 Hello, and welcome to The Verge Live. Today is a huge day, I think, in the tech world, and in the world. Microsoft has named a new CEO after a search that took just about six months. Steve Ballmer stepped down six months ago. They accelerated the timeline, and they gave themselves a little bit more time. Today, they announced Satya Nadella, who has been at Microsoft for something like 22 years, currently running the cloud services division, will be the new CEO. I'm joined here by Dieter Bohn. Hello. Our senior reporter, Tom Warren, is somewhere in London in an undisclosed location. There's just a lot to unpack here. Tom, I think most people are curious what you think. How are you reacting to the news of Satya Nadella? Well, I guess it's not surprising, because of the rumors from last week, and the continuous rumors that he's one of the top contenders. I guess the surprise is more, not necessarily that he's been named, but that Gates has stepped down as the chairman, and all that side to it. I think that's more surprising. Satya is an interesting candidate, because he's obviously got an enterprise background, a focus on service and stuff. I think the questions around Microsoft going forward this year is going to be, are they going to keep going for the consumer stuff, or is this going to be full-blown going for the cloud and the enterprise, and all those sort of things. It's definitely not a surprising move for Nadella, but certainly surprising to see Gates step down as chairman, and become more involved, apparently. Right. There's an interesting message there. He stepped down as chairman, but then he said he was going to dedicate something like a third of his time. He's going to substantially increase the time that he's going to dedicate to Microsoft. Apparently, being chairman of Microsoft, he was just like, whatever. He ran the foundation. I'd recommend the chairman was like one day a week, step in, make sure the company's doing fine, be the chairman of the board of directors. I think what he's saying, he can't be in that role. There's been a lot of conversation about whether any CEO can come into Microsoft, with Gates and Ballmer still on the board of directors, Gates particularly in that chairman position, and actually affect real change. I think that's basically what's been the holdup. They have to strike this balance of the new CEO coming in and having power and authority to shake things up like he wants to, without Ballmer and Gates looking down over him. They need to maintain a sense of continuity and not have people panic that it's not the same people that are around. I think they need to, it's Microsoft, and they need to reinvigorate their sense of innovation, pride and all this other stuff. You see Gates saying he's going to, I think he said he's going to spend three days a week, a third of his time, or up to three days a week, a third of his time, working on new products specifically for Microsoft. That's what I was going to say. He's working on stuff. He's making things. I think that's really important. That sense of continuity, actually, Steve Ballmer, obviously outgoing CEO, was the face of Microsoft for a decade. Here's a quote. Satya is a proven leader. He's got strong technical skills and great business insights, remarkable ability to see what's going on in the market, to sense opportunities, really understand how we've come together at Microsoft to execute the instance opportunities in a collaborative way. Our senior leadership team has never been stronger. Together, this group will drive us forward. We actually also have a video of Ballmer welcoming Satya Nadella, which Microsoft did a weird thing today. They literally announced the news by tweeting a link to their website and saying, we've got a new CEO. Full of YouTube videos. It's a beautiful website if you haven't looked at it. It's a really nice website. HTML5, they're good at it. IE's great. It's just weird that they've chosen fake interviews and weird walk-in talks and photo shoots as the way to... It's strange. Let's run the Ballmer video here. Of all, I love the spirit and culture of this place, the perseverance, which has been the cornerstone of our culture from the very beginning. I know Satya will lead this company into the future and that future is going to be bright with innovation, with growth, and with impact in the market and on the world. I love this company and today couldn't be a better day. The only thing he was missing there is saying developers. I love this company as a reference to previous Ballmer moments. He's met a Ballmer. He's floating. Ballmer himself is in the cloud. He's like Robert De Niro. He just played himself. He's just playing himself now. Wasn't he screaming there at the internal meeting as well? I'm sure he was screaming, I love this company. He's out. I was talking to some people at Microsoft today and said, a couple of weeks, we don't control him. You can go interview him if you want. Ballmer and Jay. Then they asked me to please not do that. Obviously, I think Gates stepping into a more product focus for old Ballmer, obviously completely stepping out, maintaining a seat on the board. The key question is what is going to happen now to Microsoft with a new CEO, with a new person? Tom, you actually wrote a profile of all the candidates a while ago. Do you want to give us a quick rundown of who Nadella is and where he came from? Essentially, he's been at Microsoft for 22 years. He's worked across the Bing business and their advertising stuff in search. He's worked a little bit on Office. Most of the core of his work has been on the cloud stuff recently and in the server business that he did. Effectively, he took the server business up the revenues, just changed their focus from being a client server platform into being focused on the cloud. That's key for the enterprise and businesses and stuff. The thing that I guess he lacks is obviously, he's never been the CEO of a publicly traded company. He also doesn't really have much attention or focus on devices and even to a certain extent, mobile and consumer stuff. Although today, he's obviously mentioned cloud first and mobile first, but he's obviously got Nokia coming in. I think that's going to be an interesting dynamic to this initially, at least, anyway, with the Nokia acquisition. His history is really the server and enterprise guy. My question is, given that that's his history of server and enterprise and given everything that I've seen him say today, all the interviews that he's given, the fake interviews, everything that's the way he talks and the language he uses sounds super enterprise and not very consumer at all. It's hard to follow. The reason we waited to do this show today was because there was a big public call with Microsoft's investors and big customers who wanted to listen to it to see if there's any more information. Dieter and I were sitting there listening to it and we're like, this is super business focused. This is very stay the course. There are big opportunities in our server business and big opportunities in our enterprise software business. What we didn't hear and what we've been waiting to hear from Microsoft for the longest time is how are you going to re-energize these consumer businesses outside of Xbox where things haven't gone well. There's a moment, and take this for what it is, where Satya was like, the Surface 2 really embodies everything that we're doing at Microsoft. Yes, there is one piece of that that is true. Then there's another piece of that where the Surface 2 embodies everything that Microsoft has gotten wrong in the mobile market for the longest time. They have a mobile operating system that's not 100% connected to Windows 8 outside of the tile interface and that is not connected to their phone offering. That's the disconnect and that's why that product is floundering in the market where the Surface Pro maybe people are actually buying. That's the big question. Tom, you and I have been talking a lot about this. There's a shift in language that Nadella has been using all day today where it's cloud instead of, you know, Balmer was devices and services, devices and services. Three screens in a cloud. Three screens in a cloud. They literally shifted the entire company from we're the world's sort of software vendor to we're a devices and services business. They're buying it so they can make devices. Nadella all day today. He didn't say devices and services. He said it only as a subsidiary of cloud first, mobile first. Before that, I just want to point out that if you've got cloud first and mobile first, I mean, can you have two firsts? I just stick that there. What does that mean? What does that shift in language mean? Yeah, I mean, I think it's clear. He's obviously trying to differentiate from Balmer's strategy for a start. You would if you're a new CEO, you want to put your mark on things. But also, I get the sense that perhaps he's more aware of the challenges and the realities that Microsoft faces rather than sort of like this devices and services focus previously. Because I mean, the devices stuff, like what devices do we have from Microsoft right now? We have the Surface and Surface Pro 2 and some other like mice and keyboard and all this sort of things. But if they're really going for devices in the way that you'd assume they were, that they produce themselves, then they're not really showing that right now. And maybe that will change, but maybe it won't. I mean, I think certain divisions like Windows and Surface and other components have kind of been waiting for the CEO