Will New Microsoft CEO Allow a Change in Windows Strategy?

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Microsoft (NASDAQ:MSFT) announced Tuesday morning that Chief Executive Officer Steve Ballmer will be replaced by an insider, Satya Nadella, the company’s executive vice president of cloud and enterprise. Bill Gates — who founded the tech giant with Paul Allen in 1975 — will step down as Chair and become a technology adviser to Nadella, a 22-year veteran of Microsoft, with current board member John W. Thompson succeeding him. The software maker will also soon have a new board member — Mason Morfit, the activist Mason Morfit, the president of activist shareholder ValueAct Holdings. Like Nadella, whose appointment was effective immediately, Morfit has big plans for Microsoft.

Morfit wants Microsoft to break an important tradition: how it markets its operating system Windows, the software on which most of the company’s other offerings rely. Windows is Microsoft’s bread and butter, and for decades, the technology company has focused creating applications and server software that supports the Windows ecosystem.

Nadella is taking the helm of Microsoft at a critical juncture. At one time, the company dominated the technology industry, holding a 93 percent share of the consumer-computing market. But since 2000, competition from rivals like Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) — companies better positioned to profit off technology’s turn to mobile computing — has left Microsoft playing catch up amid the epic decline of the personal computer market. Now, with consumer dollars increasingly being spent on mobile devices rather than personal computers, Microsoft has less than a 5 percent share of each of the tablet and smartphone markets. Further, the changing trends has put the company’s main source of income — Windows — in jeopardy.

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