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By | Neil McAllister 5th February 2015 11:26

Satya Nadella, Year One: Has Microsoft's new CEO cut the mustard?

Ten highlights from Ballmer's successor's first 12 months

One year ago, on February 4, 2013, Microsoft's board of directors appointed Satya Nadella the third chief executive in the company's history. So what do we have to show for it, so far?

Nadella's predecessor, Steve Ballmer, wasted no time in taking his hands off the wheel in Redmond, even going as far as to resign his seat on the company's board in August to pursue his new career as owner of the Los Angeles Clippers basketball team. So you'd think Nadella would have free rein to make as many changes as he wanted.

Looking back at the last 12 months, however, reveals instead a CEO who is still settling into the role and in many ways is following Ballmer's lead, strategically. Of the following ten major announcements from the first year of Nadella's tenure, many weren't actually his ideas – and his most significant strokes weren't necessarily the bold changes in direction that some Redmond-watchers were hoping for.

10. Buying Nokia's phones division

It was Nadella who ended up welcoming former Nokia CEO Stephen Elop back into Microsoft's fold, but anybody who had been following Redmond's acquisition of the Finnish firm's devices and services business knew the deal was 100 per cent Ballmer's doing. In fact, it eventually came to light that Ballmer was so keen on the purchase, yet met with so much resistance from Microsoft's board, that it created a major rift between himself and company cofounder Bill Gates. Now Ballmer is out and Gates is back in Redmond in an advisory role to Nadella – but we may never know what side of the Nokia sale debate Nadella fell on. It just wasn't his call.

9. Launching Office for iOS (and Android)

Shipping versions of the Office business apps for iOS devices was hailed as Nadella's first major act as CEO. But that launch was a long time coming, and one of its biggest proponents was – yes, you guessed it – Steve Ballmer.

"The decision to ship Office for iPad was made before Satya became CEO," a pair of Office engineers explained in a Reddit AMA last year, adding that Ballmer was fully behind the decision to ship for iOS before other platforms.

Microsoft under Nadella has since shipped versions of the Office apps for Android devices and Windows 10 early adopters are just now getting their first taste of the software. But it's all clearly a holdover from Ballmer's "devices and services" strategy (even if Nadella doesn't like to use that phrase anymore).

8. Windows 10

A new version of Windows is always a big deal, and Nadella says the next one is going to be among the biggest in the company's history. But how much is going to change, really? The new OS is said to run on just about any device that can run Windows 8.1 today, and many of the UI changes feel like attempts to roll back some of the more hated excesses of the Windows 8 design. The Windows train must keep rolling along, and it would with Nadella or anyone else in the corner office.

If Nadella had any major role here, it may have been the decision to name the new OS Windows 10 – skipping version 9 completely – and to drop the Windows Phone name so that Microsoft's desktop and smartphone operating systems use the same branding. And perhaps even more important, Nadella seems to have used the opportunity to sweep the loathed Windows RT under the rug, a decision that was a long time coming.

7. Surface Pro 3

Shareholders should be pleased that under Nadella, Microsoft finally got its hybrid tablet/laptop concept right. Surface RT was an abysmal bomb and the first two generations of the Intel-powered Surface Pro line were compelling, yet flawed. With Surface Pro 3, however, Redmond finally has a serious competitor that can easily take on competing convertible tablets from the likes of Dell, HP, Lenovo, and Samsung.

Let's not give Nadella too much credit for that, though. What makes the new design a winner is that it addresses many of the faults of the earlier ones, such as making the tablet thinner and lighter and giving it a larger screen with a more work-friendly aspect ratio. Surface Pro 3 doesn't represent a major brainstorm, just Microsoft learning from its own mistakes.

Do credit Nadella, though, for holding off on reported plans to release multiple Surface versions in various screen sizes, including an 8-inch model. With Microsoft reportedly losing money on every slab it makes, keeping the product line small was the best strategy for 2014.

6. Open source .Net

2014 was a big year for Microsoft and open source, one that saw it announce that it plans to release its entire .Net software development platform as open source software. It was a major move – one so significant, in fact, that it took longer than a year to develop. Large portions of the .Net source code have been available under open source licenses since 2012, and while Redmond launched the .Net Foundation to oversee the code's development shortly after Nadella became CEO, most of the groundwork was laid before he was appointed. Chalk this one up to long-term strategizing from Microsoft's developer tools team.