announcement. So I think it's going to be interesting to see the way that he said, we're cloud first, we're mobile first. And that's like his primary, that was his primary talk today. That's pretty much what he focused on. And people did raise the devices and services stuff, but it was really a secondary thing. So we actually, we have a little clip of Nadella talking today about sort of his vision for the connected world. Let's take a look at that. You talked about this focus on innovation. Where do you see the opportunities lie for Microsoft? You know, going forward, it's a mobile first, cloud first world. In other words, everything is becoming digital and software driven. And so I think of the opportunities being unbounded. And we need to be able to pick the unique contribution that we want to bring. And that's where our heritage of being, having been the productivity company to now being the do more company where we get every individual and every organization to get more out of every moment of their life is what we want to get focused on. So I have a prediction. Tom, I think you might share this. Tom and I have literally been talking about this all day. I think this signals a shift for Microsoft, a bigger shift. And I talked to some people today and I was told to read into this change however I wanted. And this is how I'm choosing to read into this. I think they're going to start to open up their software platforms across, or their software across platforms. I think this is, they're going to start to engage iOS and Android as places where they need Microsoft software and services to go in a much more focused and directed way than just using Office to sell Windows, which has been the cornerstone of the, like the Balmer empire. So if they do that, the big challenge is can they do it and make money at it? Yeah. I mean, that's the big, that's the big challenge. Yeah. Because it's pretty difficult to sort of expect people to pay for something like Skype or Outlook or SkyDrive or OneDrive or whatever. It's pretty difficult to convert a user into like, you know, into revenue. So, but I think that they've obviously started doing that. Like they've obviously got all these services across Android and iOS, but not really to the full extent that they could. Like they could obviously make that software a lot better on the rival platforms. So I think it'd be interesting to see if this year that they do that, they take the steps, they put Office and iPad, they, you know, all the sort of things that you'd expect them to do as a software company. And I think it's like the important thing here is that they're mobile first. And that's a, to me that's really interesting way of saying like, you know, we're focused on mobile and all that sort of stuff. But really and truly, if we're being honest, Android is like the Windows equivalent, right? On mobile it's dominating all the OEMs and backing and stuff. So I think it will also be interesting to see if Microsoft has any sort of shift towards perhaps using Android apps on their own platforms or doing some sort of Amazon style fork with Android or anything related to Android. That would be crazy. That would be insane. I mean, that would be the, see, I think that putting their apps on the Android platform is, that's the opportunity that has been vacated by Blackberry, right? Because Blackberry, the killer app for Blackberry is messaging. It was built on the back of Outlook, right? Completely, you know, Blackberry and Exchange were just sat on your Outlook box in your office, right? And so Blackberry is out of that market. Samsung is trying to take that market with knocks. Apple is doing whatever it's doing to like integrate with Exchange and all this stuff. I said Outlook box and I meant Exchange. But Microsoft isn't in that space at all really anymore, right? So that's a place where they can say, well, we can start to provision Android devices and Windows phone devices and iOS devices in a much more holistic way because that's what we do. Like we're already providing the email services for all these companies. And then to say, well, we can also extend that to Office and OneNote and all this other stuff that we make. And I don't see them doing that. They're not focused on doing that right now. And I think Balmer's strategy was to say, well, we're going to buy Nokia and we're going to sell you a complete integrated package, Apple style, you know, soup to nuts. Here's your business. And I think they have kind of realized that that opportunity is no longer there for them. Right. That's the big thing. And so if they can't win with that basic strategy, just buy Nokia, sell everything just like Apple, the big challenge, the very first thing is what are they going to do about that traditional mobile market of just smartphones? Because they, I trust him to get cloud services right. Microsoft's already doing a pretty good job. I trust him to find the right strategy for dealing with software and what platforms to put it on and doing it in the right way. But the big question is just straight up selling phones. Do they need to do that to be successful and how are they going to do that? Right. And so, you know what? The people at Microsoft have always told me when I say, where is Office on the iPad? It's a fair question, right? Here's the dominant tablet platform. It is eating away at laptop sales. Like where is Office for this device? And they always say, well look, Office makes us money. No one has ever made real money selling software on mobile. They make real money selling services to back free software on mobile and you can make a little bit of money selling like $2 games on mobile, but you can't make Microsoft money selling software on mobile. And it sounds like this is mobile first. Microsoft's saying it's a strategy of software companies on mobile first. It means that they are going to rise the challenge of making real money selling software on mobile. And that to me involves engaging the other platforms. Because they are not going to make real Microsoft level money on mobile unless they engage iOS and Android while they try to build up Windows phone and hopefully solve this ridiculous puzzle of Windows RT, Windows 8, the Xbox all having shades of the same operating system. Right. Yeah, well and the other thing about mobile, sorry go ahead Tom. I was just going to say, I was just going to add, I think it remains to be seen, but there is a real opportunity there right on the iPad for Office. Like no competitors really created something that's like perfect that people are going to right now and buying. So there's an opportunity for them to generate some sort of revenue from selling Office and iPad. And the initial versions they put out for like the iPhone and stuff are pretty limited and you have to subscribe to their services and stuff. So it would be interesting to see if they take a slightly different approach there. Yeah I think for me the big takeaway, something else that Del said was like he wants to expand the definition of mobile to the industrial internet, the internet of everything and sort of basically anything not PC. And so I think when we hear Microsoft say we're mobile first, cloud first, I think that our definition of mobile has to be bigger than just phones. And even if they don't manage to find immediate success with just selling Nokia phones, they need to find something that catches on pretty soon. And that seems to be what they're going for. Well let's talk about Nokia for a minute. I mean this was the, you know, Ballmer basically like lit the building on fire and then was like okay find me a CEO, right? Like he undertook a massive reorganization, won Microsoft, he bought Nokia and then he left, right? He actually did those things in reverse order. He bought Nokia, undertook the massive reorganization. There was endless amount of talking and speculation that Stephen Elop, by the way poor Stephen Elop, I mean his plan just failed. His like secret plan to ruin two major companies. He got half of the way there. But you know Stephen Elop was at Microsoft, went to Nokia, famously adopted Windows Phone over Android. You can talk about that. There will be books written about that decision for decades to come. And then Microsoft purchased Nokia. He's coming back into the fold. For 30 seconds he was the CEO front runner. And then it was Alan Mulally and then that fell apart and here we are with Satya Nadella. And I just want to know what happens to Nokia now. Is there, the one thing we haven't really talked about today, I've seen anyone talk about from Microsoft externally really is they're about to enter the hardware game in the most serious way that Microsoft has ever entered the hardware market outside of the Xbox. But phones are a much bigger market than game consoles. There are many more competitors. Microsoft isn't the leader. It took them forever to become the leader of the Xbox. And now with the PS4 and Xbox One that's all up in the air again. What are they going to do with Nokia? What is the strategy? And I just haven't heard it at all. Well I've got a hunch but I'm really curious to hear what Tom thinks. Yeah I'm totally, I don't know. It's just totally not clear. And they've obviously not been able to talk about the intricacies of the deal yet and stuff. But I think when you look at it, if you look at what they did with Skype, they kind of took it and they haven't really done much to it. Like Skype is just, it's not languishing but they really need to start taking that service and doing something with it. And I think they'll run with a sort of