Microsoft’s early investments in the cloud were key to its revitalization

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Despite the outcry’s of some over zealous hardware fetishizers, Microsoft isn’t doomed, and its pivot to the cloud has been a boon for the company as it’s revitalized the culture and employee morale over the past few years.

Thanks to a lengthy post published by the Seattle Times, we’re privy to some inside baseball (behind the scenes) about how Microsoft’s move to the cloud has helped save the company. As author Matt Day points out at the beginning of his piece, 2010 was the start of a rough ride for Microsoft as the smartphone began to surpass the PC market in not only sell through but usage market share. Adding to Microsoft’s woes, was Apple’s introduction of the iPad which added further augmentation to the personal computing realm and pushing the company closer to the fringe.

In a perhaps underreported move, former Microsoft CEO Steve Ballmer attempted to curb the company’s imminent downward spiral by removing Bob Muglia of the Server & Tools division and replacing him with Satya Nadella.

Nadella navigated Microsoft’s fast-growing Server & Tools division with expert precision and is now the company’s CEO as he makes his expertise in cloud computing the new battlefield in which Microsoft is now making a relatively impressive stand.

“Microsoft stock hit all-time highs this week, a reflection of investor confidence in Nadella’s pivot away from flagging consumer services like smartphones and toward business software delivered on the web. A company that for much of the 2000s tried in vain to fashion itself in the model of Apple or Google found a better target in its back yard in Amazon.com.”

“Microsoft has pushed hard to catch up, spending billions on new data centers and rewriting its software for delivery via the web. Those investments are starting to pay off. Microsoft’s sales of web-based computing infrastructure brought in about $2.3 billion during the last year, analysts with RBC Capital Markets estimate.”

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Ballmer wasn’t alone in helping guide Microsoft to more prosperous ventures. Co-founder and original CEO of Microsoft Bill Gates eventually stepped in to help mold how Microsoft would transition to the cloud.

“It wasn’t long before Bill Gates asked to review the team’s work. The co-founder’s official role at the company was limited to a board seat, but he still kept a close watch on Microsoft.

Ray Ozzie, Microsoft’s chief software architect, said the team wasn’t ready.

Gates wouldn’t take no for an answer. He insisted, meeting the team in a small conference room one Friday morning and grilling it on its progress.

The following Monday, Gates called another meeting. The project was great, he said, but he wanted the team to go public with its work.”

Shortly after going public, Gates and the Windows Azure team knew they had something worth exploring further when “some AWS customers wanted to run Microsoft’s software on Amazon’s infrastructure.”

While Muglia nurtured Server & Tools for years, it was under Nadella’s tutelage that ‘Azure’ picked up steam.

“Nadella instituted weekly meetings in which senior leaders spent hours delving into how customers used Microsoft services, as measured by about 3,000 metrics.

If a portion of Azure’s network fails in Southeast Asia, for example, “We want to know why, and we want to know in an excruciating depth what we are doing to make sure it doesn’t happen again,” Guthrie said.

Revenue isn’t discussed. “We focus on customer metrics, and what we find is when we improve them, our revenue keeps going up,” he said.

Azure relaunched in 2013 with a set of infrastructure services that performed many of the same functions as Amazon’s AWS.”

In the end, Microsoft has now sought to unshackle itself from being the Windows-only company by leveraging the vast resources it’s dumped into cloud computing. As it stands, cloud computing is becoming a new platform in and amongst itself and could provide Microsoft a new Windows blockbuster with extensibility and a much longer future than the company was looking at back in 2010.

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