5. Universal Windows apps

With Windows 10, Nadella says, the same apps will run on any device running a Microsoft OS, be it a desktop, a laptop, a tablet, or a smartphone – only he doesn't really mean it. All of this talk about "universal apps" sounds good, but it only applies if developers build their software using a limited set of modern tools. While Microsoft's touch-friendly Office apps for Windows 10 will be universal apps, for example, that's just a lightweight version of the suite. The real deal will be Office 2016, and it will still be designed to work primarily with a keyboard and mouse.

What's more, the groundwork for the universal app concept was already laid when Redmond introduced the Windows Runtime in 2012. At the time, Nadella himself called it "revolution through evolution" – and it's still evolving, not being built from scratch.

4. "Cloudobile"

One area where Nadella's influence has been felt is Microsoft's increased emphasis on the cloud and mobility. Sure, Ballmer was essentially tooting the same whistle when he talked about "devices and services." But Microsoft has invested heavily in its Azure cloud under Nadella's tenure, to the point that it's now the only serious contender to the mighty Amazon Web Services.

Nadella also seems to be cannier than Ballmer when it comes to the realities of what's needed to succeed in the cloud. You probably never would have heard Ballmer say "Microsoft loves Linux," as Nadella did in October. And Redmond's sweaty former chief exec probably wouldn't be as quick to team up with Docker to introduce Linux-compatible application container technologies in Windows Server.

Both were shrewd moves. It's just a shame that neither the cloud nor mobility is where Microsoft makes its real money.

3. HoloLens

Nadella hasn't let us forget that Microsoft fancies itself a hardware vendor, and in January the firm surprised most everybody with the reveal of HoloLens, a sci-fi headset that can overlay 3D rendered objects on the wearer's vision, while still allowing a partial view of the real world.

A project as ambitious as this one surely took longer than a year to develop, so we can't credit Nadella for greenlighting it. But he can take credit – or the blame – for not pulling the plug, though, particularly when earlier the same month Google announced that it was shutting down its controversial Glass Explorer program and going back to the drawing board. No doubt the support of NASA had something to do with it.

Still, it will be awhile before HoloLens reaches store shelves, so this announcement, while intriguing, is largely a symbolic feather in Nadella's cap for now.

2. Buying Mojang

We're not sure, but this one could be all Nadella. Even though Ballmer – Microsoft's largest shareholdercongratulated the company on the purchase, we can't really see the Clippers commander dropping $2.5bn on a company that hasn't achieved much beyond publishing kid-craze videogame Minecraft.

Privately-held Mojang pulled in around $128m in profit in 2013, according to the Wall Street Journal. If Microsoft somehow manages to triple that, it should make back its investment in, oh, six and a half years.

Honestly, we really don't know where Microsoft is going with this one, but if Nadella does then kudos to him.

1. Layoffs, layoffs, layoffs

So far, nearly everything we've touched on has been the extension of a long-term strategy for Microsoft, rather than something that originated in Satya Nadella's office. But if Nadella hasn't been a great originator of new ideas so far, we'll say one thing for him: when a job needs doing, he gets it done.

Nadella climbed into the CEO's chair at a time when shareholders were restless and drastic measures were needed. He proceeded with full vigor, and anyone who read his stultifying six-page memo to staff last July should have been able to tell that layoffs were in the offing.

When he finally came clean on his plans, Nadella announced a mass purge of some 18,000 staffers. While the bulk of those jobs were reportedly positions made redundant when Microsoft acquired Nokia, others were not. And however you see it, it was still the largest round of layoffs ever in the company's history.

It was hardly the most auspicious start to Nadella's tenure as CEO from Microsoft employees' perspective, but it will probably have to go on record as the single most significant act of his first year in the role for which he can take full credit.

Now comes the hard part. Nadella's sophomore year as CEO will see him preside over major refreshes of Microsoft's core product lines, including Office and Windows. It will be trial by fire in the eyes of shareholders and the board and arguably the first real tests of Nadella's leadership, following a year that let him off comparatively easy. ®

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