similar approach to Nokia. I'm guessing they will anyway. They'll drop them in and they'll kind of leave them alone for a little bit and just figure out what they're going to do because they're not going to have a full strategy and being able to shake these people up. There's also the added complexity that most of the people are based in Finland as well. So they're not going to want to move those people. I think that acquisition is going to be interesting to watch because especially a lot of the growth areas for Windows Phone are in Europe and obviously Latin America as well. Yeah that's actually, I was just going to bring that up. If I were them, pick your areas where you're already starting to see some growth and target those really heavily and gain a foothold there. Don't try and take on Apple and especially Android everywhere because they're going like gangbusters, both of them. And if you can build on some growth that you already have in a couple of different markets, you can establish something and grow from there. I think as a consumer strategy that's the best they can do and then they just need to make the enterprise sell that they offer the best end to end solution for an enterprise. They can do that certainly much better than Blackberry was able to with Blackberry 10. So I mean I don't think, it's not going to just completely blow up right away like the Kin did, but it is going to be a slow progress before we start to see like genuine worldwide consumer success. It may never be in the cards for them, but I think they can capture certain markets and they can make a relatively compelling argument to enterprise. I mean Tom, you've been reporting that Nokia is going to do Android stuff for quite some time now. Yeah, I mean we've heard that they're doing the Normandy stuff. They've obviously been planning that for the low end. Sounds as though that's probably going to happen at Mobile World Congress and that the Microsoft acquisition isn't going to close before then. So that will definitely be interesting if that particular model is going to be on the Microsoft side of the acquisition. It's not something that Nokia are going to spin off, but I don't know that they can do that. That's definitely going to be interesting to see where Microsoft takes that. But even on the Windows phone side, I think they face a significant challenge across this year with not having a Nokia brand across Europe. Because I think that's really been helping to push because it's still like a respected brand in Europe to a certain extent. And it's not in the US. They've never really got anywhere there. But it could be without that Nokia name on it. That could be an interesting dynamic as well. So that's mobile. That's where we are with mobile. Then there are the other huge components of Microsoft. So it's funny, another thing you didn't talk about at all today as far as I can tell besides a passing mention was the Xbox. Here's another huge piece of Microsoft strategy and they're just kind of like leaving it alone. I didn't hear a lot of conversation about the future of Windows besides the Surface 2 is great. What I mostly heard was we're going to really focus on these big business customers. And that kind of focus away from the consumer and onto the enterprise is interesting. But Tom, do you have any sense of, I mean, the last piece of news that we reported about Windows was that they're turning, in Windows, the next update to Windows 8.1, they're going to turn off the boot to the tile interface. Which by the way, I'm just calling Metro. And that's going to happen. And it's called Metro. They should have paid the grocery store and gotten the rights to the Metro name. I'm just calling it Metro. Ditto SkyDrive. And SkyDrive. I don't even know what they're doing with SkyDrive. But are you getting any sense of what they're going to do with these other big chunks of business besides the enterprise stuff? Because it can't be staying the course. Right? The course is not working. Yeah, I mean on the Windows stuff, like on the boot to desktop, they're going to effectively, like they were testing that and it might have been like some weird testing scenario. But from what I've heard, they're going to just allow OEMs to boot to the desktop on PCs that aren't touch screens. So they've not been allowed to do that before. So yeah, I mean I think like coming up shortly for the Windows side of things and for Office, like certainly on Windows, they're trying to make it more PC friendly, right? Back to like the majority of the way that it's used at the moment. Because they've obviously seen that feedback. And I think a lot of it is also to do with businesses are moving away from Windows XP by April. They want an alternative to Windows 7 as well. So they need to make it more friendly to sort of entice businesses to move towards that rather than Windows 7. Because they don't want another scenario where Windows 7 is the next Windows XP in like 10 years time. And in Office, it's like they've really missed an opportunity to make Office touch. Like on the surface, it's runs in a desktop mode. They completely missed that. And it was kind of a mess really. And now they're creating their touch versions of Office. But we've only really heard that they're going to do them for Windows. So again, it feeds back into the whole idea of Office on iPad. And then obviously the server and cloud stuff, that's like slowly emerging as their big business now. So Xbox is really tiny in comparison. And for like years up until, I can't remember the exact date, but it's probably around 2010, 2011. It was losing money, right? And it still costs a lot of money to launch a console and all the marketing and stuff. So I don't know what will happen with Xbox this year or the year after. But I get a sense that that and the surface is like a showcase for their services and stuff. So I can't see that they'd get rid of that, like not initially at least. I think what's clear from looking at their revenue and profit over the last couple of years perhaps is that they've got this big backing from the server and Office and enterprise software. And they're making loads of money there. And if they go and lose a billion on surface, it doesn't matter so much. It's a small, it sounds like a lot, but really in reality it's not. So I think they can still keep feeding the consumer side and trying things and trying to get these services onto devices and stuff whilst having that enterprise backing. I think some of the stuff that Nadella is talking about today, like cloud first and mobile first, is probably a little bit to do with protecting that dominance they have in the enterprise before it really gets attacked by like, I mean, I guess Google is probably the imminent threat rather than anyone else. And yeah, I mean, I think that's their strategy is they want to be a little bit, they want to take revenue from wherever they can, right? So they'll do the Apple strategy of doing surface. They'll get a bit of revenue from there. They'll do Google style online services and make money there. Well, you know, it's interesting. And this is like, you know, we saw the Nadella walk and talk with another random Microsoft staffer who I don't know. But you know, if they, you know, whatever. It's their day. You don't want other journalists in the mix. I get it. You want to do your own rollout. You want to do fake interviews. But what I would have asked, and I think what anybody, any actual journalist would have asked on this day is, okay, you took over. You're at war, right? You're at war with Google. You've reached a detente with Apple, but you're fundamentally going to be at war with Apple when Nokia is part of your company and you start selling cell phones. How are you going to make peace? Are you going to, do you want to make peace? And I think whether or not Microsoft can fight Google to a truce or find leverage against Google outside of making scribbled t-shirts is actually like a major question sort of in the industry. And I don't, as far as I can tell, there's no answer to that question yet. And I think finding the leverage for Microsoft against Google against Apple, even to some extent now against Samsung, Samsung also makes cell phones, is going to be hugely important. So actually the other thing is like he needs, he just oversees, he's overseeing a company that just went to the one Microsoft strategy and like there was infighting with Microsoft and they've got big decisions. Like they've got Windows 8, RT, Windows Phone, Xbox has got a random version of Windows. They've got to make the decisions about whether or not to take their software to these other platforms. He's got to make a lot of big decisions and really have the power to do it. And is Bill Gates moving into this new role going to help or hurt that ability? Right, so we should talk about Gates. Tom, well actually, before we start, Gates also shot his own YouTube video. This rollout to me is amazing. Just because it's kind of cool but it's also kind of, watch the video. Here's Bill Gates welcoming Satya. Satya's got the right background to lead the company during this era. There's a challenge in mobile computing. There's an opportunity in the cloud. And the various business groups he's worked in, he's driven innovation, gotten architectures put together that really meet the needs of our customers. The opportunity for Microsoft is greater than ever before. Whether it's taking Office and bringing it to interactive documents, letting you find your information in rich ways, securing your information in rich ways, or even