Microsoft's new CEO, Ned, launched the Revolution: Cloud becomes the core business

Satia Nadra (Satya Nadella) has begun revamping Microsoft in just 5 months since it became CEO of Microsoft this February.

In the past few months, Barnard has been signaling the reform, hoping that people will forget the Microsoft that sells Windows and Office software, and position Microsoft as a cloud-platform company that is raising productivity around the world.

On the evening of July 17, Microsoft announced the biggest layoffs in history, with the hardest hit being the Nokia (7.38, 0.13,-1.73%) mobile phone and services unit that Microsoft acquired. Of the 18,000-person layoffs, about 12,500 will come from Nokia's equipment and services sector.

For Barnard, who vowed to lead Microsoft to break the tradition and innovate, layoffs are actually the inevitable result of the new deal.

Behind the layoffs: a pragmatic choice for the new CEO

Microsoft's last CEO, Mr. Ballmer, dominated the acquisition of Nokia's handset business in September 2013 in an effort to advance the "Device + service" strategy. At that time, Mr Ballmer hoped that Microsoft, like Apple, would make a breakthrough in hardware, software and services after operating on the Nokia phone.

But in the past year or so, Nokia's performance has been unsatisfactory and Windows phone sales have been lackluster. At the same time, Microsoft's personal involvement in hardware, especially in the mobile phone business, has made many handset makers less interested in Windows Phone.

At present, Microsoft Windows Phone's global smartphone market share is still small, at around 4%, according to Third-party reports, while Android and iOS share about 80% of the market. Microsoft is in a far-behind state.

The downsizing of Nokia's mobile phone business today could mean that Nadra is not going to continue Ballmer's policy of betting on Microsoft's own hardware business, but of looking to the partners to catch up with Google (573.73, 8.93,-1.53%) and Apple (93.09, 1.69). ,-1.78%) company.

In fact, Nadra's new policy on the hardware business has already revealed such a message. Two months after Nadra, he led Microsoft to announce that Windows Phone and 9-inch Windows 8 tablets no longer had a licensing fee, hoping that more vendors would help windows make a quick and big eco-system.

If Mr Ballmer's "Device + service" strategy shows his overconfidence in Microsoft's own hardware business, Nadra's strategy is more pragmatic and more responsive to the competition that Microsoft is facing.

Market share has proved that Microsoft itself alone, hardware business is difficult to rival the vast number of Android and Apple, and the wooing of these hardware vendors to become partners is clearly more beneficial to Microsoft.

In addition, as a technology-oriented company, manufacturing, hardware and other business itself is a low-margin business, as the new CEO, Nadra will also need to be in the profit and business to make a certain balance.

Of course, outsiders should also see that Nadra has not completely abandoned Microsoft's own plans to enter the hardware business. He still appreciates Microsoft's hardware products such as Xbox and surface, but Nadra should actually hold reservations about expanding his mobile phone business.

Nadra New Deal: Cloud first

In fact, reducing the size of the mass hardware, such as mobile phones, is more important because, Nadra, the business is not Microsoft's core business.

In the first week of July, the first week of Microsoft's new fiscal year, Nadra sent a lengthy e-mail memo to all Microsoft staff outlining the company's ambitions for the new fiscal year. He said in his report that the top priority of the new fiscal year was to reshape Microsoft's "core".

In the internal memo, Nadra said the concept of "Device + service" is helpful to Microsoft, but Microsoft now needs a unique new strategy that focuses on mobile and cloud computing.

On the July 16 Microsoft Global Partners Conference, Barnard took the stage speech. "If there is no cloud, there is no mobile experience," he said in a speech. In turn, cloud computing can make everything work in harmony and in order, but without a mobile terminal such as sensors or mobile devices, it will not be able to affect the world and people's lives. ”

Such a statement shows that Nadra is actually a recognition of the importance of mobile terminals, but specifically to Microsoft, the business is not a unique competitive advantage. Microsoft's unique advantage is its cloud-related businesses, including Office 365, Windows Azure, and so on.

