According to Bloomberg, Satya Nadella will be Microsoft's next chief executive officer. He's a current Microsoft executive and he leads the company's cloud and enterprise division, which, amidst a general atmosphere of bad press for Microsoft, has been the company's star division with rapidly rising revenue.
There are two ways you could look at the promotion. One is to say that Microsoft is elevating the cloud and enterprise guy because that's their best-performing division so they think it had the most-impressive executive, so Nadella is just the best all-around person available. The other is to say that Microsoft is elevating the cloud and enterprise guy because that's their best-performing division so they think that's where the objective growth possibilities are, so Nadella is the relevant subject-matter expert. Option one wouldn't necessarily mean this choice has any implications for Microsoft's strategic direction, but based on Nadella's interview with Quartz back in December it sounds like Nadella's vision is option two.
And this makes a lot of sense. The market for cloud-based enterprise software services is enormous, and while Google has some very impressive products in this space so does Microsoft. And unlike Google, Microsoft has deep experience with enterprise sales and support.
But of course this raises the question of what happens to Microsoft's consumer products. Obviously they'll keep making the market-leading PC operating system and selling the market-leading PC office suite and will keep making tons of money doing so even as the size of that market shrinks. They just launched a new XBox so there will be years to see how the console gaming market plays out before a new generation comes due. Windows Phone might in a sense benefit from a closer corporate focus on the enterprise marketplace. It's been a dud as a consumer product, but with BlackBerry vanishing from the scene you could imagine working from the top down with the enterprise people to devise a product that meets some kind of crucial use-cases.
And then there's Bing. I am obsessed with Bing. Not because I use Bing or because Bing is a commercially important product but because Bing is a socially important product. Steve Ballmer's heroic determination to compete with Google on search has helped us resolve a lot of very thorny issues that would arise if Google Web Search became a monopoly product. But while we all (in some ways even including Google) owe Ballmer a debt of thanks for doing this, it's far from clear that it's been a smart business decision for Microsoft. All the "Scroogled" ads in the world aren't going to turn this into a market-leading product, and Google at this point seems to be benefiting from both superior engineering and strong network effects. But what will we do if Bing goes away?