building a new platform, a cloud platform that connects to all sorts of different devices. I'm thrilled that Satya's asked me to step up, substantially increasing the time that I spend at the company. I'll have over a third of my time available to meet with product groups. And it'll be fun to define this next round of products working together. So there's a lot of opportunity in front of us and it's exciting that we've got a strong leader to take us there. That to me, just that last line, maybe I'm being negative. I'm being hopeful. I'm switching, I'm flipping the switch. Oh, I just hope. I'm super hopeful. Yeah, I mean, they've got a guy. A bomber, I think, was a lame duck for a long period of time there where no one believed outside of Microsoft that he could do the things that he wanted to do. And there were a series of decisions, particularly at mobile, that created that belief. And I think they're saying the right things right now. But the other piece, and I think this is just going to be a thing for Microsoft to figure out, is what role does Bill Gates have there? If Bill Gates, this would be like Steve Jobs. When Steve Jobs came back to Apple, he was an advisor to Gil Emilio. And then like 25 minutes later, he was the CEO of Apple. And that's there. That's the historical precedent for this situation. Well, the other historic, I mean, so the question is, is he going to come in and do that and kind of become the shadow leader? Or is he going to be like, I don't know, like a constitutional monarchy? He's not actually going to help make products. He's Queen Elizabeth. He's going to be Queen Elizabeth. He's going to be in on the money. Tom, you're English. Tell me how that feels. Yeah, I'm trying to get my head around the Gates stuff. Because I kind of expected him to step down as chairman this year. And maybe someone from the outside take over as chairman. But I guess what I wasn't expecting is for him to then be like the wingman for Nadella. So I guess it's just interesting to see how it's going to play out. I mean, Nadella said in his video, in his Microsoft interview, he said, I think the quote was exactly, he's going to ruthlessly remove any obstacles that allow us to innovate. So he's going to be pretty ruthless about sort of focusing where Microsoft's going to go. And I just wonder how Gates is going to be involved in that. Because I can't imagine Gates ever wanting to adopt Android or put all its services on viable platforms that are better than on its own platforms. Well, you know, famously, famously Bill Gates killed the courier because it couldn't run Atomik, right? I mean, because it wasn't Windows. And famously, the first, or the Xbox 360 was a Skunk Works project that didn't run, right? It was aside from the Windows stuff because Microsoft had a tendency to kill anything that wasn't Windows at that time. Kin, also. Just saying. The Kin was just a mistake from beginning to end. Like, shouldn't have done that. It's right. That thing would have been fine if it wasn't priced at the ridiculous price it came at. It would have never been fine. It was a terrible product and marketed just in the worst. Anyway, it doesn't matter. It's all over now. The nightmare is over. Bomber is gone. That was a joke. I'm actually very sad that Bomber is leaving. He was wonderful to cover. He was tremendous to cover and his obvious passion for Microsoft was cool. My happiest moments live blogging at The Verge were taking pictures of Steve Bomber. Yeah. I just love it. As a journalist, you could not ask for a better CEO. I think as a shareholder, they obviously made a different decision. But what I want to note, like honestly, the real question is can they do this thing? Can they make this change to be a software company that serves all of the platforms and there are now multiple platforms in the world with Bill Gates still kind of there. He was the one who drove a large part of the Windows first strategy at Microsoft. He's a business genius. Along with Gates and Bomber, they built Microsoft into this behemoth on the back of using the leverage of Windows. Tom, I'll let you have the last word on this. My opinion is yes, they can do that, but I don't know that they can do that and still feel like Microsoft instead of feeling like Oracle or Sun or IBM or something. If they become the cloud enterprise. Tom, what do you think? Today with the Gates stuff, it's like the Gates effect. He's there. I think a lot of it is to do with making the data not seem so green. He's not so fresh into it and he's got a helping steady hand there and stuff. Really, I can't see exactly how involved Gates is going to be. He said time and time again that he's focused on his charity and the foundation work. He's saying that he's going to be involved a third of the time, but I don't really know exactly what that means and how involved he's going to be in the products. Notoriously, he used to be the worst person to put a product in front of because his product reviews were like he'd pick it apart basically. If he's going to be like that, then I guess it changes the dynamic in a sense that if you're a product manager and you've got a product and you've been building up and you're ready to go and you're waiting for the final sign off and review and stuff, who do you go to? Do you go to Gates or do you go to Nadella? Where's the dynamic there and who says yes and no? How does that stop there being some weird arguments between Nadella and Gates, which I'm sure when he was in the boardroom there used to be some heated arguments probably over strategies and stuff. I don't know. I can't see how he's going to make a massive difference as well because he walked away from his full-time work in 2008. You're coming up six years without him being intimately involved in product decisions and the meetings that they have every week with the various product teams and stuff. He would have been in a day or so a week doing the board stuff, but in terms of products, I don't know. I can't see how he knows intimately what Microsoft's product strategy is right now as well. Well, maybe, but I think if you're Gates, that's a huge opportunity to actually begin to shape that strategy without the baggage of knowing how you got there. I think if Gates' role is to basically be the editor and to say this is good enough, this isn't good enough, we can put this out, that needs to get baked a little bit more. And to be a product guy that can stand outside of Microsoft politics. I don't care whose fiefdom this came from. This is good. This is bad. Yeah. I hope if Gates' role in Satsu's job is to run the business, I think that is recreated across the industry and I think that would make sense. I guess what Microsoft really needs, the time they've needed in recent years at least, is like a gatekeeper. Similar to what Marissa Mayer used to do at Google, which is just sit there and block stuff that just wasn't working, send it back. And what Jobs used to do at Apple, nitpicking, if Gates can do that well and to the correct strategy and stuff then that's definitely what Microsoft needs because there's some products that they should just take a little bit more time and care on before unleashing them out and stuff. Just like some basic mistakes that it's just unthinkable really. If they could have a gatekeeper there that would do that, I don't know if Gates is the right one for that but just because there's a lot of emotion and history there. But yeah, it's definitely interesting to see how him and Nadella work together. To me that's exciting. Hopefully that re-energizes Microsoft to make better things and hopefully we see them resurgent in a way that they've got the businesses that are working. I think the Xbox is really interesting. But on mobile, the places where they're talking about mobile first, they need to make a big push and hopefully they do that again. So I just want to end. We've assembled, this is very sad for me to see Steve Ballmer leave Microsoft and I was alluding to it earlier but covering Ballmer has been amazing and a privilege in many ways. So we're just going to end with a little highlight reel of Steve. Thanks for sticking with us. We're going to have all kinds of news on this the rest of the week on theverge.com and if you want more of us talking about this, the Verge cast is on Thursday as usual so tune into that. So let's say hello to Sacha Nadella and to Bill Gates' new role but more importantly goodbye to Steve Ballmer. Microsoft's like a fourth child to me. Children do leave the house. In this case I guess I'm leaving the house. Hey Bill, what's up? What's up? Hey, what's up? We've been given an enormous opportunity and Bill gave us that opportunity. I want to thank Bill for that. I want you to too. The pace of innovation isn't going to slow. It's going to get faster and faster. There might be a few competitors that are unfortunately eliminated. I love this company. Yes! I am a PC and I love this company. Developers, developers, developers, developers, developers, developers, developers, developers, developers, developers, developers. Yes! Listen to what else you get at no extra charge. The MS-DOS executive, an appointment calendar, a card file, a notepad, a clock, a control panel and can you believe it? Reverse it. Send them to CD, post them to MSN, mail them to friends all with one click. One Microsoft, one strategy, one team, focused, disciplined, professional and expert in all that we do. Let me use a line from an old movie. Relationships are like sharks. They move forward or they die. I actually think tech companies are the same.
