Data Sheet—How Microsoft CEO Satya Nadella Fueled a Humble Comeback

January 15, 2019, 1:48 PM UTC
Fortune Brainstorm TECH 2014
Fortune Brainstorm TECH July 14th, 2014 Aspen, CO 5:30 PM BIG DATA, BIGGER CHALLENGES Satya Nadella, CEO, Microsoft
Interviewer: Walter Isaacson, CEO, The Aspen Institute Photograph by Stuart Isett/Fortune Brainstorm TECH
Photograph by Stuart Isett — Fortune Brainstorm TECH

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I spent Monday at Microsoft, a relatively humble, relatively quirky, and relatively confident company.

Satya Nadella, just shy of five years into his tenure as Microsoft’s CEO, is well aware of the world’s view of his company’s rejuvenation—and he refuses to gloat out loud. “When you have major franchises that run out steam,” he says, referring to Microsoft’s once-dominant Windows software, “to reinvent yourself is hard work. I’m always looking for inspiration” from companies that have done it.

Nadella spoke to a small group of journalists at the beginning and end of a day packed with evidence of Microsoft’s uniqueness. Peers like Apple and Amazon share relatively little with the world until the day they’re ready to sell it. Microsoft, by contrast, offers glimpses of seemingly every idea that might be its next big thing, from “magic window” two-way display technology to quantum computing to its HoloLens “mixed-reality” platform.

To its great good fortune, Microsoft several years ago hit on a replacement to its Windows franchise, the multi-faceted Azure cloud-services business that is No. 2 to Amazon’s market-leading product. (On Tuesday, Microsoft announced its latest cloud services win, signing Walgreens Boots to a multi-year deal.) Azure, in turn, is the center of Microsoft’s “intelligent edge” strategy: Every potential hit device and service leverages and feeds Azure, the company’s growth engine.

Nadella has pulled off the seemingly impossible in making Microsoft the feel-good company of the tech industry. Gone are the days of Steve Ballmer, when devices by competitors were four-letter words in Redmond, Wash. Microsoft now plays nice whenever possible. Nadella identifies only three primary competitors: Amazon, Google, and Alibaba. “All are aggregators with platform businesses,” he says. “We are a platform business with a small aggregation business.” (Asked why he includes Alibaba, mainly a cloud powerhouse in its home country, Nadella replied: “Anyone who is doing well in China can get outside it.”)

The company’s resurgence and the evaporation of animosities once endured in global capitals allow it to be a policy leader on multiple fronts. President Brad Smith spoke Monday at length about what the tech industry can do to alleviate societal problems, some of which technology and its companies have exacerbated. He says Microsoft sees three ills it will address through policy means: access to technology, particularly broadband in rural America; the gap in technical skills among the poorly educated; and challenges posed by explosive economic growth, notably the lack of affordable housing in the major urban areas where tech does business. On Thursday, Microsoft plans to announce an initiative it is leading in the Puget Sound area to add to the housing supply.

Microsoft faces plenty of challenges. The track record of its smaller bets is poor. It sees a future of “seamless” computing but doesn’t have a position in the critical smartphone market. A global economic slowdown would hurt it along with everyone else.

And yet, in a physical and metaphorical sign of its rebirth, Microsoft is tearing up huge swaths of its suburban Seattle campus to build new buildings, underground garages (cars will disappear from the main campus), and eco-friendly links to public transit.

But it’s tough to remember anymore when Microsoft was the most hated company in tech or the flattest of doormats either. Other companies could do a lot worse than humble, quirky, and confident.


Battle of the titans. The Federal Trade Commission sued Qualcomm for anti-competitive behavior but the trial that's been going on for the past week in San Jose has been more Qualcomm v. Apple. On Monday, Apple COO Jeff Williams said the chipmaker made his company pay a licensing fee of $7.50 per iPhone in addition to paying for wireless modems. Qualcomm says the fees cover all of its innovations, not just the technology in its modems. Meanwhile, blogger and Apple columnist John Gruber reports that CEO Tim Cook told his staff that Apple replaced 11 million batteries under its $29 iPhone battery replacement program versus 1 to 2 million per year previously.

Buzz, buzz, buzz. There may be more drones flying overhead at night, if rules proposed by the Trump Administration on Monday are approved. “This will help communities reap the considerable economic benefits of this growing industry, and help our country remain a global technology leader,” Transportation Secretary  Elaine Chao said in a speech introducing the proposal.

Couch potatoes. With Disney, Apple and who knows else introducing Internet video services, it was time for Comcast's NBCUniversal to throw its hat in the ring. The network said it would offer a free, ad-supported streaming service to Comcast cable customers, and possibly others if the company can strike some deals. Asked if the company can be a Hulu owner and a Hulu competitor at the same time, NBCU CEO Steve Burke had a simple answer: Sure.


Former Intel chief strategy officer Aicha Evans is taking over as CEO of autonomous car startup Zoox, after co-founder Tim Kentley-Klay was ousted last summer. Meanwhile, Bloomberg reports that Intel's board hopes to name a new CEO by the company's January 24 earnings announcement...Amazon hired Disney senior vice president Kyle Laughlin to head its Alexa Gadgets division, TechCrunch reports. Laughlin had been general manager of Games, Apps and Connected Experience in Disney’s Consumer Products and Interactive Media unit...Former Pinterest and Facebook exec Cat Lee joined Seattle venture capital firm Maveron as a partner. Lee will be based in San Francisco and focus on women-led companies.


The just-completed CES show in Las Vegas was an unending smorgasbord board of gadgets and gizmos, from the most mundane new laptops and phones to the weirdest gear such as anti-snoring masks and a bread-making robot. But fear not: former Microsoft exec Steven Sinofsky, who has attended CES many times, is back with his detailed reported (illustrated with many great photos, too). There's much worth reading, but here is Sinofky's take on Google's participation:

Maybe I am just old and a stingy marketer (I’ve been called worse). I would not be surprised to learn that Google’s investment in CES is the largest of any company or a close second to Samsung (except they have to bring everyone from Korea, not Mountain View). Here’s my baseline comparison. When we launched Windows 7 we staffed up to make sure every booth with PCs that supported or were running Windows 7 had some branding (like a topper for the PC). That was a lot of booths! Google did the same for Assistant support (as many booths?) but also had a Google uniformed staffer at each booth the whole show — that is scale!


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Did you know that Kylie Jenner’s picture of her baby Stormi Webster from last year was Instagram's most liked photo ever, with 18.4 million hearts? Was is the operative word. Kylie's little girl has been displaced by...a picture of an egg (which has 36.6 million likes and counting). In an email interview with BuzzFeed, the anonymous egg poster had no real reason for trying to dethrone the reality star's post. "I saw this as a challenge to beat it," the poster said. "It was nothing personal."

This edition of Data Sheet was curated by Aaron Pressman. Find past issues, and sign up for other Fortune newsletters.

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