Is Microsoft Turning Itself Around?

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This week, a number of tech publications published rundowns of Microsoft CEO Satya Nadella’s first year in office, with most seeming to conclude that he’d managed to breathe some new life into the tech giant.

As any longtime Microsoft watcher knows, former CEO Steve Ballmer (and before him, co-founder Bill Gates) organized the company in a way that created fiefdoms among business divisions. In the months before exiting the company, Ballmer began to reorganize those divisions in a way that knocked down at least some of the walls between them, a process that’s continued under Nadella. Reports from inside Microsoft indicate there’s more collaboration between working groups, and more of a focus on developing interesting mobile and cloud software.

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What does Microsoft’s future look like? Nadella is making a very big bet—in prestige, if not in resources—on the HoloLens, a black plastic headset that projects holographic images on the wearer’s surrounding environment. You could use HoloLens to play games, such as Minecraft, or for more productive pursuits: Imagine working on a virtual mockup of a project at your desk.

But Microsoft still depends on enterprise sales for a significant portion of its revenue, which means its immediate future will also depend on the success of Windows 10, due later this year. If Windows 10 proves a massive hit, it could give Microsoft some much-needed momentum. (Certainly Nadella’s decision to make the operating system free for those upgrading from Windows 7 and 8, at least for the first year of Windows 10’s life, will spur early adoption.)

If Windows 10 fails to perform at a blockbuster level, however, it will only contribute to a perception that Microsoft is gradually crumbling away to obsolescence, despite Nadella’s efforts. While the “new” Microsoft has made great strides in interoperability with competitors’ platforms, and received strong reviews for its latest cloud products, it still needs to show in the only way that matters to investors—revenue, profit, and units sold—that it can take on Apple and Google.

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