 Hello, and welcome to The Verge Live. Today is a huge day, I think, in the tech world,
 and in the world. Microsoft has named a new CEO after a search that took just about six
 months. Steve Ballmer stepped down six months ago. They accelerated the timeline, and they
 gave themselves a little bit more time. Today, they announced Satya Nadella, who has been
 at Microsoft for something like 22 years, currently running the cloud services division,
 will be the new CEO. I'm joined here by Dieter Bohn.
 Hello.
 Our senior reporter, Tom Warren, is somewhere in London in an undisclosed location. There's
 just a lot to unpack here. Tom, I think most people are curious what you think. How are
 you reacting to the news of Satya Nadella?
 Well, I guess it's not surprising, because of the rumors from last week, and the continuous
 rumors that he's one of the top contenders. I guess the surprise is more, not necessarily
 that he's been named, but that Gates has stepped down as the chairman, and all that side to
 it. I think that's more surprising. Satya is an interesting candidate, because he's
 obviously got an enterprise background, a focus on service and stuff. I think the questions
 around Microsoft going forward this year is going to be, are they going to keep going
 for the consumer stuff, or is this going to be full-blown going for the cloud and the
 enterprise, and all those sort of things. It's definitely not a surprising move for
 Nadella, but certainly surprising to see Gates step down as chairman, and become more involved,
 apparently.
 Right. There's an interesting message there.
 He stepped down as chairman, but then he said he was going to dedicate something like a
 third of his time. He's going to substantially increase the time that he's going to dedicate
 to Microsoft. Apparently, being chairman of Microsoft, he was just like, whatever. He
 ran the foundation.
 I'd recommend the chairman was like one day a week, step in, make sure the company's doing
 fine, be the chairman of the board of directors. I think what he's saying, he can't be in that
 role. There's been a lot of conversation about whether any CEO can come into Microsoft, with
 Gates and Ballmer still on the board of directors, Gates particularly in that chairman position,
 and actually affect real change. I think that's basically what's been the holdup.
 They have to strike this balance of the new CEO coming in and having power and authority
 to shake things up like he wants to, without Ballmer and Gates looking down over him. They
 need to maintain a sense of continuity and not have people panic that it's not the same
 people that are around.
 I think they need to, it's Microsoft, and they need to reinvigorate their sense of innovation,
 pride and all this other stuff. You see Gates saying he's going to, I think he said he's
 going to spend three days a week, a third of his time, or up to three days a week, a
 third of his time, working on new products specifically for Microsoft.
 That's what I was going to say. He's working on stuff. He's making things.
 I think that's really important. That sense of continuity, actually, Steve Ballmer, obviously
 outgoing CEO, was the face of Microsoft for a decade. Here's a quote. Satya is a proven
 leader. He's got strong technical skills and great business insights, remarkable ability
 to see what's going on in the market, to sense opportunities, really understand how we've
 come together at Microsoft to execute the instance opportunities in a collaborative
 way. Our senior leadership team has never been stronger. Together, this group will drive
 us forward.
 We actually also have a video of Ballmer welcoming Satya Nadella, which Microsoft did a weird
 thing today. They literally announced the news by tweeting a link to their website and
 saying, we've got a new CEO. Full of YouTube videos. It's a beautiful website if you haven't
 looked at it. It's a really nice website. HTML5, they're good at it. IE's great. It's
 just weird that they've chosen fake interviews and weird walk-in talks and photo shoots as
 the way to... It's strange. Let's run the Ballmer video here.
 Of all, I love the spirit and culture of this place, the perseverance, which has been the
 cornerstone of our culture from the very beginning. I know Satya will lead this company into the
 future and that future is going to be bright with innovation, with growth, and with impact
 in the market and on the world. I love this company and today couldn't be a better day.
 The only thing he was missing there is saying developers. I love this company as a reference
 to previous Ballmer moments. He's met a Ballmer. He's floating. Ballmer himself is in the
 cloud. He's like Robert De Niro. He just played
 himself. He's just playing himself now.
 Wasn't he screaming there at the internal meeting as well? I'm sure he was screaming,
 I love this company. He's out. I was talking to some people at Microsoft
 today and said, a couple of weeks, we don't control him. You can go interview him if you
 want. Ballmer and Jay.
 Then they asked me to please not do that. Obviously, I think Gates stepping into a more
 product focus for old Ballmer, obviously completely stepping out, maintaining a seat on the board.
 The key question is what is going to happen now to Microsoft with a new CEO, with a new
 person? Tom, you actually wrote a profile of all the candidates a while ago. Do you
 want to give us a quick rundown of who Nadella is and where he came from?
 Essentially, he's been at Microsoft for 22 years. He's worked across the Bing business
 and their advertising stuff in search. He's worked a little bit on Office. Most of the
 core of his work has been on the cloud stuff recently and in the server business that he
 did. Effectively, he took the server business up the revenues, just changed their focus
 from being a client server platform into being focused on the cloud. That's key for the enterprise
 and businesses and stuff. The thing that I guess he lacks is obviously, he's never been
 the CEO of a publicly traded company. He also doesn't really have much attention or focus
 on devices and even to a certain extent, mobile and consumer stuff. Although today, he's obviously
 mentioned cloud first and mobile first, but he's obviously got Nokia coming in. I think
 that's going to be an interesting dynamic to this initially, at least, anyway, with
 the Nokia acquisition. His history is really the server and enterprise guy.
 My question is, given that that's his history of server and enterprise and given everything
 that I've seen him say today, all the interviews that he's given, the fake interviews, everything
 that's the way he talks and the language he uses sounds super enterprise and not very
 consumer at all. It's hard to follow.
 The reason we waited to do this show today was because there was a big public call with
 Microsoft's investors and big customers who wanted to listen to it to see if there's any
 more information. Dieter and I were sitting there listening to it and we're like, this
 is super business focused. This is very stay the course. There are big opportunities in
 our server business and big opportunities in our enterprise software business. What
 we didn't hear and what we've been waiting to hear from Microsoft for the longest time
 is how are you going to re-energize these consumer businesses outside of Xbox where
 things haven't gone well.
