Microsoft's Satya Nadella Does Not Need Our Advice
The tech company's new CEO is being bombarded with silly suggestions from the media.
Why is it that every time a company gets a new CEO, the media falls all over itself to offer advice?
Satya Nadella has been running Microsoft (NASDAQ:MSFT) for one day and already thousands of folks have stepped up to offer lists of recommendations of things he needs to do right now before Microsoft, I don't know, falls into a volcano or something.
Now I'm okay with identifying Microsoft's weaknesses and going through Mr. Nadella's background to see how he could address them, but one thing we don't need is conventional wisdom offered by Captain Obvious and his band of merry bloggers.
So I'm going to go through some of the more common suggestions we're hearing and explain why they're completely silly.
1. Be More Like Google or Apple or In-N-Out Burger...
Microsoft has over 100,000 employees and will do about $84 billion in revenue this year.
How exactly does it take all that and magically make itself more like other companies with completely different business models at completely different stages of their life cycles?
Large corporate cultures don't change easily. In fact, I'm not sure they ever do, with the rare exceptions of General Electric (NYSE:GE) in the early '80s and IBM (NYSE:IBM) in the '90s.
But wait -- from a products and services standpoint, Microsoft already did try to be more like Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL).
For example, it launched Bing when it saw Google printing money in search. And it went full blast into tablets after the iPad disrupted the PC cycle.
Microsoft has already tried to be like Google and Apple. It didn't work. It has tiny market share in smartphones and tablets, and it has lost billions of dollars in Internet services.
2. Microsoft Must "Fix" Windows
Windows 8 was flawed, but the real reason the PC market is struggling is because the ground has shifted.
What do people do with computers today?
They watch movies on Netflix (NASDAQ:NFLX), communicate on Facebook (NASDAQ:FB), stream music on Spotify, use email, and so forth.
For tasks like these, any device with an Internet connection is good enough.
So unless you have some very specific software need -- like the full desktop versions of Microsoft Office or Adobe (NASDAQ:ADBE) Photoshop -- tablets are good enough to get the job done and offer some advantages over traditional laptops: They're less expensvie, more portable, have better battery life, and are tougher. Plus, tablets offer a novelty factor because they've only been around for a few years.
Microsoft should strive to make Windows better as a matter of practice, but at the end of the day, that's not going to offset the structural challenges embedded in the modern PC market.
3. Do More Cloud Stuff
I think Mr. Nadella gets the importance of cloud-based services.
I mean, I looked at his bio and saw this:
And in Microsoft's opening remarks on its recent earnings call, the word "cloud" was mentioned 16 times.
Trust me, he is totally into the cloud.
4. Innovate More
5. Spin Off the Xbox Business
The only good reason to spin off the Xbox business would be an expectation that the video game console business was set to die.
Believe me, there is no chance that spinning off the Xbox would be akin to the success McDonald's (NYSE:MCD) saw in unleashing Chipotle (NYSE:CMG) onto the world. The gaming console business is mature, low margin, and highly cyclical. That's not a good recipe for a mega-valuation.
And in any case, Xbox is the only Microsoft brand that a large number of consumers truly love, and it represents the company's best chance of owning living-room techno real estate.
It's not going anywhere.
Enter the Hypocrite
I can't believe I'm doing this, but I'm going to go out on a limb and offer my own advice to Mr. Nadella:
Be more like Russell Crowe.
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