Longtime Microsoft (NASDAQ:MSFT) Chief Steve Ballmer, in August 2013, issued the now-infamous statement that he would retire "within the year." News of Ballmer's departure couldn't come soon enough for disgruntled shareholders, as evidenced by Microsoft's share price spike of about 7% immediately following the announcement.
But that was then, and this is now. With Ballmer gone and new CEO Satya Nadella hitting his stride, Microsoft investors are enjoying a banner year. Much of Microsoft's 31% jump in share price so far in 2014 is due to Nadella's strict adherence to his mobile-first, cloud-first strategy, a change to new, high-growth markets that Ballmer was either unwilling, or unable to implement. Microsoft's cloud results continue to shine with an annual run rate of an estimated $4.5 billion in revenue, as well as triple-digit growth per quarter.
Dawn of a new age
It has been surprising to some, but Nadella's mobile strategy -- even after Microsoft's $7 billion-plus acquisition of Nokia's mobile unit -- isn't all about devices; that was Ballmer's vision when he inked the deal. Nadella's plans are about putting Microsoft solutions into the hands of as many mobile users as possible, in most any way possible, and he's taking steps to do just that.
Though the rumor mill had been in full swing for a while, some people were still surprised when Nadella announced the Office 365 for Apple's (NASDAQ:AAPL) iOS platform. Granted, Microsoft had been prepping Office for use on iOS before Nadella took the helm, but it's telling that the company waited for Ballmer to exit the building before burying the hatchet with its longtime nemesis, for a couple of reasons.
One, Ballmer's list of negative quotes regarding Apple are the stuff of legend, and making Office available for iDevices would have come across as an admission of failure. But Office 365 for iOS is perfectly aligned with Nadella's mobile vision, and that has been reinforced by recent Microsoft announcements.
In addition to offering its free Office 365 apps to iPhone and iPad users, Microsoft recently took the wraps off a new version of Office for the world's most popular operating system, Android. Office for Android would have really had Ballmer steaming, because if there was a competitor that caused him more angst than Apple, it was Larry Page and Google (NASDAQ:GOOG) (NASDAQ:GOOGL).
Turns out, Nadella wasn't done working with Android in its efforts to get Microsoft solutions into the hands of the masses. In a sign of the times, Microsoft last week introduced an early test version of its Visual Studio 2015 that included an Android emulator. The new emulator gives developers the ability to build, run, and test their Android-compatible apps using a Microsoft solution. Emulators are pretty standard for dev geeks, and, according to a Microsoft developer division, "great emulators are key to productive development cycles." So Microsoft built one, for Android.
In keeping with its Android emulator announcement, Microsoft also said it is making its primary software framework .NET, both open source and cross-platform with industry standards including Linux. If any doubts remained that Nadella is serious about opening the mobile doors to Microsoft solutions, regardless of OS and developer preferences, those have been laid to rest.
The icing on the cake
Microsoft has also traveled down the partnership path to expand use of its solutions. In just the last month or so, Microsoft teamed up with salesforce.com, and photo, video, and file-sharing provider Dropbox -- for both its iOS and Android users -- to integrate Office 365 and other Microsoft services into its new partners offerings.
Mobile devices aren't simply a loss-leader anymore for Microsoft -- Surface Pro 3 showed a profit last quarter after more than doubling revenue from a year ago -- and there are certainly opportunities for growing smartphone share in emerging markets with the company's low-cost device lineup. But Nadella's "mobile-first" plans don't revolve around merely selling units. Notably for investors, the CEO isn't just ranting and raving about a new mobile direction; that was more Ballmer's style. Microsoft's new leader is aggressively doing something about it.