 There's a moment, and take this for what it is, where Satya was like, the Surface 2 really
 embodies everything that we're doing at Microsoft. Yes, there is one piece of that
 that is true. Then there's another piece of that where the Surface 2 embodies everything
 that Microsoft has gotten wrong in the mobile market for the longest time. They have a mobile
 operating system that's not 100% connected to Windows 8 outside of the tile interface
 and that is not connected to their phone offering. That's the disconnect and that's why that
 product is floundering in the market where the Surface Pro maybe people are actually
 buying.
 That's the big question. Tom, you and I have been talking a lot about this. There's a shift
 in language that Nadella has been using all day today where it's cloud instead of, you
 know, Balmer was devices and services, devices and services. Three screens in a cloud. Three
 screens in a cloud. They literally shifted the entire company from we're the world's
 sort of software vendor to we're a devices and services business. They're buying it so
 they can make devices. Nadella all day today. He didn't say devices and services. He said
 it only as a subsidiary of cloud first, mobile first.
 Before that, I just want to point out that if you've got cloud first and mobile first,
 I mean, can you have two firsts? I just stick that there. What does that mean? What does
 that shift in language mean?
 Yeah, I mean, I think it's clear. He's obviously trying to differentiate from Balmer's strategy
 for a start. You would if you're a new CEO, you want to put your mark on things. But also,
 I get the sense that perhaps he's more aware of the challenges and the realities that Microsoft
 faces rather than sort of like this devices and services focus previously.
 Because I mean, the devices stuff, like what devices do we have from Microsoft right now?
 We have the Surface and Surface Pro 2 and some other like mice and keyboard and all
 this sort of things. But if they're really going for devices in the way that you'd assume
 they were, that they produce themselves, then they're not really showing that right now.
 And maybe that will change, but maybe it won't. I mean, I think certain divisions like Windows
 and Surface and other components have kind of been waiting for the CEO announcement.
 So I think it's going to be interesting to see the way that he said, we're cloud first,
 we're mobile first. And that's like his primary, that was his primary talk today. That's pretty
 much what he focused on. And people did raise the devices and services stuff, but it was
 really a secondary thing.
 So we actually, we have a little clip of Nadella talking today about sort of his vision for
 the connected world. Let's take a look at that.
 You talked about this focus on innovation. Where do you see the opportunities lie for
 Microsoft?
 You know, going forward, it's a mobile first, cloud first world. In other words, everything
 is becoming digital and software driven. And so I think of the opportunities being unbounded.
 And we need to be able to pick the unique contribution that we want to bring. And that's
 where our heritage of being, having been the productivity company to now being the do more
 company where we get every individual and every organization to get more out of every
 moment of their life is what we want to get focused on.
 So I have a prediction. Tom, I think you might share this. Tom and I have literally been
 talking about this all day. I think this signals a shift for Microsoft, a bigger shift. And
 I talked to some people today and I was told to read into this change however I wanted.
 And this is how I'm choosing to read into this. I think they're going to start to open
 up their software platforms across, or their software across platforms. I think this is,
 they're going to start to engage iOS and Android as places where they need Microsoft software
 and services to go in a much more focused and directed way than just using Office to
 sell Windows, which has been the cornerstone of the, like the Balmer empire.
 So if they do that, the big challenge is can they do it and make money at it?
 Yeah. I mean, that's the big, that's the big challenge.
 Yeah. Because it's pretty difficult to sort of expect people to pay for something like
 Skype or Outlook or SkyDrive or OneDrive or whatever. It's pretty difficult to convert
 a user into like, you know, into revenue. So, but I think that they've obviously started
 doing that. Like they've obviously got all these services across Android and iOS, but
 not really to the full extent that they could. Like they could obviously make that software
 a lot better on the rival platforms. So I think it'd be interesting to see if this year
 that they do that, they take the steps, they put Office and iPad, they, you know, all the
 sort of things that you'd expect them to do as a software company. And I think it's like
 the important thing here is that they're mobile first. And that's a, to me that's really interesting
 way of saying like, you know, we're focused on mobile and all that sort of stuff. But
 really and truly, if we're being honest, Android is like the Windows equivalent, right? On
 mobile it's dominating all the OEMs and backing and stuff. So I think it will also be interesting
 to see if Microsoft has any sort of shift towards perhaps using Android apps on their
 own platforms or doing some sort of Amazon style fork with Android or anything related
 to Android.
 That would be crazy. That would be insane. I mean, that would be the, see, I think that
 putting their apps on the Android platform is, that's the opportunity that has been vacated
 by Blackberry, right? Because Blackberry, the killer app for Blackberry is messaging.
 It was built on the back of Outlook, right? Completely, you know, Blackberry and Exchange
 were just sat on your Outlook box in your office, right? And so Blackberry is out of
 that market. Samsung is trying to take that market with knocks. Apple is doing whatever
 it's doing to like integrate with Exchange and all this stuff. I said Outlook box and
 I meant Exchange. But Microsoft isn't in that space at all really anymore, right? So that's
 a place where they can say, well, we can start to provision Android devices and Windows phone
 devices and iOS devices in a much more holistic way because that's what we do. Like we're
 already providing the email services for all these companies. And then to say, well, we
 can also extend that to Office and OneNote and all this other stuff that we make. And
 I don't see them doing that. They're not focused on doing that right now. And I think Balmer's
 strategy was to say, well, we're going to buy Nokia and we're going to sell you a complete
 integrated package, Apple style, you know, soup to nuts. Here's your business. And I
 think they have kind of realized that that opportunity is no longer there for them.
 Right. That's the big thing. And so if they can't win with that basic strategy, just buy
 Nokia, sell everything just like Apple, the big challenge, the very first thing is what
 are they going to do about that traditional mobile market of just smartphones? Because
 they, I trust him to get cloud services right. Microsoft's already doing a pretty good job.
 I trust him to find the right strategy for dealing with software and what platforms to
 put it on and doing it in the right way. But the big question is just straight up selling
 phones. Do they need to do that to be successful and how are they going to do that?
 Right. And so, you know what? The people at Microsoft have always told me when I say,
 where is Office on the iPad? It's a fair question, right? Here's the dominant tablet platform.
 It is eating away at laptop sales. Like where is Office for this device? And they always
 say, well look, Office makes us money. No one has ever made real money selling software
 on mobile. They make real money selling services to back free software on mobile and you can
 make a little bit of money selling like $2 games on mobile, but you can't make Microsoft
 money selling software on mobile. And it sounds like this is mobile first. Microsoft's saying
 it's a strategy of software companies on mobile first. It means that they are going to rise
 the challenge of making real money selling software on mobile. And that to me involves
 engaging the other platforms. Because they are not going to make real Microsoft level
 money on mobile unless they engage iOS and Android while they try to build up Windows
 phone and hopefully solve this ridiculous puzzle of Windows RT, Windows 8, the Xbox
 all having shades of the same operating system.
 Right. Yeah, well and the other thing about mobile, sorry go ahead Tom.
 I was just going to say, I was just going to add, I think it remains to be seen, but
 there is a real opportunity there right on the iPad for Office. Like no competitors really
 created something that's like perfect that people are going to right now and buying.
 So there's an opportunity for them to generate some sort of revenue from selling Office and
 iPad. And the initial versions they put out for like the iPhone and stuff are pretty limited
 and you have to subscribe to their services and stuff. So it would be interesting to see
 if they take a slightly different approach there.
