Skip to Content

Microsoft is officially middle-aged

Microsoft CEO Satya Nadella at Brainstorm Tech 2014Microsoft CEO Satya Nadella at Brainstorm Tech 2014
How big, Satya? This big. Microsoft CEO Nadella at the 2014 Fortune Brainstorm Tech conference in Aspen, Colo.Photograph by Stuart Isett — Fortune Brainstorm Tech

While you were running Saturday errands, the world’s biggest software company celebrated its 40th birthday. Yes, seriously.

In a letter sent to employees, Microsoft co-founder Bill Gates (still a technical advisor) predicts computing will evolve more quickly over the next decade than ever but is still too far out of reach for many people.

“So I hope you will think about what you can do to make the power of technology accessible to everyone, to connect people to each other, and make personal computing available everywhere even as the very notion of what a PC delivers makes its way into all devices,” he wrote.

Of course, there are literally dozens if not hundreds of other companies—both large and small—that would love to solve that problem at Microsoft’s expense.

Mere toddlers like collaboration software upstart Slack, flirting with a $2 billion valuation, are challenging its dominance in productivity software. Twenty-something Amazon Web Services and teenager Google are making things tough in the data center realm. And despite its expensive Nokia investment, Microsoft can’t seem to get more people to trade in their Apple and Samsung smartphones.

As it enters its fifth decade, does Microsoft have the energy to combat competition on so many different fronts? That’s up to company’s third CEO, Satya Nadella. After spending his early days rightsizing the company (the last round of Microsoft’s biggest layoff ever was apparently completed last week), he is busy acting as different from his immediate predecessor, Steve Ballmer, as possible.

That’s evidenced in Microsoft’s relationship with Box. “We’re seeing a different Microsoft, and customers are seeking a different Microsoft,” Box CEO Aaron Levie said during Fortune’s Brainstorm Tech conference last July.

Nadella has already pulled off a few refreshing surprises. Consider the company’s $2.5 billion buyout of the wildly successful Minecraft developer last September or the January sneak peek at the company’s virtual reality interface, HoloLens.

Officially speaking, the upcoming Windows 10 launch, which will be sold under a new subscription mode, will be the first big test of Nadella’s leadership. But in my mind, attracting and retaining the talent to keep Microsoft relevant throughout its fifth decade could be his biggest challenge as CEO. There’s a reason so many people are interested in the new book from Google’s human resources chief.

Nadella’s misguided comments last fall about women in technology didn’t help. That’s why one of the most important strategic decisions early in his tenure came in November, when Nadella promoted Kathleen Hogan from a customer-facing role to run human resources.

Hogan’s resume includes leading the Microsoft services organization; she also was a developer at Oracle and a partner at consulting firm McKinsey. Her mandate: lead Microsoft’s cultural transformation and ensure “Microsoft remains the best, most inclusive place to work.”

Sign up for Data Sheet, our daily newsletter about the business of technology.