Microsoft Corporation (NASDAQ:MSFT) has made it official. Cloud and enterprise VP Satya Nadella is the third CEO in the company’s history. Of course many people were analyzing this decision before it even became official, speculating that he was just a safe choice and perhaps not the best CEO Microsoft could have chosen. However, some are now rethinking the idea that an outsider would be a better choice and suggesting that perhaps Nadella could have been the right selection all along. And they could be more right than they know.
2014 marks a key moment at Microsoft
There’s no denying that Microsoft Corporation (NASDAQ:MSFT) has missed many of the major technology shifts over the last several years. It missed the social networking wave, has been unsuccessful against Google Inc (NASDAQ:GOOG) in search, and was a late entrant behind Google and Apple Inc. (NASDAQ:AAPL) in the mobile device game. However, cloud presents a new opportunity for the company to get back into the game, particularly since enterprise customers have long been Microsoft’s bread and butter.
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Nadella has certainly shown his talents in keeping Microsoft Corporation (NASDAQ:MSFT) in the game in the cloud business. The company was on the verge of missing the boat there, but he took hold of the reigns and made it into the most important part of Microsoft. The key now is going to be taking some of that magic and working on the rest of the company, whipping it into shape at a time when another new technology segment is emerging: so-called “smart” or Internet-connected devices.
Microsoft’s announcement opens the floodgates
Now that we finally know the official word about Nadella, the floodgates of calls for a spinoff of the company’s entertainment division have opened. CNBC’s Jim Cramer, HighMark Capital analyst Todd Lowenstein and others are once again calling for Microsoft to spin off its Xbox and Skype businesses into a separate entity.
However, many believe that Nadella doesn’t think a spinoff would be a good idea, and Bill Gates has said in the past that he doesn’t think it would be. It could be because they see the greater picture and how the Xbox and Microsoft Corporation (NASDAQ:MSFT)’s more consumer-oriented businesses fit into its greater strategy. And if Nadella is as much of a visionary as Bill Gates was, then we have a winner.
Bridging the gap between enterprise and consumer
As Microsoft Corporation (NASDAQ:MSFT) plays off its strength in cloud services, Nadella and Gates could be seeing how that strength could put Microsoft back in the consumer game. For example, cloud gaming has become extremely popular, and the Xbox is a major player in this space. As more and more consumers begin to store their music and other content in the cloud, we’re probably going to see more and more consumers become aware of the cloud and how it can help them.
Currently, the cloud is largely an enterprise-focused business, although many consumers who use iTunes (not all) are using the cloud for storage every day, at least to back up their music. The issue is that many don’t realize this and don’t understand what the cloud is and can do for them. I’m always running across people who have lost all the files on their computer because they didn’t back them up in the cloud, and this survey from about a year ago (via ZDNet) illustrates how little people understand about the cloud. But as more and more people become educated about cloud computing, the gap between enterprise and consumer devices will start to be crossed, just as Gates believes.
Microsoft offers free Lumia 520 with Xbox Music pass
Microsoft Corporation (NASDAQ:MSFT) may even start coming up with more creative tactics to get consumers into its devices. For example, the company is now offering a free Nokia Lumia 520 with the purchase of an Xbox Music pass. The Lumia 520 has been the most popular Windows Phone, and clearly Microsoft is trying to leverage the popularity of its Xbox to convert consumers to its Lumia phones.
And don’t forget that the Xbox is an Internet-connected device, suggesting that it could become even more important as Microsoft prepares for this up-and-coming segment of the industry. The use of sensors in the Xbox could be applicable in other places, and the connection between the Xbox and Microsoft’s cloud business is one that maybe shouldn’t be severed, particularly as we move into this new age of computing.
So could Microsoft Corporation (NASDAQ:MSFT)’s Xbox division survive on its own? Certainly. But should it? Perhaps though, like the Satya Nadella decision, this is something that should be rethought by some as well.