It’s all about perception for the new boss at Microsoft

One of the first observations made by Microsoft's new 46-year-old CEO Satya Nadella was that "our industry does not respect tradition – it only respects innovation".

Quite so, but Microsoft does have a well-deserved tradition of industry preeminence and influence. However, the industry is also all about perception. And today, whatever about its past triumphs, the widespread perception is that Microsoft has lost its way.

Microsoft does have impressive financials: $24.5 billion revenues in the most recent reported quarter – October to December 2013 – with a corresponding profit of $6.6 billion.

Yet Apple’s iPhone alone is outselling all of Microsoft’s offerings combined. Microsoft has a grand tradition as a “smart follower”, but the perception is that it was slow to follow Apple into the smartphone market, even after Google’s Android. Microsoft launched Windows 8 last October, but the perception is that a common operating system across servers, PCs, laptops, and tablets is no longer the way of the world. “Windows Everywhere” may have worked a decade ago, but now it risks alienating Microsoft’s core market on laptops and PCs without attracting any significant part of the new tablet market.

The threat to Microsoft is its uncertain market position. Should it continue to play into the consumer market, where it is perceived to have badly lost momentum against companies such as Apple, Samsung and Google? Or should it move further up into the corporate “enterprise” market and compete against well-entrenched companies such as Oracle, IBM and SAP? Or continue with both markets?

It is all about perception. How does Nadella perceive Microsoft, and its opportunities in the market? Can he transform both how the public and how corporations perceive Microsoft?

Cloud platform
Cloud computing is widely considering the new computing genre and Nadella has personally led Microsoft's foray, with Azure, its cloud platform. Wisely he turned a blind eye to his prior boss's "Windows Everywhere" marketing campaign of last summer, by instead ensuring that Azure works well with all technologies. Azure has been one of Microsoft's more recent successes, playing well in the face of cloud offerings from its competitors.

But the cloud computing industry has a very major challenge. The rest of the world now largely perceives that US cloud providers may no longer be benign partners. At least one major cloud provider is trying to convince the public that personal privacy is dead, and they should just “get over it”. As a consequence of the Snowden revelations, there is a perception that the US government routinely peruses consumer and commercial data uploaded to US cloud providers. Some perceive that the US government may even not only collect foreign, commercially sensitive, information but on occasion also quietly disclose this for the direct benefit of US competitors.

Could a cloud vendor emerge which does not routinely read the data of its users, and equally which ensures that all data, under every possible circumstance, are always highly secure? Gross loss of privacy does in fact matter to many users. Confidentiality certainly does matter to most corporations. A global, trustworthy, technology-neutral cloud computing platform has yet to be offered: given his past stewardship of Azure, could Nadella so innovate and thus transform Microsoft?

It is all about perception: what is Nadella’s vision for Microsoft? Way back in 1977, when only corporations and governments had computers, Bill Gates had an audacious vision of “a computer on every desk and in every home”. Today, many desks and homes in fact have more than just a single computer, and there are yet further computing devices now to be found in the pocket and in the handbag. When Gates promoted his vision, he realised the potential of personal computing. Does Nadella perceive a further leap forward for personal computing?

The newest trend in personal computing is towards “wearable computers”, including glasses. These use augmented reality to overlay the field of vision with computer-generated graphics. However, the current augmented vision devices in general are clumsy, fragile, expensive, and have both short battery lives and relatively poor quality graphics.

Augmented retailing
But the potential is enormous. One can envisage augmented assistance – in which guidance such as directions are overlaid directly in your field of view; augmented advertising – in which adverts are generated and overlaid on real world objects; augmented retailing – in which you can see how a product might look say in your home; or even augmented fashion – in which you can change what you look like to other people who have similar augmented vision devices. Microsoft already has established a leadership position in home entertainment via its Xbox One offering: could Nadella lead Microsoft to innovate into a pragmatic augmented reality product? Can Nadella finesse how computers and people combine to together see the real world?

A vision for the new Microsoft? It is all about perception.