Indeed, at this year's Microsoft Global Partners Conference, many of the top executives on the stage are talking more about Microsoft's fast-growing cloud business, and there are many incentives to attract partners to sell Microsoft's cloud business.

Shanghai Nanyang million state Software Technology Co., Ltd. Managing director Zhu Zhengwen participated in this year's Microsoft Global Partners. In an interview with Sina Technology in Washington, D.C., he said that while Microsoft was Tiyun in the past two years, it felt wool, but this year it has become clear that it is doing its best to cloud the transition.

Many Microsoft insiders admit that they have become increasingly aware that the reforms the company's CEO has revealed are heading in one Direction-everything goes first. A number of in-house employees said that Microsoft has a big stake in the cloud computing business, which must be the company's future.

Windows importance dropped

When Nadra put cloud computing business at the top of the line, the importance of the gates and Ballmer-era cash-cow windows began to fade, leaving it in the cloud business.

In the past few years, as long as Mr. Ballmer made public his speech, Windows must have been a headline business. In that era, this is understandable, after all, this part of the business for Microsoft contributed to most of the revenue. But this year's global partners, Microsoft is delivering a different policy on Windows.

In Monday, Kevin Turner, Microsoft's chief operating officer, took the stage at a global partners conference, saying that Windows, which monopolized 90% of the world's PC market, had only 14% per cent of the global equipment market.

In the view of Turner, such a small share change means that Microsoft still has a lot of room to grow in the equipment market. But from another perspective, this statement can actually be understood as, windows in this mobile-first era, the leading edge has ceased to exist.

In fact, in the eyes of Microsoft CEO Barnard, Windows is no longer the top priority. One corroboration was that in the early July memo, Nadra mentioned windows in only a handful of words. And, this statement also appeared in 60% of the memo.

"Putting windows in the memo shows a significant change in Microsoft's strategy," Ben Thompson, a US independent analyst, Ben Thompson in a report last week. In the first 2000 words of the memo, Nadra did not even mention windows, sending out a different signal from Ballmer. ”

So what exactly does this signal mean? Perhaps the best answer is that Windows's core position is being replaced by cloud business.

In fact, Microsoft's earnings reports are showing such trends. Although the Windows business in the overall revenue of Microsoft accounted for a large proportion, but the growth rate is still far behind the Microsoft cloud business. As of the third quarter of fiscal year 2014 (March 31, 2014), Microsoft's Azure year earnings rose more than 150% last year, and Office 365 revenue reached $2.5 billion trillion, a business that was just launched two years ago.

The reform of Microsoft culture

In addition to changing Microsoft's core business, the new CEO, Barnard, is actually investing in the corporate culture of Microsoft. A Microsoft employee revealed that Nadra the "return to basics" culture within the company.

The employee explained that Nadra is a very pragmatic person, and he hopes that under his leadership, Microsoft will be able to return to the status of practical customer service.

Previously, within Microsoft, there has been a deep-seated understanding that the interests of existing products should be strictly protected, not arbitrarily crossed, or will be punished. This repression and repression of the culture of innovation has left Microsoft employees without the impetus to innovate.

Now, Nadra decided to change the status quo. In his latest internal mail, he promised employees that Microsoft would streamline its work to further implement accountability and make Microsoft more nimble and agile.

He also told employees that Microsoft would reduce the level of management to accelerate information flow and decision-making processes, which would include flattening corporate organizations and expanding the control of personnel managers. In addition, Microsoft's business processes and support model will become more streamlined and efficient, mutual trust between the team will be enhanced.

From the core business of the transfer, organizational operations to enhance flexibility, and then to corporate culture reform, Nadra in the stage less than six months, has begun to reshape the PC era of Microsoft. In his plan, Microsoft will be a new company that dares to break the tradition and respect innovation.

A Microsoft employee who declined to be named said that Nadra is a very courageous leader and will resolutely implement his firm direction. "Microsoft has found the right leader this time. The employee said.

While it is not yet easy to assert, Nadra led Microsoft Cloud Transformation will achieve what achievement, but in the industry at a time of change, Nadra launched a revolution for Microsoft significant.

(Responsible editor: Mengyishan)