Microsoft: how is it faring under new boss Satya Nadella?

Why the former king of desktop software still searches for a niche in today's mobile world.

by Andrew Saunders
Last Updated: 20 May 2015

Formative years

In 1975, schoolfriends Bill Gates and Paul Allen, a pair of the geekiest geeks ever to bond over near-perfect scores on their maths SATs, set up shop in the unfashionable backwater of Albuquerque, New Mexico, to sell their version of the BASIC programming software to fellow micro-computer fans. Micro-Soft (geddit?) booted up for the first time.

By 1981, it had moved to Washington state, and the hyphen was history, just in time for Microsoft's big-break: selling the MS-DOS operating system to IBM for its all-new PC (the DOS prompt still lurks deep in Windows 8 if you know where to look). The deal bankrolled the launch of the first version of the all-conquering Windows operating system four years later, which put the company firmly on course to become – as it did in 1999 - what was then the largest corporation in the world, with a market cap of $618.9bn.

Recent history

That was then. Nowadays, big tech is all about consumerisation and mobile devices, and buttoned-up Microsoft struggles on both counts. A £99 Tesco Hudl probably has as much kerb appeal to the average punter as a £500 Microsoft Surface Pro.

Arch-rival Apple took that market cap record in 2012, and the iPhone 6 looks set to be another winner, with four million pre-orders in its first week. The $7.2bn acquisition of Nokia last year was a belated admission by Microsoft that hardware just isn't its thing, but can the merged entity really take on Samsung and the rest?

Who's the boss?

Like many US tech giants, Microsoft hangs onto its CEOs – current incumbent Satya Nadella (pictured) is only the third in its history. He took over in February from 'dancing' Steve Ballmer, whose infamous on-stage energy was not reflected in commercial performance.

Nadella is known for the gnomic phrasing of his all-staff emails – is the hugely successful Xbox a core or non-core division? No one's sure, despite his lengthy updates. He has also just pushed the button on the $2.5bn acquisition of one-hit game wonder Minecraft.

The secret formula

Fortunately for Microsoft, the business market remains a cash cow, despite past challenges from freeware such as Linux and Open Office. Google Docs is the next big threat, but the firm is much better placed to compete on offering cloud services for corporate customers than it is in the consumer marketplace. A shame they forgot to put the start menu on Windows 8.1...

Proudest moment

Bill Gates may not have the cool of Steve Jobs or Larry Ellison, but unlike either he is giving away most of his $76bn fortune. If the Gates Foundation does end up with a malaria vaccine, the Microsoft founder's legacy could eclipse them all.

Vital statistics

Sales $77.5bn

Net profit $21.86bn

Employees 128,076.

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