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Microsoft is a company in transition.
Since August 2013, when Steve Ballmer announced his plans to step down as CEO, the company has done a lot of things that the old Microsoft never would have dreamed of.
It’s given products and source code away for free, moved fast to release a bunch of new products, and began to dismantle a toxic culture that grew up over the last decade.
Most important, Microsoft has accepted the reality that Windows no longer rules the world.
Wall Street seems to be pleased with the changes, which started in Ballmer’s last few months and have accelerated dramatically under new CEO Satya Nadella — the stock is up 53% since Ballmer said he’d step down.
Released a really good version of Office for iPad … before Windows tablets got one
Microsoft was rumored to be sitting on a version of Office for iPad for years. One of the first things that Satya Nadella did after taking over from Steve Ballmer was to finally release it. That happened in March.
It wasn’t just a simple viewer, or a port of the then-crummy Office for mobile phones, but a completely new twist on the core Office apps — Word, Excel, PowerPoint, and OneNote — that took full advantage of the iPad’s size and touch screen. The reviews were mostly surprised and positive.
Meanwhile, there’s still no touch-first version of Office for Microsoft’s own tablets.
Then gave Office for iPad away for free*
*Well, kind of free. Originally, iPad or Android tablet users could edit Office files only if they had an Office 365 subscription. Otherwise, they could only view files. But earlier this month, Microsoft announced that consumers no longer needed an Office 365 subscription to use Office on their iPads and Android tablets. But for certain business uses, a subscription is still required.
Gave some versions of Windows away for free, too
Last spring, announced that it would give Windows away to companies making devices with screens smaller than 9 inches. In other words, Windows Phone and all versions of Windows that run on small tablets and tiny devices will now be free.
Giving any version of Windows away would have been heresy in the old Microsoft, but with Android available at no cost, and dominating the market for portable devices, Microsoft had little choice here.
Created a version of Office for iPhone that’s better than the Windows Phone version
Earlier this month, Microsoft also released a pretty major update to its Office apps for iPhone that brings them a lot closer to the iPad versions. The Windows Phone version is a lot more basic. Microsoft is planning to update it when Windows 10 ships next year, but the old Microsoft never would have favored a competitor’s platform like this.
It even featured an iPad in a promotional video!
Remember the time Steve Ballmer pretended to stamp on an employee’s iPhone? Those days are long gone — a promotional video for Sway, a new presentation product, featured a user working with an iPad.
Crowned productivity as king
This year, Satya Nadella has said repeatedly that Microsoft’s new focus is productivity. This is a big deal: under Gates and Ballmer, Windows was always king. But with non-Microsoft platforms like iOS and Android now running on the majority of the world’s computing devices, Microsoft has realized it can’t rely on its Windows business to drive the company.
Importantly, Nadella’s vision of productivity extends beyond using Office apps to do work. The company also includes personal productivity products like Outlook.com (formerly Hotmail) in the mix. The idea is that Microsoft will provide services that let you get the most out of all parts of your life — work and home.
Made the cloud the center of everything
Microsoft has been moving parts of its business over to the cloud for almost a decade now, starting with cloud-based versions of products like Exchange (email) and Azure (infrastructure). But it always felt a little like lip service.
Satya Nadella made it very clear how important the cloud is to Microsoft when he defined the company’s three main businesses as Windows, Office 365, and Azure. Those last two products are based entirely in the cloud.
This is a big deal for Microsoft because its traditional business, selling software that people and companies buy once and install, can have great profit margins — once Microsoft recoups the initial costs of development and a big marketing push, every additional sale is nearly pure profit. That’s not the case with cloud services, which have significant ongoing costs. But many customers want their software this way now, and Microsoft has fully embraced the change.
Started giving away some of its secrets
Last week, Microsoft said it would take a key piece of technology called .NET and release big parts of it under an open source license. That means anybody could look at the code and modify it for their own ends. Microsoft also said that .NET would now run on Linux and Mac OS.
How important is .NET? Back in the early 2000s, Steve Ballmer called .NET a “bet the company” initiative. It is basically a set of technologies that developers use to create apps for Windows (and now, other platforms). It’s just the latest in a series of developer technologies that Microsoft has open-sourced since April, including the VisualBasic and C# programming languages.
Quite a change from the Microsoft of the early 2000s, which was so terrified of Linux’s open source model that Steve Ballmer once called it “cancer.”
Got behind the ‘Internet of things’
Microsoft knows it missed a huge opportunity in smartphones and tablets. It has resolved not to miss the next big thing: the “Internet of things,” which is the idea that millions of small devices will communicate with each other and transmit information to all kinds of places — particularly to the data warehouses of companies, who will use this information to make business decisions and build more useful products.
Microsoft this year announced a program called Windows on Devices that will let programmers write software for the Internet of things. Oh, and it’s free.
Started curing a cut-throat culture
Last November, Microsoft abandoned its “stack ranking” system for evaluating employees. Inherited from GE, stack ranking forced each manager to put all direct reports into a bucket, from lowest to highest performing. Each bucket had a fixed percentage — so even if a manager thought all her reports were fantastic, she had to put a certain number of people in the lowest bucket.
A lot of Microsoft employees blamed this system for creating a culture where playing office politics was more important than developing great products. (Although the contrary point of view, expressed here by a former Microsoft employee, is lso worth considering.) Nobody mourned when it was killed.
Released a bunch of new products fast
The old Microsoft was big and slow. It released big updates to its core products every two or three years.
The new Microsoft is much more willing to take risks and release small but important products — even if those products compete with some of its old products, like Sway does with PowerPoint. It’s also released Cortana, an answer to Apple’s Siri and Google Now (which happens to be excellent at making sports predictions), a tool for business analysts called Power Q&A, and a search engine for your documents and files called Delve.
It’s also promised to move more quickly to update big products lke Windows, although the two-year gap between Windows 8 and Windows 8.1 suggests that’s not going to be a slower process.
Now, see where Satya Nadella landed on this year’s enterprise power list….
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