Kara Swisher

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Cloudy With a Chance of Transformation: New Microsoft Server and Tools Head Satya Nadella Speaks!


After he was appointed the new president of Microsoft’s important Server and Tools Division from his top engineering post at its come-from-behind Bing search unit, Satya Nadella now finds himself a leader of a business that also needs to keep catching up.

In a wide-ranging interview with BoomTown yesterday, Nadella talked about both his four-year stint at Bing and how he looked forward to the challenges of his new job.

Nadella got the nod, he said, after CEO Steve Ballmer went through a process of what was Microsoft’s “position in this business and a certain set [of ideas] about who should come in next.”

Interestingly, almost 20 years earlier, after working at Sun Microsystems, Nadella had started in the same area of Microsoft he will now lead.

Quoting the famous T.S. Eliot lines–“We shall not cease from exploration, and the end of all our exploring will be to arrive where we started and know the place for the first time”–Nadella was an evangelist for Windows NT.

Eventually, his career brought him to the search arena, most recently to the most aggressive and expensive effort yet by Microsoft with Bing to try to eat into the massive and lucrative lead of Google.

“Those were fairly dark days for us,” noted Nadella, pointing out that any market share gains by Microsoft seemed impossible.

But, according to numerous surveys, it has been only uphill for Bing, especially after it started to really spend and also inked its search and online advertising deal with Yahoo, a partnership that Nadella was a key player in striking.

“We have, depending on which one you look at, grown five share points,” he said. “But behind that, I am most proud of launching a brand and a product that is delivering.”

Of the recent controversy in which Google accused Bing of lifting its results, Nadella borrows another quote, this time from Gandhi.

“‘First they ignore you, then they ridicule you, then they fight you, then you win,'” he said, noting Bing has always said it uses toolbar and other public user data. “The real debate is whether we are better.”

In any case, as Nadella sees it, the Bing experience has helped him prepare for his new job, noting he was in charge of building a 200,000-machine grid to serve the various online services at Microsoft.

“I have been CIO of a cloud platform where there are only two of that size,” he said. “So, I know what it is like to be a customer of those services.”

His hope for his next job, he said, is to make it the next-generation cloud platform, while also serving the needs of current customers with its current product.

‘We have a product and brand that are really foundational, but there is a threshold to it,” Nadella said. “We have to serve the needs of our existing customers, while also moving them to the cloud and building a next-generation offering.”

At Bing, he said, “every day is upside, since we came from so far behind, whereas in server and tools, we are the leader.”

Big competitors are different and the same too, when it comes to the cloud.

“Amazon has done a good job, but not in the same game as us,” said Nadella, ticking off Google, Oracle and VMware as rivals in different ways too. “It’s a nascent marketplace.”

Acquisitions, he said, will also be important. “We are always looking at what opportunities there are,” he said.

His overall view?

“I think that the challenge is how to operate in a space where we have a $15-plus-billion-dollar business and we know the paradigm is shifting and managing that shift where we are the disruptors and also the leaders at the same time.”

In other words, between a rock and a hard place, a place Nadella knows well from Bing.

“We can’t be stuck in current paradigm,” he said. “And we can’t shoot too far ahead of ourselves either.”

To get a good sense of his style as he moves from consumers to enterprise, here’s a video interview I did with Nadella back in mid-2009, just after the Microsoft search deal, and another I did this past summer at one of his regular search updates for the media.