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Microsoft's 'CEO of no' on Xbox: NO SALE

Nadella: Steve Ballmer without the Steve Ballmer

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Microsoft’s new chief executive has told us what he’s not going to do - sell Bing or Xbox - but not what is he going to do. So far, all we’re hearing is a lot of "no".

Speaking at a technology event in California, Nadella has been reported and quoted on Twitter to have ruled out the sale of both Xbox and Bing.

On Xbox, Nadella said:

The Xbox is arguably a successful product for Microsoft: while it is more or less a loss-leader, the Xbox One has sold in its millions. But it may be seen as too consumer, too low margin, by those who want to hive it off.

As for Bing, Microsoft’s CEO seems to regard the loss-making venture as something of a success; Bing has 30 per cent of the internet search market – gains mostly at the expense of the disappearing Yahoo! rather than from a relatively unchallenged Google.

Nadella said the reason for keeping Bing was that its services are built into the software and services on Windows 8.1 and Windows Phone.

There’s been speculation over the future of both operations, with pressure apparently coming from shareholders to shed one or both. That focus would seem to be on devices and enterprise.

Nadella has now been in the hot seat for 110 days. Observers get very hung up on the concept of the first hundred days – the idea stems from US Whitehouse watchers who measure the legislative record of incoming presidents by this yardstick.

The idea is that it’s during the first 100 days when a new Commander in Chief has their most momentum and least resistance and when their wave of popularity hasn’t begun to ebb.

With this in mind, some have been getting very excited indeed about the idea of his Nadella's initial 100. Investors hail his presence as a fresh start and reporters are attaching great significance to his every action.

During this period, we’ve seen the release of Microsoft Office for Apple’s iPad, the closure of the Nokia acquisition and the launch of Surface Pro 3.

But none of those could be claimed by or attributed to Nadella – they were already well underway under his predecessor Steve Ballmer.

The president of Microsoft North America Judson Althoff got it right last week, saying at a JP Morgan event that people were wrong to attribute too much to Nadella too soon.

“It’s a big company… and to state that we’ve seen dramatic change in the first 100 days of a new CEO would be frankly a little lofty,” Altoff said.

As for everything else – for example, Office 365 and Windows Azure, which are supposedly Microsoft’s future, these too were already running before Nadella arrived.

Backing Xbox isn't a brave decision, it's an obvious one

It’s little surprise that Nadella is making few changes – he wasn’t hired to make radical changes but execute on current strategy.

His executive decisions not to sell Bing or Xbox are more attributable to Ballmer and the board than you’d realise. Keeping Bing and Xbox were the policies of Ballmer with the backing of a board that has barely changed since the former CEO was running the show.

The only new additions have been: Steve Ballmer and VC G Mason Morfit from Value Act Capital, who joined in March as part of the pound of flesh investors extracted along with getting Ballmer out as CEO.

An actual decision that does seems to have come from Nadella was taken with newbie executive vice president of Microsoft’s devices group Stephen Elop.

Their big idea: not to release a Surface mini, as everybody was expecting, based on the fact it wasn’t exciting enough.

This was, we’re told, to have been based on ARM.

The sales track record of ARM tablets is poor, so perhaps Nadella and Elop were right not to lump Microsoft with another pile of unsold inventory.

The irony is that it has been the ARM surfaces that have proved most exciting, for reviewers and geeks at least, because they are thinner and lighter than the Pros. They are a real departure for Microsoft, given its software is written for Intel.

Speaking Tuesday in California, Nadella reckoned that it’s time to build the “next big thing".

Nadella tried to excite the web by demonstrating Skype Translate, which lets you talk in one language on Skype as the service translates into other tongues.

Sadly for Nadella, Google used the same event to say it would start manufacturing its own driverless and steering-wheel-less cars, with silly faces. Cars, I tell you! Without steering wheels! The web went wild, even if the Mountain-View motor does look like a blank-looking VW Beetle.

The measure of Nadella won’t be in releasing yet-more new technology – as The Reg has said before - but in running Microsoft. That means finally making Bing profitable and radically expanding Windows Phone’s piddly four per cent market share.

Also, he will need to successfully swallow the mega Nokia acquisition that takes Microsoft to 130,000 employees, while also cutting Microsoft’s burdensome bureaucracy.

And he needs to do all this while maintaining a rather successful Windows business – given the PC sector is, according to early analyst reports, starting to show some measured improvements. All that will take longer than 100 days.

Is this the "post, post PC" era Nadella talked about Tuesday? Is it the return of the PC as tablet sales slow thanks to market saturation and everybody who was going to buy one has bought it? ®

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