Tuesday, February 4, 2014

Can Indian-American CEO Nadella Succeed at Microsoft in Post-Wintel World?

Microsoft, the world's largest software company, has named Satya Nardella, an Indian-American company veteran of 20 years, as its new CEO to replace its long-time leader and Bill Gates' pal Steve Ballmer. It's clearly a matter of great pride for not only his fellow Indian-Americans in the United States but also in India, Nadella's country of birth. I offer my sincere congratulations and best wishes to Mr. Nadella and his fellow Indians who are celebrating it as their own success. The question on everyone's mind now is whether he has what it takes to bring back the Wintel-era glory to Microsoft.

Wintel Era:

Wintel (Windows+Intel) represented the most successful period for Microsoft and its partner Intel when the two companies together made history with the personal computer revolution. Working for Intel as an engineer in 1980s and 1990s, I had a chance to work with both Microsoft and Intel executives to help bring about the PC revolution. Both companies offered products that worked well together to address the needs of hundreds of millions of PC users in that period. Both companies enjoyed phenomenal growth and high profit margins. I met Bill Gates several times in the two decades at frequent Intel-Microsoft executive meetings. I also got a chance to work with other Microsoft executives including Paul Maritz, Rob Glaser, Nathan Myhrvold, Carl Stork and others.

One particular incident with Bill Gates that I remember was at the 80486 CPU launch event at McCormick Place in Chicago. Gates insisted on doing the 80486 CPU demo at the event. Gates was a real geek at the time. He showed up wearing a rumpled shirt. His hair was uncombed. As he began the rehearsal under a spotlight aimed at the stage, he started complaining that he couldn't see under its glare. Intel marketing manager suggested to him to not look directly into the light to avoid it. Somehow we got through the rehearsal and, later, the actual launch in front of the media and the analysts went quite well.

The Wintel duopoly enabled both Intel and Microsoft to increase performance, bring down prices and still enjoy unprecedented profitability in the computer industry. Dave House, Executive VP at Intel in charge of microprocessor business, put it best when he told me and my fellow 80386 CPU engineers in 1985 that "making 80386 microprocessor chips is like printing money". He went on to explain that "it costs more than 10 cents for the US govt to print a dollar bill but Intel's cost of printing 80386 chips is less than 10% of its average selling price". I believe Microsoft made even bigger profits with DOS and Windows operating systems and PC applications in 1990s. 

RISC Challenge:

Wintel partnership came under severe strain in 1992-93 when Microsoft decided to build its Windows NT operating system to run primarily on Reduced Instruction Set Computing (RISC) processors from DEC and MIPS. Intel's CISC (Complex Instruction Set Computing) X86 architecture-based processors were considered by many as old and uncompetitive relative to RISC. RISC processors came with a reduced set of simple instructions executable within a clock period, lots of registers, more cache memory and powerful compilers which Intel x86 based CPUs lacked at the time. Intel responded to the challenge by offering much higher clock rates, larger cache memories, improved instruction pipelining, multiple execution units and highly optimizing compilers which made more efficient use of the limited number of registers and better instruction scheduling on the Intel processors. I was assigned the role of a program manager at Intel to work with Microsoft to optimize Windows NT for 80486 at the time. It was interesting to watch the competing arrogant management styles of the two companies on full display during this effort. Needless to say, Intel beat back the RISC challenge and went to become the world's largest and most profitable chip company.

PC Era Over:

The world has dramatically changed since the 1990s when Wintel ruled the roost. PC is no longer the dominant device. Smartphones and tablets have brought the era of mobile cloud computing where neither Intel nor Microsoft enjoy leadership position. Even developing like Pakistan are deploying cloud computing applications. A Google sponsored survey in Pakistan found that mobile computing is expected to overtake desktop computing this year. Several new and more innovative and powerful players have emerged to in this market. It is this new reality that stares Staya Nadella in the face.

Decline of Empires:

In a recent New York Times column, Nobel Laureate economist Paul Krugman compared the decline of Microsoft to the fall of the great empires of the past. Drawing upon the lessons of Medieval Muslim historian Ibn Khaldun, Krugman wrote:

"How could Microsoft have been so blind? Here’s where Ibn Khaldun comes in. He was a 14th-century Islamic philosopher who basically invented what we would now call the social sciences. And one insight he had, based on the history of his native North Africa, was that there was a rhythm to the rise and fall of dynasties. Desert tribesmen, he argued, always have more courage and social cohesion than settled, civilized folk, so every once in a while they will sweep in and conquer lands whose rulers have become corrupt and complacent. They create a new dynasty — and, over time, become corrupt and complacent themselves, ready to be overrun by a new set of barbarians. I don’t think it’s much of a stretch to apply this story to Microsoft, a company that did so well with its operating-system monopoly that it lost focus, while Apple — still wandering in the wilderness after all those years — was alert to new opportunities. And so the barbarians swept in from the desert". 

