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In his short time as Microsoft (NASDAQ: MSFT ) CEO, Satya Nadella has shown a willingness to reverse mistakes made under his predecessor Steve Ballmer and an openness to trying new things. He has also shown that he understands that the days of Microsoft being the only game in town are over and that a willingness to make changes based on what customers want is essential.
In office only two months, Nadella has made a number of bold moves including the recent launch of Office for Apple's (NASDAQ: AAPL ) iPad. But his boldest decision yet came April 2, when the company announced it would return the traditional Start Menu to its Windows operating system.
The Start Menu change -- which will be part of a free Windows 8 update at a to-be-determined date -- corrects the single biggest thing customers dislike about the operating system.
How Microsoft got here
Windows 8 essentially has two interface options -- the visual "Metro" screen optimized for touch, and a variant on the traditional Windows desktop. The problem was that no matter how well it works, the Metro interface with its tiles and tablet-style design was a huge change that some customers would not like.
The alternate traditional desktop screen looked like the previous interface but it lacked the Start Menu, which made it not very useful. Offering a version of the traditional desktop that lacked the menu that people used to access their programs was actually worse than only having the new interface would have been. The alternate screen accomplished little and mostly served as a reminder to people of what they were missing.
Microsoft sort of remedied the problem in its Windows 8.1 update returning the start button in a fashion. Clicking on the returned button leads to the Start screen (the visual interface), not the traditional pop-up Start menu.
Putting the start button back but not having it do what it used to do seemed like an arrogant move from a company that did not realize its customers could just leave for Apple devices or ones running Google's (NASDAQ: GOOG ) Android software.
How Microsoft is fixing it
The Start Menu will return with its old functionality along with "Live Tiles," (those squares that update automatically in Windows 8), and the ability to find and install Microsoft's universal Windows apps (including its news, finance, sports, and weather apps). It won't be exactly the same but it should be familiar enough to satisfy longtime Windows users
"Your prayers haven't quite been answered, PC fans, but Microsoft is definitely listening to your concerns—and it's bending over backward to create a Windows that mashes its touch-tastic, cloud-connected vision of the future together with the keyboard and mouse that the PC faithful know and love," Brad Chacos wrote on PC World.
By relenting Nadella has shown that he is willing to admit mistakes and give customers a say in the products they use.
Windows is still huge business
Despite the frosty reception Windows 8 has gotten from some customers and potential customers, the Windows division has done over $18 billion in revenue for each of the past three years, according to Microsoft's 2013 annual report.
Still the company knows it faces challenges to Windows, which has lost market share to Android.
"The Windows operating system faces competition from various commercial software products and from alternative platforms and devices, mainly from Apple and Google," the company wrote in its 2013 annual report.
Returning the Start Menu to its previous state may not reverse the gains of Android, but it should solidify the Microsoft base. Some business moves are about gaining new customers, but this one is about keeping existing users happy and in the Microsoft fold.
What this means for Microsoft
"Our commitment is to make Windows more personal and accessible to individuals," said Terry Myerson, executive vice president, OS Group at Microsoft, at the company's 2014 development conference.
What he meant was that Microsoft, under its new CEO, would not be charging ahead without considering the needs of its customers. That's a huge concession for a company that under Ballmer and his predecessor, Microsoft founder Bill Gates, could do whatever it wanted.
Windows was launched in 1985 and it had no real competition for over 20 years. Yes, Apple existed but until the iPhone in 2007 and the iPad in 2010, the company was a niche player. If Ballmer had acknowledged that first Apple then in a different (but more damaging) fashion Google changed the operating system business, he might still have a job.
Doing something as relatively simple as putting back a popular feature that makes customers more comfortable with Windows shows a refreshing lack of the arrogance that marked Microsoft under its previous leaders. It also shows that Nadella's Microsoft is a new kind of company -- one that understands that user feedback matters in a way it did not previously.
What Nadella is doing is good for Microsoft's business in the short term, but the fact that he is willing to do it shows that the new CEO will bring real change in the long term.
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