Microsoft Announces Nadella As CEO, New Role For Gates

Transcript

RENEE MONTAGNE, HOST:

NPR's business news starts with moving up at Microsoft.

(SOUNDBITE OF MUSIC)

MONTAGNE: After a closely watched search, Microsoft has a new chief executive. He's Satya Nadella. He is 46 years old and was raised in Hydrabad, India. He came to the U.S. as a young man and has been at Microsoft for 22 years.

In a related announcement, Microsoft said that Bill Gates has stepped down as chairman and will support the new CEO as his technology advisor. NPR's Steve Henn is following this story and joins us now. Good morning.

STEVE HENN, BYLINE: Good morning.

MONTAGNE: Well, tell us who Satya Nadella is, for those of us, of course, outside that world, and what is his vision for Microsoft?

Well, as you said, Satya Nadella was born in Hydrabad, but his story really isn't a typical sort of rags-to-riches tale. He was the son of an important and prominent civil servant. When he came to the U.S., he was part of a highly trained influx of high-tech Indian immigrants, and in many ways, success was expected.

HENN: By all accounts, Nadella is bright and hardworking. He hasn't shied away from talking about his family publicly and work-life balance. And he's really pretty different from Microsoft's previous CEO, Steve Ballmer. You know, Ballmer is known as a shouter, he was intently focused on his work. Nadella is quieter. He's more of a listener.

At a meeting of Indian technology entrepreneurs here in Silicon Valley last year, he was asked to give the group advice. And his response was to say that he would rather learn from them. He'd rather hear their stories. And when he was pressed on this, his one piece of advice was that if you stop learning, eventually you'll stop doing things successfully.

MONTAGNE: Well, Nadella has been clearly successful at Microsoft for the couple of decades he's been there. Again, he must have been in his early 20s, really, it sounds like his life's work. What, though, was his most recent role?

HENN: Well, his most recent role has been president of Microsoft's $20 billion services and tools business, which is a huge part of Microsoft but isn't really one that many consumers are familiar with. But it's a fast-growing part of the company and it's an enormous profit center. More than 10,000 people reported to Nadella, and he earns billions of dollars in profit for the company every year.

But selling big services and big tools to other corporations is going through a transformation. It used to be that this kind of business really consisted of selling servers and applications. But now, companies have a choice. They can buy computers from you, and your software, or they can rent space and services in the cloud. And Microsoft competes in both these areas. It's moved aggressively to compete against Amazon, renting space on its own server system, called Azure, and it's now one of Amazon's biggest competitors.

But at the same time, it's continuing to sell equipment. In effect, Microsoft here is competing with itself. I think what made Nadella so attractive to Microsoft's board of directors is that he's managed this transition so well. He's grabbing market share in the older, contracting part of the business - selling servers - and at the same time, he's competing aggressively in the new, expanding part of the business, selling space on the cloud. And if you think about it, running a tech giant like Microsoft successfully really means managing transitions like this again and again and again.

MONTAGNE: Well, Steve, though, there are other transitions that Microsoft has not managed so well. Personal computer sales are falling, Microsoft struggled to establish itself as a competitor in mobile space. Is it possible that Microsoft might be abandoning its efforts to compete with the likes of Apple and Google, and instead concentrate of serving business customers?

HENN: Well, I think a lot of people are going to be temped to see Nadella's appointment as a sign that that's true. But, honestly, I think it's too soon to say for sure. You know, there are many analysts out there, even former Microsoft executives, who think that the company would really be better off if it were more tightly focused on things it does well. And one of them is clearly serving the needs of its big business customers.

But, honestly, I'd be surprised if Microsoft threw in the towel here. You know, the other big announcement today coming out of Redmond is that Bill Gates would be stepping down from his role as chairman of the board of Microsoft. But he's not leaving the board, and in fact, Microsoft said Gates would actually be spending more time at the company and he'll be working closely with Nadella on technology and strategy.

And so, I think their going to continue to compete in this space. Nadella is tenacious, and now with Bill Gates' help, he's running a company that's really famous for that - it's tenacity. So, I don't expect them to give up.

MONTAGNE: NPR technology correspondent Steve Henn. Thanks very much.

HENN: My pleasure. Transcript provided by NPR, Copyright NPR.