 Yeah I think for me the big takeaway, something else that Del said was like he wants to expand
 the definition of mobile to the industrial internet, the internet of everything and sort
 of basically anything not PC. And so I think when we hear Microsoft say we're mobile first,
 cloud first, I think that our definition of mobile has to be bigger than just phones.
 And even if they don't manage to find immediate success with just selling Nokia phones, they
 need to find something that catches on pretty soon. And that seems to be what they're going
 for.
 Well let's talk about Nokia for a minute. I mean this was the, you know, Ballmer basically
 like lit the building on fire and then was like okay find me a CEO, right? Like he undertook
 a massive reorganization, won Microsoft, he bought Nokia and then he left, right? He actually
 did those things in reverse order. He bought Nokia, undertook the massive reorganization.
 There was endless amount of talking and speculation that Stephen Elop, by the way poor Stephen
 Elop, I mean his plan just failed. His like secret plan to ruin two major companies. He
 got half of the way there. But you know Stephen Elop was at Microsoft, went to Nokia, famously
 adopted Windows Phone over Android. You can talk about that. There will be books written
 about that decision for decades to come. And then Microsoft purchased Nokia. He's coming
 back into the fold. For 30 seconds he was the CEO front runner. And then it was Alan
 Mulally and then that fell apart and here we are with Satya Nadella. And I just want
 to know what happens to Nokia now. Is there, the one thing we haven't really talked about
 today, I've seen anyone talk about from Microsoft externally really is they're about to enter
 the hardware game in the most serious way that Microsoft has ever entered the hardware
 market outside of the Xbox. But phones are a much bigger market than game consoles. There
 are many more competitors. Microsoft isn't the leader. It took them forever to become
 the leader of the Xbox. And now with the PS4 and Xbox One that's all up in the air again.
 What are they going to do with Nokia? What is the strategy? And I just haven't heard
 it at all.
 Well I've got a hunch but I'm really curious to hear what Tom thinks.
 Yeah I'm totally, I don't know. It's just totally not clear. And they've obviously not
 been able to talk about the intricacies of the deal yet and stuff. But I think when you
 look at it, if you look at what they did with Skype, they kind of took it and they haven't
 really done much to it. Like Skype is just, it's not languishing but they really need
 to start taking that service and doing something with it. And I think they'll run with a sort
 of similar approach to Nokia. I'm guessing they will anyway. They'll drop them in and
 they'll kind of leave them alone for a little bit and just figure out what they're going
 to do because they're not going to have a full strategy and being able to shake these
 people up. There's also the added complexity that most of the people are based in Finland
 as well. So they're not going to want to move those people. I think that acquisition is
 going to be interesting to watch because especially a lot of the growth areas for Windows Phone
 are in Europe and obviously Latin America as well.
 Yeah that's actually, I was just going to bring that up. If I were them, pick your areas
 where you're already starting to see some growth and target those really heavily and
 gain a foothold there. Don't try and take on Apple and especially Android everywhere
 because they're going like gangbusters, both of them. And if you can build on some growth
 that you already have in a couple of different markets, you can establish something and grow
 from there. I think as a consumer strategy that's the best they can do and then they
 just need to make the enterprise sell that they offer the best end to end solution for
 an enterprise. They can do that certainly much better than Blackberry was able to with
 Blackberry 10. So I mean I don't think, it's not going to just completely blow up right
 away like the Kin did, but it is going to be a slow progress before we start to see
 like genuine worldwide consumer success. It may never be in the cards for them, but I
 think they can capture certain markets and they can make a relatively compelling argument
 to enterprise.
 I mean Tom, you've been reporting that Nokia is going to do Android stuff for quite some
 time now.
 Yeah, I mean we've heard that they're doing the Normandy stuff. They've obviously been
 planning that for the low end. Sounds as though that's probably going to happen at Mobile
 World Congress and that the Microsoft acquisition isn't going to close before then. So that
 will definitely be interesting if that particular model is going to be on the Microsoft side
 of the acquisition. It's not something that Nokia are going to spin off, but I don't know
 that they can do that. That's definitely going to be interesting to see where Microsoft takes
 that.
 But even on the Windows phone side, I think they face a significant challenge across this
 year with not having a Nokia brand across Europe. Because I think that's really been
 helping to push because it's still like a respected brand in Europe to a certain extent.
 And it's not in the US. They've never really got anywhere there. But it could be without
 that Nokia name on it. That could be an interesting dynamic as well.
 So that's mobile. That's where we are with mobile. Then there are the other huge components
 of Microsoft. So it's funny, another thing you didn't talk about at all today as far
 as I can tell besides a passing mention was the Xbox. Here's another huge piece of Microsoft
 strategy and they're just kind of like leaving it alone. I didn't hear a lot of conversation
 about the future of Windows besides the Surface 2 is great. What I mostly heard was we're
 going to really focus on these big business customers. And that kind of focus away from
 the consumer and onto the enterprise is interesting.
 But Tom, do you have any sense of, I mean, the last piece of news that we reported about
 Windows was that they're turning, in Windows, the next update to Windows 8.1, they're going
 to turn off the boot to the tile interface. Which by the way, I'm just calling Metro.
 And that's going to happen. And it's called Metro. They should have paid the grocery store
 and gotten the rights to the Metro name. I'm just calling it Metro.
 Ditto SkyDrive.
 And SkyDrive. I don't even know what they're doing with SkyDrive. But are you getting any
 sense of what they're going to do with these other big chunks of business besides the enterprise
 stuff? Because it can't be staying the course. Right? The course is not working.
 Yeah, I mean on the Windows stuff, like on the boot to desktop, they're going to effectively,
 like they were testing that and it might have been like some weird testing scenario. But
 from what I've heard, they're going to just allow OEMs to boot to the desktop on PCs that
 aren't touch screens. So they've not been allowed to do that before. So yeah, I mean
 I think like coming up shortly for the Windows side of things and for Office, like certainly
 on Windows, they're trying to make it more PC friendly, right? Back to like the majority
 of the way that it's used at the moment. Because they've obviously seen that feedback. And
 I think a lot of it is also to do with businesses are moving away from Windows XP by April.
 They want an alternative to Windows 7 as well. So they need to make it more friendly to sort
 of entice businesses to move towards that rather than Windows 7. Because they don't
 want another scenario where Windows 7 is the next Windows XP in like 10 years time. And
 in Office, it's like they've really missed an opportunity to make Office touch. Like
 on the surface, it's runs in a desktop mode. They completely missed that. And it was kind
 of a mess really. And now they're creating their touch versions of Office. But we've
 only really heard that they're going to do them for Windows. So again, it feeds back
 into the whole idea of Office on iPad. And then obviously the server and cloud stuff,
 that's like slowly emerging as their big business now. So Xbox is really tiny in comparison.
 And for like years up until, I can't remember the exact date, but it's probably around 2010,
 2011. It was losing money, right? And it still costs a lot of money to launch a console and
 all the marketing and stuff. So I don't know what will happen with Xbox this year or the
 year after. But I get a sense that that and the surface is like a showcase for their services
 and stuff. So I can't see that they'd get rid of that, like not initially at least.
