Microsoft CEO Satya Nadella caps a decade of change and tremendous growth

Satya Nadella marks his tenth year as Microsoft CEO on Sunday, capping a decade of stunning growth as he pivoted the slow-moving software giant into a laser focus on cloud computing and artificial intelligence.

Microsoft’s stock has soared by more than 1,000 per cent since Nadella took the helm in 2014, compared to the more gradual 185 per cent growth of the broader S&P 500. Microsoft now has a market value of $3 trillion — more than any US publicly traded company, including its longtime rival Apple.

“Nadella’s had the biggest transformation of a tech company potentially ever,” said Wedbush Securities analyst Daniel Ives. “The only one that would rival it was (Steve) Jobs coming back to Apple and turning it around with the iPhone.”

Microsoft has created $2.8 trillion in shareholder wealth in the past decade, meaning an investor who bought a $10,000 stake in Microsoft at the time Nadella took over and did nothing with those shares, would have a stake worth about $113,000 now.

“Our industry does not respect tradition — it only respects innovation,” Nadella told employees in an inaugural memo 10 years ago, an opening salvo that hinted at bigger shifts to come. Microsoft declined requests for an interview.

Now a hero to Wall Street, some were at first sceptical that such transformation could come from an insider who’d already spent 22 years at the Redmond, Washington company. He’s only the third Microsoft CEO, following Steve Ballmer, who lasted for 14 years, and Bill Gates, who co-founded the company in 1975 and took it public in 1986.

Big changes came quickly under Nadella. He marshalled resources to build up the Azure cloud computing platform, a shift in priorities from the company’s long-time reliance on its flagship Windows operating system and the royalties it gets for each PC sold with it. And he largely put the brakes on Microsoft’s ill-fated attempts to play catch-up in the smartphone market, marked by his predecessor Ballmer’s $7.3 billion acquisition of Nokia’s phone business.

But some of the biggest changes were in the company’s culture, a shift away from Microsoft’s brash external reputation and internal bickering to a more collaborative approach that Nadella has modelled in his own collegial personality and engineer’s mindset.

“Microsoft is known for rallying the troops with competitive fire,” Nadella said in his 2017 autobiography. “The press loves that, but it’s not me.”

Much of Nadella’s strength is how he stands out from the typical “very strong ego CEO,” said Raimo Lenschow, a stock analyst at Barclays who covers 36 tech companies. Instead of making bold pronouncements, Lenschow said Nadella takes a more measured approach to explaining “where he thinks the future is going.”

And “whether it’s the person making food in the cafeteria, an engineer, finance executive, a customer, he treats everyone in the same way, with respect,” said Ives. It’s not just Wall Street analysts who think so.

A tiny startup from Zeeland, Michigan, running a booth at January’s CES gadget show in Las Vegas caught a glimpse of Nadella’s curiosity when he showed up, shook founder Tim Murphy’s hand and asked for a demo. The product, Audio Radar, visualises the sounds in video games for deaf and hard of hearing players.

“He’s very down to earth,” said Murphy, who was there with a small crew including his teen son. “I gave him the pitch, played some games, and he was like, ‘It’s wonderful what you’re doing.’ Honestly, I can’t really remember too much of what he said because I was just kind of shocked.”

Nadella has long made the accessibility of technology a priority, informed in part by his experience raising a son who was visually impaired, quadriplegic and had cerebral palsy. Zain Nadella died in 2022.

What’s brought Microsoft to its latest heights is its emergence as an artificial intelligence leader, setting the agenda on how AI tools could get used in work and society. While Nadella has been emphasising AI for most of his tenure, its role was not guaranteed and happened after years of careful planning that led to a close partnership with ChatGPT-maker OpenAI. (OpenAI pays The Associated Press an undisclosed fee to license its archive of news stories).