Microsoft's new leader flew under the radar, until now

The Seattle TimesFebruary 10, 2014 

BIZ CPT-MICROSOFT-CEO 2 MCT

Longtime company executive Satya Nadella has been chosen to guide the once-dominant software giant into the future.

MICROSOFT — MCT

SEATTLE — For a man just named Microsoft Corp. CEO, there is remarkably little known about Satya Nadella.

That's even though Nadella, as executive vice president of Microsoft's Cloud and Enterprise division, helped build on a fast-growing division that's responsible for providing servers, cloud platforms and other tools for corporations. It's an operation that last fiscal year brought in $20 billion in revenue — more than most companies on the Fortune 500 list.

Nadella has also been the face of Microsoft's cloud aspirations for the past few years. He's played a big role in how Microsoft's Windows Azure has become a viable competitor to Amazon Web Services.

He's been credited with being a key player in helping shape, articulate and execute Microsoft's strategy for the cloud, the term used to refer to services and data that live on remote servers and which can be accessed by users online. Cloud computing has become more important in recent years and will only become more so.

Compared with many of the other candidates reportedly considered to succeed retiring Microsoft CEO Steve Ballmer, though, Nadella has been lower-profile.

For one thing, he hasn't appeared to campaign for the top spot.

He's too much of a class act to do so, say people who know him, many of whom also describe him as personable, very smart and charismatic. He is well respected within Microsoft and well regarded by Wall Street.

And he clearly possesses one primary quality Microsoft's board said it was looking for: deep technical knowledge. Nadella's experience covers some of the most complicated technologies in business today, from industrial-strength servers to complex online services.

But there are two knocks against Nadella.

First, he lacks experience with consumer devices — an area in which Microsoft is struggling (Xbox aside) to gain traction. It's important for Microsoft to gain market share in tablets and smartphones, lest customers completely abandon Windows-based devices in favor of devices running Apple's or Google's Android operating systems. Second, he's never been chief executive of a company as big and complex as Microsoft.

Cloud aside, Nadella's work as a leader within various divisions in the company have largely involved executing a CEO's or predecessor's broad visions and strategies, rather than crafting his own.

"He's one of the nicest guys you could meet. He definitely seems to care about his people and his team," said David D'Souza, a former senior engineering executive at Microsoft and co-founder and CEO of mobile collaboration app company Moprise. "He's very passionate and a hard worker. He always executes well on strategy."

But "he hasn't had the opportunity to build something new himself and define a strategy," D'Souza said.

Some doubt whether investors, who have sent Microsoft's share price up lately over rumors that an outsider such as Ford Motor Co. CEO Alan Mulally would be named Microsoft CEO, will be happy with a longtime insider such as Nadella.

"The question is whether making an insider like Satya CEO will satisfy Wall Street and others who want big changes at Microsoft, even if they have no idea what that would entail," said a former Microsoft executive.

But others say that lack of CEO experience is not necessarily a negative.

"In many organizations, a division the size of (the one Nadella leads at Microsoft) would be its own company," said Norman Young, a senior stock analyst at Morningstar investment research firm.

"He's got charisma, employees like him, and he's got the acumen to lead the company. Not having been a CEO is not necessarily a minus here," Young said. "When he speaks, he's calm, smooth, charismatic. He knows his stuff."

David Smith, an analyst at research firm Gartner, says he's heard "nothing but good things" about Nadella.

"He seems, from what I've seen, relatively low-key. He just seems to be more steady and gets the job done," Smith said.

As president of Microsoft's Server and Tools division from 2011 to earlier this year, Nadella helped focus that group on several key priorities, including making it easier for companies to start using Microsoft's cloud tools and simplifying the division's bewildering array of product names.

Revenue went up, from $17.1 billion in fiscal year 2011, when he started, to $20.3 billion last fiscal year.

Nadella "executed by setting the priorities the right way," Smith said.

Nadella grew up in Hyderabad, India, where he met his wife, Anupama Nadella, and where their parents still live, according to an interview Nadella gave the Deccan Chronicle in July 2013.

In the interview, he cites playing cricket for Hyderabad Public School as teaching him about teamwork and leadership.

He earned a bachelor's degree in electrical engineering from Mangalore University and master's degrees in computer science from the University of Wisconsin and business administration from the University of Chicago.

"He's personable, sharp, bright, very charming," said Ravi Sanga, a scientist from Normandy Park, Wash., who's a longtime friend of Nadella's. "He's very interested when he talks to you. Very down to earth. Just a good, good man."

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