Conclusion: 

Krugman's comparison of today's Microsoft with ancient dynasties seems to make a lot of sense. The "Wintel" dynasty is being overthrown by hordes representing cloud computing "barbarians and tribesmen" at Apple, Google, Amazon and a whole bunch of other tech companies. Can  a Microsoft lifer like Staya Nadella, steeped in Microsoft's established culture, fend off the "barbarian at the gates"? If I were a betting man, I'd say No! But let's wait and see.

Related Links:

Haq's Musings

Minorities are Majority in Silicon Valley

Mobile Internet in South Asia

Pakistan Deploying Mobile IT Apps

Emerging Nations Deploying Cloud Computing Faster

Mobile Internet to Overtake Desktop in 2014 in Pakistan

Biometric Information Technology in Pakistan

Power Theft in Pakistan

Mobile Banking in Pakistan

Mass Literacy Through Mobile Phones

Online Education in Pakistan

Pakistan's Telecom Revolution


20 comments:

Shams said...

The times have changed a lot since Ibne Khuldoon, though, and this Satya fella is in fact a big name in Cloud computing, so you should be betting Klugman's ass that Microsoft will see a turn around.

Riaz Haq said...

Shams: "The times have changed a lot since Ibne Khuldoon, though, and this Satya fella is in fact a big name in Cloud computing.."

Satya may be smart but Microsoft is yesterday's news.

Anonymous said...

ARM Google is todays Wintel.

Though I'm sort of happy that a fellow Indian has become microsoft CEO.I personally have never liked Microsoft much...

Siraj said...

Post-Wintel ? not yet

Intel/MS is going no where there is going to be no fall of empire here infact Intel getting into tablet chip market is going to deliver combined with MS/other windows based devices like tabs/smartphones to wider audience.

Android is not for organizations/business sorry that is just not the right OS, Apple also has traditionally kept itself away after trying so many times but couldn't get into server/large business the market is open to MS it needs to join Intel to work with Mobile platform to establish another era of empire.

MS new CEO is an excellent choice has best track record but please people don't tag him "indian" or what not by both side he has nothing to do with india he left india for better future he is very much american let him be like that his only focus/objectives is to make MS even better.

Anonymous said...

When a country is going broke, make a black president. First time
When a currency is going bust, make a FED chair a woman. First time
When a PC era is over make a Hindo a CEO. First time

you see a trend here?

Riaz Haq said...

Anon: "ARM Google is todays Wintel"

ARM and Google don't have the kind of duopoly Wintel did in its time.

Mobile and cloud computing market is highly fragmented today with many many players. No one or two companies have a lock on it like Intel and Microsoft did in the PC era.

Riaz Haq said...

Siraj: "Intel/MS is going no where there is going to be no fall of empire here infact Intel getting into tablet chip market is going to deliver combined with MS/other windows based devices like tabs/smartphones to wider audience."

Both Intel and Microsoft will still be around but there will no Wintel or anything even close to the kind of duopoly that existed in the PC era.

ARM and Google don't have the kind of duopoly Wintel did in its time. Mobile and cloud computing market is highly fragmented today with many many players. No one or two companies have a lock on it like Intel and Microsoft did in the PC era.

Ismat said...

Great piece, Riaz Saheb. Reminded me of the days when I put my IRA savings in Microsoft and it just kept doubling and doubling and doubling, until the crash came in 2000. You write, "The "Wintel" dynasty is being overthrown by hordes representing cloud computing'. Wouldn't the selection of Satya Nadela and his emphasis on cloud computing augur well for Microsoft? (I'd like to know because I never sold out MSFT completely ).

Incidentally, as you would know, Ibn-e-Khuldun had also said that the ruled gradually acquire the characteristics of their rulers. This has happened in Pakistan, where corruption and social degradation of the 'toadi baari/saadi baari' team emanating from the top has spread to the general public.

Riaz Haq said...

Ismat: "Reminded me of the days when I put my IRA savings in Microsoft and it just kept doubling and doubling and doubling, until the crash came in 2000"

I owned substantial stock in Intel, the other half of the Wintel duopoly, and suffered huge losses in 2000 market crash.

