Satya Nadella Added $850B to Microsoft
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Nah, not really. 2000 was the dot-com bust (which was the start of the death spiral for a lot of formerly high-flyers, including Sun Microsystems) and 2001 was the DoJ consent decree, which brought a lot of MS's attempts to expand to a screeching halt. Ballmer, while being thoroughly mediocre in a lot of ways, deserves at least some credit for not tanking MS in that era.
He was not, however, a product guy. Witness their failures with the Zune, mobile, early cloud computing. His problem was that he always tried to do what would be best for Microsoft and not the customer. You can get away with this if you already have an install base (windows/office), but with net new products people will look at what's best for them first. Even with developers developers developers he tried too hard to get people to use pure MS tech and made developing for the web on MS ugly if you using anything other than .NET. The result is a generation of developers on Macs and to a lesser extent linux.
Funny enough, thinking of the customer is what MS did with the xbox and it worked out well enough.
It seems paradoxical that trying to maximize shareholder value at all costs could have the opposite effect long term; but think of it this way: almost every company in the world is fixated on profit -- that's not a differentiator. What makes the company is amazing products that people need, even depend upon -- once you have that, it is very hard to fail.
Profit singlemindedness can definitely lead you astray, be fragile (of course, the 'user-oriented' robust strategy can be thought as ultimately also a form of profit seeking).
What Nadella seems very competent at doing is also pleasing his workforce as an additional important stakeholder.
I can imagine what happened with Zune, cloud, etc is that (an enormously successful) MS assigned senior engineers to head up potentially prestigious new projects as professional rewards, but what they should have done was acquire-hire startup founders with fire in their belly (and strong vision) about the space. Ironically anyone with that much belly fire probably would have left MS to pursue it, basically disqualifying everyone left. :)
But it certainly wasn't ordained that Apple would parlay that into the runaway success of the iPhone.
Contrast this with Apple, which (then) used MP3s and you could plug in the player and have friends copy the music; add in the premium pricing and you've also got a status symbol. "Sharing" mp3s was the modern equivalent of sharing CDs or cassettes, something the labels took way to long to figure out in their early attempts at strict online digital music.
I have no idea if Apple intentionally did this, but it mattered. MP3 players were in their infancy and when people compared, the ipod looked better.
Eight years post-Jobs, it remains to be seen what Apple's evolutionary thrust turns out to be, Amelio/Sculley. For now the market expectations (user desires) would seem to support innovation and design as a business priority.
Tim was the 2nd in command of Apple for years. Easy to forget this, but Apple's success in the 2000s is partially attributable to Tim as well (not to forget all the other brilliant folks at Apple).
https://www.folklore.org/StoryView.py?story=Diagnostic_Port....
Ballmer was responsible for this blight upon humanity. How many human hour / lifetimes were wasted trying and failing to get things to work on Vista?
Imagine a world where the "iPhone" was a Microsoft product and Apple was a company left buying out other phone companies in a futile effort to catch up. That would would look very different.
IMHO, there is an alternate universe where Ballmer was never Microsoft's CEO, and instead, they had someone who could envision a future of mobile and cloud offering years before the competition did. Which means a world where the Windows Phone outsells iPhones and Androids combined, where Azure has 70%+ of the cloud computing market, where the Microsoft store is streaming original video content to customers through Xbox Live, etc. In this world, Microsoft crested the trillion dollar market cap several years ago and is well on their way to hitting the $2T mark.
His "everything has to be Windows" philosophy was toxic, too. (Then I realized that he didn't really care about the underlying technologies of things, and as long as you called your embedded system that had an event loop and some interrupt handlers "Windows Event Loop And Some Interrupt Handlers, Enterprise Edition" you would be politically safe).
“500$? Fully subsidized? With the plan? That is the most expensive phone in the world” [0]
https://www.theverge.com/2013/7/12/4516806/one-microsoft-bal...
What on earth is this doublespeak? If he always did what was best for Microsoft, we would not be discussing what his problem was in managing Microsoft. That's not how "what's best for Microsoft" works.
What would happen? Things would function. They'd probably be fine for the first couple months, and they might even pass their first quarterly earnings without anyone noticing he's gone. If the department heads all were quiet and didn't notify the shareholders, things would seem completely fine.
But then the next quarter comes up. Money shifts around a little bit creating a small deficiency here, and a surplus over there. Department heads start to assist each other towards shared goals which may be detrimental to other departments.
Tribalism starts to take hold. Each department head is now their own top dog, and some will start to breed a culture within their areas where they believe they are absolutely more critical than other areas. Some individuals may start to actively sabotage the other departments if they feel it serves to benefit their own dept.
Without a CEO, you no longer have a company, you have a community of companies that are in direct competition with each other.
This doesn't mean the individuals within a company are unimportant. They get plenty of recognition within their own circles, but when you're talking about money, there's a reason the CEO is the focal point.
What you are saying seems to me to be completely groundless in every dimension.
Also: I did not state the antithesis "Satya Nadella had nothing to do with MSFT adding $850b to their market cap". I'm just stating "It's not true that MSFT adding $850b to their market cap is attributable solely to Nadella".
I like your point about the board though, and I wonder how the MSFT board specifically feels about Nadella.
It's trivial for a CEO to issue a puff piece as a marketing tool. Steve Jobs tried to advertise himself next to Ghandi. Assigning credit is a difficult game. Studies show people over and under assign credit. The best/most realistic crediting of work to successful performance ratio ended up with the team crediting to one another something like 115% over how much work was actually done.
