New Microsoft CEO faces challenges in mobile, investor relations

Tue Feb 4, 2014 3:28am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Bill Rigby

SEATTLE (Reuters) - As Microsoft Corp prepares to unveil insider Satya Nadella as its new chief executive, investors and analysts are weighing how effective the 22-year veteran will be in re-igniting the company's mobile ambitions and satisfying Wall Street's hunger for cash.

The world's biggest software firm faces a slow erosion of its PC-centric Windows and Office franchises and needs to somehow challenge Apple Inc and Google Inc in the new realm of mobile computing. At the same time, some investors are campaigning for retrenchment and a bigger cut of the company's massive cash pile.

Most agree that Nadella's background in creating Microsoft's Internet-based - or 'cloud' - computing services makes him a safe pair of hands to take the company forward, but there remains a question over his ability to make Microsoft a hit with consumers, or with impatient shareholders.

"He is the right person to drive safe, right down the middle of the fairway, and continue Microsoft's strengths," said Rajeev Chand, managing director and head of research at tech investment bank Rutberg & Co. "What we don't know is will Nadella help with the consumer revival, or with the mobile revival. Mobile is an open hole in his background."

Microsoft's problem is stark. More than 90 percent of PCs run Windows, but only 4 percent of smartphones do and an even smaller slice of tablets.

The company is still the undisputed king of workplace computing, but it is finding it hard to kindle the affections of consumers at home and on the move. Its Surface devices had some success over the holiday shopping season, but its phones are showing signs of losing momentum.

"I would advise him (Nadella) to take a fresh look at mobile, or bring in some talent who really understands the space," said David Smith, an analyst at tech research firm Gartner.

Last July, CEO Steve Ballmer outlined Microsoft's new devices and services business model that is intended to marry cloud services with nifty gadgets that can challenge Android phones and Apple's iPad. He backed that up with the $7.2 billion purchase of handset maker Nokia, set to close this quarter.   Continued...

A man is silhouetted against a video screen with the Microsoft logo in the background as he poses with a Nokia Lumia 820 smartphone in this photo illustration taken in the central Bosnian town of Zenica September 3, 2013. REUTERS/Dado Ruvic