I think both Intel and Microsoft are yesterday's news.

Riaz Haq said...

Ismat: "Incidentally, as you would know, Ibn-e-Khuldun had also said that the ruled gradually acquire the characteristics of their rulers. This has happened in Pakistan, where corruption and social degradation of the 'toadi baari/saadi baari' team emanating from the top has spread to the general public."

I agree. I wrote a piece on it a few weeks back titled "Can the Taliban Defeat and Destroy Pakistan".

Here's an except:

Pakistani leaders need to develop necessary consensus to fight the existential challenge posed to the nation by the Taliban and their allies in Pakistan. They need to declare war and show determination, not weakness, in the face of relentless Taliban attacks on innocent civilians. They must remember that it took Sri Lanka a long sustained effort spanning decades to win against the Tamil Tigers (LTTE). It will take a long and sustained effort for Pakistan to win the war on Taliban to preserve Pakistan. It's time for Pakistanis to learn the lessons of history to chart and stay the course. Once there is a clear strategy and plan, I am confident that the Pakistani state and its military will eventually defeat and destroy the Taliban.

http://www.riazhaq.com/2014/01/can-taliban-defeat-and-destroy-pakistan.html

Anonymous said...

It is surprising that an ex Intel employee is telling Intel as yesterday's news.

Intel's server chips E5, Ivy-Bridge and the various HP DL and other similar machines are beating the crap of Sun and IBM servers in benchmarks.

PC world itself is in decline because of tablets and smartphones, but it is not as bad as you think.

Siraj said...

i think cloud market is going to kill all Intels competitors. AMD is already in trouble .Microsoft did miss mobile domain but there are very much in cloud biz as long as they have Visual Studio they will dominate !

Riaz Haq said...

Siraj: "i think cloud market is going to kill all Intels competitors. AMD is already in trouble .Microsoft did miss mobile domain but there are very much in cloud biz as long as they have Visual Studio they will dominate !"

Server dominance is not enough to replace Wintel duopoly profits which came mainly from desktop and laptop market when it expanded rapidly during the PC era.

Riaz Haq said...

Here's an AP piece on Microsoft's CEO selection process:

SAN FRANCISCO -- After compiling a list of more than 100 CEO candidates, Microsoft settled on Satya Nadella a home-grown leader who joined the software maker in the early 1990s. That's back when Google's founders were teenagers and Facebook CEO Mark Zuckerberg was in elementary school.

Tuesday's hiring of Nadella as Microsoft's CEO after a five-month search is a safe move that's likely to be greeted with sighs of relief around the company's Redmond, Wash. headquarters, industry analysts say. But the methodical, almost predictable decision is likely to reinforce perceptions that Microsoft Corp. is a plodding company reluctant to take risks as it competes against younger rivals who relish going out on a limb.

While Google founder and CEO Larry Page boasts about his company taking "moon shots" and Zuckerberg promises to "move fast and break things," Microsoft has fallen behind the technological curve after underestimating the importance of Internet search more than a decade ago and reacting too slowly to the rise of mobile devices during the past seven years. Meanwhile, the sales of personal computers running on Microsoft's Windows software are shrinking.

Microsoft's malaise may have narrowed the field of up-and-coming visionaries interested in running a company founded in 1975.

Just as Microsoft founder Bill Gates and Apple Inc. founder Steve Jobs would never have considered working at IBM Corp. in the 1980s, today's entrepreneurial whiz kids scoff at Microsoft's overtures.

"Going to work at Microsoft could make it look like you are going back to the dark ages," says Richard Metheny, a management coach for the executive search firm Witt/Kieffer in Chicago. "It's a well-entrenched business that has had trouble lately figuring out how to play in this new world."

Despite its challenges, Microsoft remains a moneymaking machine that sits atop an $84 billion cash pile. That alone should have been enough to tempt technological sharpshooters to take a shot at turning around the company, says Dennis Carrey, vice chairman of executive recruiting firm Korn Ferry and co-author of the book, "Boards That Lead."

Microsoft "is like a car that still has a full tank of gas, but it's just an old model," Carrey says. "There are a lot of great tech executives who yearn for that kind of challenge, especially with a bucket of cash to make acquisitions and do some really fun, cool stuff."

----------
There was some speculation that Microsoft might be interested in hiring Sundar Pichai, a respected Google executive in charge of the company's Android and Chrome operating systems.

