4 Months Later, And Microsoft Corporation is Already a New Company

There are stark differences between the software giant’s former CEO and its new leader, which is exactly what was needed.

Jun 5, 2014 at 1:00PM

Exactly a month after Microsoft (NASDAQ:MSFT)announced that longtime executive Satya Nadella had been selected as its new CEO, board member John Thompson said on March 4 that "the company culture must change." Truer words had never been spoken. Holding on to a dying PC industry was only a part of former CEO Steve Ballmer's problems. His adherence to old wars and enemies -- Apple (NASDAQ:AAPL) and Salesforce.com (NYSE:CRM) immediately come to mind -- had left Microsoft mired in a decade-long slump.

Fast-forward to today. Nadella is all of four months into his reign, and Microsoft is undeniably a new, better, company. Thompson's prophetic words in early March still ring true, it hasn't been that long after all, but he must be ecstatic at where Microsoft sits today. There are a several examples of the new Microsoft, but four in particular make it clear: Nadella is having an impact.

Proof of the new Microsoft
If you were undecided on Nadella's ability to effect a change in culture at Microsoft, let alone implement a new strategic direction, introducing Office for iPad was the focus of Nadella's first public event as the new CEO. The two enemies had been negotiating an Apple-friendly version of Microsoft's wildly popular suite for years, and, even though the company decided to sell this version while Steve Ballmer was a the helm, it was interpreted by many as a symbol of a new era under Nadella.

Not being able to monetize Office with iPad users was a missed opportunity for many years, to say the least. In the last quarter alone, Apple sold over 16 million iPads, to go along with its 43.7 million iPhones. But what made the introduction of Office for iPad so impactful was that Nadella used his first presentation as Microsoft CEO to share the good news. That, in and of itself, spoke volumes about where the new Microsoft is headed.

Cutting-edge product
The notion that Nadella would sign off on Microsoft's RT Surface tablet, which has been an unmitigated failure, just doesn't seem plausible. Nadella is about looking forward, not simply trying to make a slightly better mousetrap. And this forward-thinking mentality is evident with the unveiling of the Microsoft Surface Pro 3.

Feature-wise there's a lot to like about Pro 3, as I discussed in a recent article. But without a doubt, the best aspect of Surface Pro 3 is its market positioning. For the time being anyway, Pro 3 stands alone as a tablet hybrid with its laptop-like features, rather than more of the same. Can Surface Pro 3 open doors to an entirely new marketplace? That's the plan, and based on Pro 3's specs, it could do it.

Two more walls come down
The old Microsoft's animosity with Salesforce may not have been in the same league as Apple, but it was there nonetheless. That's why it surprised a few folks last week -- though, with Nadella at the helm, perhaps it shouldn't have -- when Microsoft announced a new strategic partnership with the CRM leader.

As part of the deal, Microsoft has agreed to incorporate Salesforce's CRM into its Windows phones and desktops. Salesforce's end of the bargain includes using Microsoft's SQL server and integrating Office 365 into its CRM. A win-win to be sure, but more telling is that the partnership is yet another example of Nadella mending fences, rather than building bigger ones.

Lastly, let's not forget the recently delivered smartphone running a Windows-friendly Android OS. It simply doesn't make good business sense to stay compartmentalized, as Ballmer kept Microsoft for years, in a world of overlapping devices and services. The new Microsoft understands that, and has proven it time and again these past four months.

Final Foolish thoughts
Still undecided if this is a new Microsoft? In a recent interview Nadella actually used the phrase "post-PC era"; sound familiar, Apple fans? It was coined by Apple guru Steve Jobs, and that alone means that phrase would have never been uttered by Ballmer. Yes, it's only been four months, but if they are an indication of what investors can look forward to, Microsoft's future looks very bright indeed.

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Editor's Note: A previous version of this article indicated that Mr. Nadella was responsible for the launch of Office for the iPad. However, this was already being developed by ex-Microsoft CEO Steve Ballmer. The article has been edited to reflect this, and the Fool regrets the error.

Tim Brugger has no position in any stocks mentioned. The Motley Fool recommends Apple and Salesforce.com. The Motley Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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