Debating over blame and credit is mostly a waste of time, even though people fundamentally need positive feedback for good work and negative feedback for bad work. It's mostly used politically in big corps and that's a big void I try to stay away from.
1. Split Microsoft into three parts, each with its own exactly equivalent market.
2. Have Satya Nadella as the CEO of one of them, Steve Ballmer as the CEO of the other, and a control group with no CEO in the third.
The lift obtained from the first may be because of Satya Nadella. It's possible that Steve Ballmer may be getting worse over time, which is why you have a third control buckets to compare against.
https://www.wsj.com/articles/microsoft-to-buy-back-up-to-40-...
I do tend to give people the benefit of the doubt though...
Especially on sites like HN and reddit which are relatively easy to manipulate.
I don't know how comfortable I am with any company posting and promoting their own product/content. Even employees voting on posts seems like a potential conflict of interest to me.
Citation needed.
Also, a gentle reminder that Satya Nadella, as amazing as he might be, is not the sole reason why Microsoft's stock price has gone up.
Yeah, Nadella laying off all of Microsoft's QA staff in 2014 helped considerably. /s
Headlines like these are the equivalent of scientific papers with no citations, no coauthors, no acknowledgements - as if the author was solely responsible for creating all the value merely by thinking in the aether. These types of scientific papers don't exist outside crank pot science for good reason - they are ludicrous. Just like this headline.
Two things I dislike about this article
1. It's tone is so favorable to Nadella and Microsoft, it feels like it was written by a fan. Amazon and Bezos are described as childish. They may be but it feels like the article has an agenda
2. Why is this a novel? The first third of this covers the main points but it keeps going
What you cannot do (once you are more than a handful) is to not use any Microsoft cloud services (exchange online, office 365, skype fb, teams, ...) while doing business with other companies.
Satya saw this way before the rest of us.
Far-far aside: I watched his recent appearance on the daily show. Regardless of your views of him (he gave off a more sympathetic sheen as a basketball team owner and public service contributor [usafacts] than he did as a business man), but man does he not have an inside voice. He (or rather anyone around) would not function in an open plan office.
Good/bad/and indifferent a lot of the takes on Ballmer seem to reflect how much you think a tech company needs a "basketball team owner".
I bet Satya Nadella is just another corporate bureaucrat who is skilled at taking credit for success which has nothing to do with them.
I don't buy it for 1 second that someone who is good at creating value could have the patience to spend almost 30 years working in a bureaucratic and monopolistic corporation like Microsoft and I doubt that it's even possible to learn these kinds of skills there. On the other hand, I think there is probably no better place to master the art of social manipulation and backstabbing.
The concept of WAR (Wins Above Replacement) needs to be brought into the business world.
An sub par player on the Yankees will still win a lot of pennants.
I'm not saying Satya is that guy, but generally speaking these sensationalist headlines are a problem!
Who gets the blame when companies like Nokia and RIM implode?
So in a way its the CEO's fault for hiring/having such executives?
They all follow the same 'hero' or 'zero' angle and typically have no access to the nuance (or underplay it) and complexity that goes into any success or failure. Nice reading though.
Note: Then I see this of all things: 'Disclosure: The author's self-managed super fund owns shares in Microsoft."
- MSFT revenue/share price @ 2014: 86.8 / 37.1
- MSFT revenue/share price @ 2019: 125.8 / 133.52
-> revenue growth: 44.93% / price growth: 259.89%
So either MSFT was significantly under-priced in 2014 or it's over-priced right now.
Also: Disclosure: The author's self-managed super fund owns shares in Microsoft.
It made sense when the story was about renting out spare data center capacity. Amazon and Google had a ton of excess which started the story.
Microsoft, Oracle, IBM et al did not, but had to react to Amazon and Google Cloud and had to build up capacity. Then the game turned into ensuring all that new capacity was utilized. Enterprise needing to make the shift to Cloud is driven almost mindlessly by that fact, much more than actual Enterprise needs and issues. Utilization is achieved by smart marketing, a ton of it, targeted at dumb Enterprise.
This feels like some honeymoon period.
Is your claim that there are almost no legitimate reasons to move enterprise applications to the cloud? I don't want to hire more engineers, buy more servers, etc. I just want to pay money and skip everything else.
At work we have an application used by financial advisors in offices during working hours only.
Why do we need to have 4 whole machines spinning 24/7 (in the name of reliability and availability) when we only need a fraction of that computing power and only between 08:00 and 17:00?
Investors are buying the stock because it’s one of the largest in the indexes weighing in at nearly 5% of the SP 500 market cap. Because of passive investments and mutual funds trying to match passive (index) returns, a nickel of every dollar invested in the stock market goes directly to buy Microsoft without any human consideration.
So it might also just be because Microsoft had the better offering and Amazon may not have a good reason to sue. Might, may, could end up either way.
Did they sell that many more … what exactly? I am just trying to understand where that value is.
Or was this essentially all stock buybacks that artificially inflate the "value" as established by the market cap?
Ironically too is that when you control the MSFT market cap against the Trump inflated stock market, there is actually no actual gain, especially when you control for stock buybacks, aka, corporate stock self-inflation.
* Long term customers gained
* Goodwill created
* New products
All of this reduces to "discounted future revenue". Say you have a 10 year target on MSFT. Do you think MSFT will make $850 billion dollars more in the next ten years than they did in the last ten years? MSFT revenue has doubled in the last ten years. Even if it does not grow at all, they will earn around $1T in the next ten years as compared to (about) $800 billion in the last ten.
Edit: and if you DO think it will grow then perhaps $850B of value is perhaps the top line.