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Nadella seen as best choice for Microsoft’s new CEO… except in one crucial area

Microsoft CEO Nadella Analysis

Microsoft’s decision to pick enterprise and cloud boss Satya Nadella as its next CEO has been widely met with praise from analysts and investors so far. Ars Technica’s Peter Bright, however, points out that there’s one crucial area where Nadella’s prowess as a business leader is sorely untested: The consumer electronics market.

“Making sure that Microsoft doesn’t make the same mistakes, and that it actually leads the consumer space rather than belatedly following others, will require strong, consumer-focused voices and leadership within the company,” Bright writes. “With Nadella’s promotion, it’s not entirely clear where this consumer focus and understanding will come from. Microsoft may be pinning its hopes on a new more active role for Bill Gates… But whether Gates can provide this guidance isn’t so clear. In broad strokes, Gates’ Microsoft was an early pioneer of both tablets and smartphones (and even smart watches). In each case, however, the company failed to adapt those early visions to accommodate new technology and new consumer preferences. ”

Bright says that in defense of Nadella, there was simply no way to pick a CEO capable of covering all of Microsoft’s bases just because the company has so many to cover. On the other hand, the consumer electronics market is the one where Microsoft has really struggled to keep up with Apple and Google, as its Zune media player, Kin mobile phone and first-generation Surface RT tablet were all flops. Microsoft does have a major hit with its Xbox line of gaming consoles, however, so it’s not as though the company doesn’t know how to make a product that consumers will love.

More importantly, Bright notes that Nadella understands that winning in the consumer market is crucial to maintaining Microsoft’s dominance in the enterprise. If the bring-your-own-device revolution has taught Microsoft anything it’s that you can’t only sell your products to IT departments and expect them to proliferate throughout the consumer market anymore — instead, Microsoft needs to aggressively pitch its products to the consumer market so that people will want to bring them into work.

“Should Microsoft abandon the consumer market, the next generation of school-leavers will be raised on Google Apps, iPads, Chromebooks, and OS X,” writes Bright. “This won’t merely disrupt Windows on the desktop. It will damage the long-term viability of Office, and beyond that, of Windows on the server as a development platform. This is not to say that these businesses will evaporate entirely, but they’ll be greatly diminished.”

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