Satya Nadella, a man who is not afraid of change, has been uprooting the legacy culture inside of Microsoft since the first day he took over the corner office from Steve Ballmer. One of his first major shifts was away from Ballmer"s device and services strategy and towards the "Cloud First, Mobile First" motto. Aside from the fact that this makes us conclude that Nadella"s brain operates like a quantum computer where two actions can both, simultaneously, happen first, the strategy does make quite a bit of sense when you look at the market.
There are many ways Microsoft could move forward, with either a mobile strategy, a gaming strategy, an enterprise one, healthcare and nearly anything you can think of - but why mobile and cloud? Well, it helps if you take a close look at the markets and the direction in which Microsoft is heading.
The first thing we need to look at is the past and the question of why Nadella isn"t putting a large focus on the traditional PC with his new agenda. Well, let us look at that market.
Chart from Net Applications
According to Net Applications, Windows already owns the majority of the desktop universe. According to this chart, Microsoft owns around 91% of the desktop market as of August 2014. Sure, there is room for growth, but as you will see, there is not as much room for revenue growth in this segment. Does this mean Microsoft is moving away from focusing on the desktop? Not quite - for the company, this segment is mature, but still a stable source of revenue.
So what about mobile? The story here is quite clear, Microsoft is in the minority with roughly 3% of the market, depending on who you ask. And as you can see, Apple and Google dominate this market.
Chart from Net Applications
So why mobile first? Easy - it"s the best place for Microsoft to grow its influence. Right now, they are almost a non-story in terms of market share, although they are doing a good job at creating brand awareness. More so, they are starting to land bigger name apps too, so the company will no doubt hope to slowly claw away sales from Apple and Google in the near future.
When it comes to "Cloud First", it seems logical; make sure all of Microsoft"s services are tied into the cloud for seamless transition across devices. But the story is deeper than that as Microsoft wants to go after Amazon and take its title for the largest cloud platform.
As you can see in the chart below, Amazon is the leader in the market and Microsoft has plenty of room to grow, unlike the desktop market.
Source: Synergy Research Group
When you see Microsoft"s new strategy presented in a way of where they can grow, Nadella"s strategy makes a lot of sense, to no surprise. If you had been wondering how he chose cloud and mobile to be the core focus of the company"s long-term strategy, you should now have a better understanding.