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Microsoft’s partners remain linchpin of company’s business model

08 Feb 2014

Microsoft’s latest revenue figures highlight the rich, diverse portfolio that new CEO Satya Nadella has inherited, but there’s one other thing that seldom gets mentioned, and that is the goodwill of its partners.

According to global analyst firm Ovum, Microsoft continues to engender the kind of support and loyalty among its partners that other tech companies can only dream of.

"Some relationships have clearly been put under strain recently as Microsoft has moved into devices and services, but the company continues to present opportunities for its more innovative partners," says Richard Edwards, analyst, Ovum.

"Nadella comes across as a very personable individual, with a manner and demeanor very different to his two predecessors.

"Gates and Ballmer had reputations for being domineering businessmen, so it will be interesting to see how Nadella is received by the Microsoft ecosystem and partner community in the months ahead."

All eyes on Nadella...

Edwards believes Microsoft is currently in a state of transition, from an on-premise software company that develops products for PCs and servers, to a company that offers mobile-first, cloud-always services for businesses and consumers, and it’s in the hardware business too.

"What company wouldn’t find this a continuous struggle, especially with Apple and Google breathing down its neck" he asks?

In response to the question “Why is Microsoft going to be successful?” Nadella replied, “We have the talent, resources, and perseverance like no one else has.”

The important word here is “perseverance" claims Edwards, which is perhaps the real secret of Microsoft’s success.

"The company has seldom been successful in its first attempt at anything, but it generally keeps plugging away until it gets it right," he adds.

"Nadella will, at some point, be compared to Tim Cook, Apple’s CEO, so Microsoft will be hoping that its new leader will appeal to CIOs and to the man-in-the-street, as the company targets both business and consumer markets.

"In Nadella’s first interview as CEO, he appears more like Steve Jobs than Bill Gates or Steve Ballmer, so it will do Microsoft no harm at all to have this new figurehead bring a bit of charm and charisma to the position of CEO."

Keeping it in-house

Nadella, a 22-year veteran of the company, will undoubtedly have similar DNA to that of his predecessors claims Edwards, so continuity is likely to be as good as it gets.

"Having led Microsoft’s Cloud and Enterprise business unit, Nadella understands better than most the capabilities of the company’s new “growth engine,” and as a Microsoft “lifer” he will have intimate knowledge of Microsoft’s overall capabilities, including its strengths and weaknesses," he adds.

"Some investors have urged Microsoft’s board to appoint an external candidate, arguing that a radical change of culture, direction, and strategy is required to beat off the competition.

"It’s entirely possible that the departure of Bill Gates as chairman could have been the compromise option, with John Thompson, the senior independent director, now taking over the role."

Microsoft needs to make friends with the corporate CIO

From a CIO and enterprise IT perspective, Edwards would like to add three items to Nadella’s to-do list:

Cloud:

Signpost Microsoft’s cloud strategy clearly and purposefully, stating what is ready for mainstream customers and what is still considered “bleeding edge.”

Mobile:

Support business productivity tools and collaboration services across all devices, not just on the ones that Microsoft sells.

Desktop:

Listen to your business customers, especially the technology ambivalent employee. Build them something they actually want and need rather than performing technical gymnastics.

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