Biggest challenge for Microsoft‘s next CEO: Working under the shadow of Bill Gates & Steve Ballmer

 

Even before the bubbly stops flowing, the next Microsoft chief will have to buckle down to the unenviable task of bringing around a company that was once almost broken up for being too dominant but is now struggling to stay relevant. 

And it will be not be easy—the Redmond, Washington-based company, the big daddy of the software world, has been a non-starter in newer areas like tablet and search engine, where it has burnt huge amounts of cash and made little headway. "The complexity of Microsoft in itself is challenging," said Ravi Venkatesan, former chairman of Microsoft India. 

"Microsoft can't be a leader in everything and now faces more problems due to its siloed culture and lack of risktaking ability." But the biggest challenge for the new CEO will be to work under the shadow of Bill Gates—the founder and one of the richest persons on earth—and Steve Ballmer, the current CEO. 

Many candidates are rumoured to have opted out of the race over concerns that the two former CEOs would tinker too much in decision-making. It might just be easier for Satya Nadella—considered the front runner along with Google's Sundar Pichai—to navigate his way around them as he's a trusted insider and a 22-year veteran at the firm. 

That the company might be preparing for Gates to step down as chairman might also help. The CEO will also have to decide whether to continue with Ballmer's vision of making Microsoft a leader in everything related to technology, including devices and services, or discard the idea and make the company focus on its areas of strength. 

But there is trouble there too. Microsoft dominates a market that is in decline. While Windows is the preferred operating system for traditional personal computers, it runs less than 15 per cent of new devices, according to research and analyst firm Gartner. By end 2013, global PC shipments totaled 82.6 million units, a 6.9 per cent decline from the fourth quarter of 2012. This is the seventh consecutive quarter of shipment decline, Gartner said. "Microsoft has its biggest challenges in the consumer space. Zune, Kin, Surface RT and Windows RT have not been successful," Patrick Moorhead of Moor Insights & Strategy, a US-based hightech industry analyst told ET recently. 

 

Microsoft competes in the new era with giants like Google, Apple, Amazon in the consumer space and also old war horses like HP, IBM and Oracle in the enterprise space. While Google has run away with the mobile internet operating system market with Android, Apple and Samsung dominate the high-end phone and tablet market. On the cloud services front, Microsoft Azure is fighting a pitched battle with Amazon web services and VMWare cloud for dominance. "The new boss will have to reboot the company—from cultural transformation to pushing the envelope on innovation. 

And that's not easy in a company of the size and complexity as Microsoft," said Vineet Nayar, tech industry veteran and former chief of HCL Technologies. Microsoft has also not been able to capitalise on its firstmover advantage in many areas. Ravi Venkatesan, author of 'Conquering the Chaos, Win in India, Win Everywhere', gives the examples of the tablet, which was first launched by Microsoft way back in 1999, and the Windows phone in 2001, ahead of anyone else. 

Then there is the $7.2 billion (Rs 45,100 crore) acquisition to deal with. Turning around the fortunes of the once-dominant handset maker will not be easy for the new CEO. Whoever takes over the 38-year-old company, challenging the established rules at the bureaucratic organisation will be a difficult and uphill task. The new leader is definitely set for a tightrope walk.