Peter N. Glaskowsky, a contributing analyst at Envisioneering Group, is among those with concerns. "Microsoft certainly believes that a strong position in datacenters will help it gain a competitive advantage in its PC business," he told us. However, "putting a datacenter guy in charge of the whole company" might cause too much distraction, pulling him away from what he is good at in the first place.
Nathan Brookwood, principal at Insight 64, agreed with that assessment. He told us the biggest challenge any Microsoft CEO will face is its diversity. Its traditional cash cow has been PC clients, which played a huge role in enterprise software. But through Xbox, it is also in the gaming and entertainment market. "You need someone who could deal with such a diversified environment." Of course, Nadella has been at Microsoft for a long time, so "he could understand" the company's diversified business "better than an outsider."
Jim McGregor, founder and principal analyst at Tirias Research, said selecting Nadella would not bring significant change to Microsoft. Nadella has been a part of its management team, and the cloud services are something "already baked into" Microsoft's ongoing strategy.
By choosing Nadella, the company would be signaling to the world that the cloud will be "a major emphasis" for Microsoft's business, McGregor said. Windows will not be the cash cow it once was. "Growth value lies in services and content." Choosing Nadella would be "the wisest" move.
Though Microsoft has invested heavily in datacenters and infrastructure to support cloud-based services, it is neither the first company to get into this market nor the most visible player there. "They are dwarfed by others."
Brookwood agreed with that. "Clearly, Microsoft is still a distant second or third player in web services. It's up against folks like Amazon who have a dominant share." In the search market, "Bing is clearly a second- or third-tier player versus Google and Yahoo... they have their work cut out for them."
Brookwood pointed out that Microsoft joined the Open Compute Project this week. The company "took the specs for the server platform they're using in their latest project and gave them to the community and saying, 'Anyone who wants to use this for datacenters, be my guest.'" This shows "Microsoft's cloud side of thinking, which is different from Microsoft's client business."
McGregor said one move could change the landscape overnight. "If Microsoft offered Office 365 for free," it might open up a huge opportunity for Microsoft. "It might help keep Microsoft Office the effective standard as the productivity platform for both consumer side and enterprise side."
— Zewde Yeraswork, Associate Editor, EE Times
— Junko Yoshida, Chief International Correspondent, EE Times