Former Microsoft CEO Steve Ballmer stepped down two years ago this week, but as the company’s largest individual shareholder, he still keeps a close watch on what it’s doing.
By and large, Ballmer told Business Insider, he’s happy with Microsoft’s progress under Satya Nadella.
He thinks that key cloud initiatives Office 365 and Azure are progressing at a great pace, and credits Nadella for setting out a very clear vision and communicating it to stakeholders:
He sort of pivoted in a way that I don’t think would have been possible for me to do even if I’d seen it that way, to really talk about this mobile-first, cloud-first world. He’s right. You might say it’s obvious, but it was an important perception point. I think he’s done a brilliant job on that, which is outstanding.
But Ballmer also mentioned two areas where he thinks Microsoft could do better.
- Giving investors a clearer financial picture of its cloud business, including “revenue and margins.”
- Coming up with a clear mobile strategy after scaling back plans to build its own phones. “Because if you’re going to be mobile-first, cloud-first you really do need to have a sense of what you’re doing in mobile devices.”
On the first point, Microsoft may be reluctant to break out detailed finances for its cloud business because it’s still spending a lot of money to get it cranked up. A report from Deutsche Bank’s Karl Keirstead on Friday estimated that Azure in particular was “hugely unprofitable,” although he also said that he’s satisfied with the company’s plans there — enough to to reiterate his price target of $65 (the stock currently trades around $50).
As far as Microsoft’s mobile strategy goes, the company is stuck between a rock and a hard place. It tried building a modern smartphone operating system, Windows Phone, but it didn’t sell very well. It tried buying Nokia and selling Windows Phones itself, but they didn’t sell very well either. The mobile market is dominated by platforms that Microsoft does not make.
So far, Nadella’s mobile strategy seems to be embracing those platforms — particularly Apple’s iOS, but also Google Android — by releasing Microsoft apps for those platforms and hoping that those apps pull people into Microsoft services.
But Microsoft may have other tricks up its sleeve.
If there are, Ballmer wouldn’t necessarily know about them because, as he told us, he’s now an “outsider.”
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