When people think of the world’s most successful tech companies in the 21st century, their minds often go first to companies that have succeeded in the mobile industry, like Apple, or in social media, like Facebook or Twitter.
Microsoft is often forgotten in this conversation. The company was very successful in the 20th century, but the company has long since lost any hype that had been associated with its groundbreaking Windows software. Nonetheless, Microsoft keeps humming along, and it’s now worth more than $850 billion—a figure that puts it in the running with Apple for the title of the world’s most valuable company.
How have they done it? According to The New York Times, Microsoft’s success largely stems from an ability to build upon its strengths. Satya Nadella, who became the company’s chief executive in 2014, realized quickly that cloud computing was the most profitable—and sustainable—part of Microsoft’s business in the 21st century. To that end, he began to trim away fat and beef up the company’s emphasis on what it does best.
That formula has worked. While other tech companies are worrying about existential threats (Facebook with fake news and political propaganda, Apple with a market already saturated with smartphones), Microsoft keeps thriving.
“The essence of what Satya Nadella did was the dramatic shift to the cloud,” Harvard business professor David Yoffie told the Times. “He put Microsoft back into a high-growth business.”
Microsoft’s recent success with the cloud is a welcome change from years past, when the once-great tech company was struggling to find a niche. During the early 2000s, Microsoft tried to make inroads in new tech areas such as mobile, search, and online advertising, and success was minimal. The company’s stock price inched up by only 3 percent in the decade between 2002 and 2012. When Nadella came along and made cloud computing a priority, however, the company quickly moved toward the top of the industry; it now ranks second only to Amazon.
In the long run, what Microsoft has done is redefine its corporate identity. In the 20th century, the company was all about Windows and the computers that used it; now, it has a new area of focus.
“The old, Windows-centric view of the world stifled innovation,” MIT business professor Michael Cusumano told the Times. “The company has changed culturally. Microsoft is an exciting place to work again.”
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