Satya Nadella, the leader of Microsoft’s massively important Server and Tools business, sent a letter to the troops today that spelled out how CEO Steve Ballmer’s decision to shake up the unit’s leadership more than two years ago has paid off.
Remember, Nadella took over the Server & Tools in February, 2011, replacing longtime Microsoft vet Bob Muglia, who was Bill Gates’ man. People were shocked at the time. Nadella had been running Bing, which had never fared well against Google.
Meanwhile, Muglia had more than 22 years at Microsoft and built S&T into its most reliable business. It was the only one of Microsoft’s five business segments to show consistent growth, quarter after quarter, for a decade.
S&T is the home of Windows Server, the database SQL Server and developer tools. Under Nadella, it also gained Microsoft’s Amazon-killer cloud, Windows Azure. S&T is the third-biggest unit in terms of revenue and profit (after the unit that sells Office and one that sells Windows). Among these top three units, it is the fastest growing.
Word was that Muglia (who now works at Juniper Networks) was ousted because he didn’t buy into Ballmer’s vision to re-make all of Microsoft’s products for cloud computing.
Today, Nadella wrote a note of vindication.
“Two years ago we bet our future on the cloud and quietly refocused our 19 billion-dollar software business by completely transforming our products, culture and practices to be cloud-first. … As it turns out we were right to take this risk.”
He then said that Microsoft’s cloud, Azure, was achieving “hyper-growth.”
- Azure is experiencing “over 1,000 new customers signing up” a day.
- Half the Fortune 500 is using Azure.
- Over 30,000 organisations have started using the “Infrastructure-as-a-Service” portion of the Azure, since it launched in April. This is the part that lets companies rent hardware and which competes most directly with Amazon.
Here’s the full letter, published on Microsoft’s blog.
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