via @azeem's @exponentialview
Microsoft Is Worth as Much as Apple. How Did That Happen? - The New York Times
It was big and still quite profitable, but the company had lost its luster, failing or trailing in the markets of the future like mobile, search, online advertising and cloud computing. Its stock price languished, inching up 3 percent in the decade through the end of 2012.
It’s a very different story today. Microsoft is running neck and neck with Apple for the title of the world’s most valuable company, both worth about $850 billion, thanks to a stock price that has climbed 30 percent over the last 12 months. At the end of trading Friday, Microsoft was just ahead of its longtime rival.
When Microsoft acquired Nokia’s mobile phone business in 2013, Mr. Ballmer hailed the move as a “bold step into the future.” Two years later, Mr. Nadella walked away from that future, taking a $7.6 billion charge, nearly the entire value of the purchase, and shedding 7,800 workers.
Microsoft would not try to compete with the smartphone technology leaders, Apple, Google and Samsung. Instead, Microsoft focused on its developing apps and other software for business customers.
Microsoft does have a successful consumer franchise in its Xbox video game business. But it is a separate unit, and though it generates revenue of $10 billion, that is still less than 10 percent of the company’s overall sales.
Microsoft products, in the main, are about utility — productivity tools, whether people use them at work or at home. And its Azure cloud technology is a service for businesses and a platform for software developers to build applications, a kind of cloud operating system.
Mr. Nadella’s big acquisitions have been intended to add to its offerings for business users and developers. In 2016, Microsoft bought LinkedIn, the social network for professionals, for $26.2 billion.
“It’s really the coming together of the professional cloud and the professional network,” Mr. Nadella explained at the time.
Under Mr. Nadella, Microsoft has loosened up. Windows would no longer be its center of gravity — or its anchor. Microsoft apps would run not only on Apple’s Macintosh software but on other operating systems as well. Open source and free software, once anathema to Microsoft, was embraced as a vital tool of modern software development.
Mr. Nadella preached an outward-looking mind-set. “We need to be insatiable in our desire to learn from the outside and bring that learning into Microsoft,” he wrote in his book “Hit Refresh,” published last year.
The company’s financial performance — and its stock price — suggest that the Nadella formula is working.
“The old, Windows-centric view of the world stifled innovation,” said Michael A. Cusumano, a professor at the Massachusetts Institute of Technology’s Sloan School of Management. “The company has changed culturally. Microsoft is an exciting place to work again.”