But it's likely that Microsoft would have had trouble persuading a Silicon Valley star to become its CEO. That's because much of Silicon Valley dismisses Microsoft's products as too complicated and expensive. There is also still a residue of resentment from the late 1990s when Microsoft's aggressive attempts to thwart the growth of Web browser pioneer Netscape Communications instigated an antitrust case, a suit filed by the U.S. Justice Department at the urging of a Silicon Valley coalition.

"When it came down to it, I don't think the Microsoft board could find the CEO that fit the profile it really wanted from outside the company," Moorhead says.

Once Microsoft decided to take the insider route, Nadella emerged as an obvious choice, Korn Ferry's Carey says. "Only history will tell us whether it was the right choice."...


http://www.miamiherald.com/2014/02/05/3913615/was-microsoft-smart-to-play-it.html

Mayraj said...

http://www.theguardian.com/commentisfree/2014/feb/05/satya-nadella-microsoft-ceo-not-make-indians-proud


Actually, Satya Nadella's selection as Microsoft CEO isn't great for Indians
When Indians glow like a proud parent at a new CEO or billionaire, they reject millions who suffer for that wealth

Riaz Haq said...

CEO Nadella to #Microsoft employees: " Our industry does not respect tradition — it only respects innovation" #India

http://www.microsoft.com/en-us/news/press/2014/feb14/02-04mail2.aspx

Anonymous said...

Bad news for India’s future brain drain: according to a new survey by the Economist and mobile phone messaging platform Nimbuzz, 57% of Indians between the ages of 18 and 22 would emigrate to America if they had the chance. Interestingly for India, which is expected to have the world’s youngest workforce by 2020, the reasons aren’t entirely related to the country’s struggling economy—violence and corruption are also big worries.

Despite the global financial crisis in 2008, economic growth in India had prompted observers to hail the advent of a reverse brain drain of top students, scientists, and entrepreneurs. But that doesn’t look so good now. India’s economy is in its sharpest downturn in a decade, growing just 4.5% last year.
+
As of May 2012, the government estimates that about 21 million non-resident Indians live outside their home country, or about 1.7% of the India’s population of 1.27 billion. That’s a slight drop from the previous estimates of between 25 million to 30 million Indians living abroad, but still signals a drain of talent and money. The wealth of Indian expatriates has been valued at as much as $1 trillion, according to Datamonitor.

http://qz.com/175831/over-half-of-young-indians-say-they-would-emigrate-to-the-us-if-they-could/

Riaz Haq said...

#Pakistani-American NEDian Rehan Jalil's Cloud Security Startup Elastica Comes Out Of Stealth With $6.3M From Mayfield

http://techcrunch.com/2014/02/18/cloud-security-startup-elastica-comes-out-of-stealth-with-6-3m-from-mayfield/?ncid=twittersocialshare via @techcrunch

Elastica, a cloud security startup launched in 2012, is coming out of stealth mode with $6.3 million in Series A funding from the Mayfield Fund. The startup is also launching its new apps that offer real-time threat detection and even post-incident forensic analysis.

As more enterprises embrace SaaS and other cloud-based services, they are increasingly feeling the need to have a different approach to security beyond just traditional firewalls. This shift means over $2 billion annual market for cloud security vendors like Elastica. As Gartner noted last year, the highest growth is forecast to occur in cloud-based tokenisation and encryption, security information and event management (SIEM), vulnerability assessment and web application firewalls.

Elastica joins a fast growing club of cloud security startups promising to combine data science and in some instances even machine learning tools to help companies and employees secure SaaS data. There’s huge investor interest in the segment and some of the biggest names in the enterprise software world are backing many of these startups.

Elastica was founded in 2012 by Rehan Jalil, former CEO of WiChorus, which was sold to Tellabs for $165 million in 2009.

http://techcrunch.com/2014/02/18/cloud-security-startup-elastica-comes-out-of-stealth-with-6-3m-from-mayfield/

Riaz Haq said...

"The very agenda of social sciences, why and how change occurs in society, was mapped by Ibn Khaldun who produced a coherent body of analysis of why societies rise, peak, and wane. Ibn Khaldun spread himself across so many disciplines and spheres of work, one wonders how so many activities fit into a single CV. Ibn Khaldun was born in 1332 in Tunisia to a family with a tradition of diplomatic service in Spain and the Maghrib, and he initially followed in his family’s footsteps into a diplomatic career that took him to act as lead negotiator in several diplomatic missions, but he fell from favour at court and chose to move to Egypt where he served as a senior judge until his death in 1406."

Ibn Khaldun’s definition of entrepreneurship, such as it is, works well, however. It is anchored in his outlook as a devout Muslim who finds guidance in all things in the Koran. A merchant “strives to make a profit, so that he may spend what God gives him to obtain his requirements and necessities through barter.” This sentence flows so smoothly one might skim over the reference that a merchant’s profits have their source in “what God gives him.” However, the connotation of these words resonates deeply, as the Koran has a term for God’s bounty, rizq, a term which may be the origin of the term we use today to describe that aspect of enterprise that is the quintessence of entrepreneurship: risk.

This whistle-stop tour of Ibn Khaldun’s Muqaddimah is but a sampler of his work but may have said enough to show Ibn Khaldun pushed the boundaries of historical scholarship out into social science. In Europe, Ibn Khaldun’s works reached a wider audience when they were translated in the nineteenth century, at a time when social sciences in Europe even then were in their infancy. But even today, Ibn Khaldun’s work has aged well and his insights often are as fresh as they were when he penned them.

It may have startled some readers to see Ibn Khaldun articulated many notions centuries before they were expressed in the West. The Laffer curve is one example, but there are others, such as John Marshall’s dictum, “the power to tax is the power to destroy (1819),” and William Graham Sumner’s “forgotten man” who ends up bearing tax burdens (1883).

But Ibn Khaldun matters not only as an ideas man ahead of his time. Ibn Khaldun lived through an age of frequent regime changes that threatened corrosion of the Islamic realm from within, and foreign invasions visited devastation across the Middle East. Ibn Khaldun lived in an age of despair but did not much care for a quiet life. On the contrary, he wanted to look threats in the eye, and one of his travels took him to an encounter with the feared warlord Timurlan, a meeting that Ibn Khaldun recorded at length in his autobiography (another of his vast range of works).

If turmoil had an effect on Ibn Khaldun, it must have been as a spur to learn about different societies, and what is urgent today about the achievement of Ibn Khaldun, who did not flinch from engaging with policy-making at the highest (and most dangerous) level, is that he demonstrated how to combine firm religious orthodoxy with irrepressible curiosity in mechanisms of social change.

Dr. Benedikt Koehler is a historian and former banker, specialising in early Islamic economics. Koehler delivered the inaugural lecture for the Legatum Institute’s “History of Capitalism” course.

http://www.capx.co/capx-essay-ibn-khaldun-islams-man-for-all-seasons/

Riaz Haq said...

Facebook’s CEO Mark Zuckerberg has committed to reading an important book every two weeks as part of his 2015 New Year’s resolutions, and up next is “The Muqaddimah,” a 14th century tome written by Islamic historian Ibn Khaldun.

The book, whose title translates to “The Introduction,” traces the progress of humanity while attempting to remove the biases captured in historical records and reveal the universal elements that connect us. It is often considered the most important Islamic history of the premodern world.

Kaldun, a lauded Arab scholar, is credited as one of the foundational thinkers of modern sociology, ethnography, and the philosophy of history.

One reviewer of the original English translation called it, “Undoubtedly the greatest work of its kind that has ever been created by any mind in any time or place … the most comprehensive and illuminating analysis of how human affairs work that has been made anywhere.”

http://time.com/3909132/mark-zuckerberg-islamic-history/


Facebook CEO Mark Zuckerberg’s 2015 New Year’s resolution was to read an important book every two weeks and discuss it with the Facebook community.

Zuckerberg’s book club, A Year of Books, has focused on big ideas that influence society and business. His selections so far have been mostly contemporary, but for his eleventh pick he’s chosen “The Muqaddimah,” written in 1377 by the Islamic historian Ibn Khaldun.

“The Muqaddimah,” which translates to “the introduction,” is an early attempt at stripping away biases of historical records and finding universal elements in the progression of humanity.

Ibn Khaldun’s revolutionary scientific approach to history has established him as one of the foundational thinkers of modern sociology and historiography.

The influential 20th century British historian Arnold J. Toynbee described “The Muqaddimah” as “a philosophy of history, which is undoubtedly the greatest work of its kind that has ever yet been created by any mind in any time or place,” according to the Encyclopedia Britannica.

Zuckerberg explains his latest book-club pick on his personal Facebook page:

It’s a history of the world written by an intellectual who lived in the 1300s. It focuses on how society and culture flow, including the creation of cities, politics, commerce and science.

While much of what was believed then is now disproven after 700 more years of progress, it’s still very interesting to see what was understood at this time and the overall worldview when it’s all considered together.

http://www.businessinsider.com.au/mark-zuckerberg-the-muqaddimah-2015-6