 I think what's clear from looking at their revenue and profit over the last couple of
 years perhaps is that they've got this big backing from the server and Office and enterprise
 software. And they're making loads of money there. And if they go and lose a billion on
 surface, it doesn't matter so much. It's a small, it sounds like a lot, but really in
 reality it's not. So I think they can still keep feeding the consumer side and trying
 things and trying to get these services onto devices and stuff whilst having that enterprise
 backing. I think some of the stuff that Nadella is talking about today, like cloud first and
 mobile first, is probably a little bit to do with protecting that dominance they have
 in the enterprise before it really gets attacked by like, I mean, I guess Google is probably
 the imminent threat rather than anyone else. And yeah, I mean, I think that's their strategy
 is they want to be a little bit, they want to take revenue from wherever they can, right?
 So they'll do the Apple strategy of doing surface. They'll get a bit of revenue from
 there. They'll do Google style online services and make money there.
 Well, you know, it's interesting. And this is like, you know, we saw the Nadella walk
 and talk with another random Microsoft staffer who I don't know. But you know, if they, you
 know, whatever. It's their day. You don't want other journalists in the mix. I get it.
 You want to do your own rollout. You want to do fake interviews. But what I would have
 asked, and I think what anybody, any actual journalist would have asked on this day is,
 okay, you took over. You're at war, right? You're at war with Google. You've reached a
 detente with Apple, but you're fundamentally going to be at war with Apple when Nokia is
 part of your company and you start selling cell phones. How are you going to make peace?
 Are you going to, do you want to make peace? And I think whether or not Microsoft can fight
 Google to a truce or find leverage against Google outside of making scribbled t-shirts
 is actually like a major question sort of in the industry. And I don't, as far as I
 can tell, there's no answer to that question yet. And I think finding the leverage for
 Microsoft against Google against Apple, even to some extent now against Samsung, Samsung
 also makes cell phones, is going to be hugely important.
 So actually the other thing is like he needs, he just oversees, he's overseeing a company
 that just went to the one Microsoft strategy and like there was infighting with Microsoft
 and they've got big decisions. Like they've got Windows 8, RT, Windows Phone, Xbox has
 got a random version of Windows. They've got to make the decisions about whether or
 not to take their software to these other platforms. He's got to make a lot of big
 decisions and really have the power to do it. And is Bill Gates moving into this new
 role going to help or hurt that ability?
 Right, so we should talk about Gates. Tom, well actually, before we start, Gates also
 shot his own YouTube video. This rollout to me is amazing. Just because it's kind of
 cool but it's also kind of, watch the video. Here's Bill Gates welcoming Satya.
 Satya's got the right background to lead the company during this era. There's a challenge
 in mobile computing. There's an opportunity in the cloud. And the various business groups
 he's worked in, he's driven innovation, gotten architectures put together that really meet
 the needs of our customers. The opportunity for Microsoft is greater than ever before.
 Whether it's taking Office and bringing it to interactive documents, letting you find
 your information in rich ways, securing your information in rich ways, or even building
 a new platform, a cloud platform that connects to all sorts of different devices. I'm thrilled
 that Satya's asked me to step up, substantially increasing the time that I spend at the company.
 I'll have over a third of my time available to meet with product groups. And it'll be
 fun to define this next round of products working together. So there's a lot of opportunity
 in front of us and it's exciting that we've got a strong leader to take us there.
 That to me, just that last line, maybe I'm being negative. I'm being hopeful. I'm switching,
 I'm flipping the switch. Oh, I just hope. I'm super hopeful. Yeah, I mean, they've got
 a guy. A bomber, I think, was a lame duck for a long period of time there where no one
 believed outside of Microsoft that he could do the things that he wanted to do. And there
 were a series of decisions, particularly at mobile, that created that belief. And I think
 they're saying the right things right now. But the other piece, and I think this is just
 going to be a thing for Microsoft to figure out, is what role does Bill Gates have there?
 If Bill Gates, this would be like Steve Jobs. When Steve Jobs came back to Apple, he was
 an advisor to Gil Emilio. And then like 25 minutes later, he was the CEO of Apple. And
 that's there. That's the historical precedent for this situation.
 Well, the other historic, I mean, so the question is, is he going to come in and do that and
 kind of become the shadow leader? Or is he going to be like, I don't know, like a constitutional
 monarchy? He's not actually going to help make products.
 He's Queen Elizabeth.
 He's going to be Queen Elizabeth.
 He's going to be in on the money. Tom, you're English. Tell me how that feels.
 Yeah, I'm trying to get my head around the Gates stuff. Because I kind of expected him
 to step down as chairman this year. And maybe someone from the outside take over as chairman.
 But I guess what I wasn't expecting is for him to then be like the wingman for Nadella.
 So I guess it's just interesting to see how it's going to play out. I mean, Nadella said
 in his video, in his Microsoft interview, he said, I think the quote was exactly, he's
 going to ruthlessly remove any obstacles that allow us to innovate. So he's going to be
 pretty ruthless about sort of focusing where Microsoft's going to go. And I just wonder
 how Gates is going to be involved in that. Because I can't imagine Gates ever wanting
 to adopt Android or put all its services on viable platforms that are better than on its
 own platforms.
 Well, you know, famously, famously Bill Gates killed the courier because it couldn't run
 Atomik, right? I mean, because it wasn't Windows. And famously, the first, or the Xbox 360 was
 a Skunk Works project that didn't run, right? It was aside from the Windows stuff because
 Microsoft had a tendency to kill anything that wasn't Windows at that time.
 Kin, also.
 Just saying.
 The Kin was just a mistake from beginning to end. Like, shouldn't have done that. It's
 right.
 That thing would have been fine if it wasn't priced at the ridiculous price it came at.
 It would have never been fine. It was a terrible product and marketed just in the worst. Anyway,
 it doesn't matter. It's all over now. The nightmare is over. Bomber is gone. That was
 a joke. I'm actually very sad that Bomber is leaving. He was wonderful to cover. He
 was tremendous to cover and his obvious passion for Microsoft was cool.
 My happiest moments live blogging at The Verge were taking pictures of Steve Bomber.
 Yeah.
 I just love it.
 As a journalist, you could not ask for a better CEO. I think as a shareholder, they obviously
 made a different decision. But what I want to note, like honestly, the real question
 is can they do this thing? Can they make this change to be a software company that serves
 all of the platforms and there are now multiple platforms in the world with Bill Gates still
 kind of there. He was the one who drove a large part of the Windows first strategy at
 Microsoft. He's a business genius. Along with Gates and Bomber, they built Microsoft into
 this behemoth on the back of using the leverage of Windows.
 Tom, I'll let you have the last word on this. My opinion is yes, they can do that, but I
 don't know that they can do that and still feel like Microsoft instead of feeling like
 Oracle or Sun or IBM or something.
 If they become the cloud enterprise. Tom, what do you think?
 Today with the Gates stuff, it's like the Gates effect. He's there. I think a lot of
 it is to do with making the data not seem so green. He's not so fresh into it and he's
 got a helping steady hand there and stuff. Really, I can't see exactly how involved Gates
 is going to be. He said time and time again that he's focused on his charity and the foundation
 work. He's saying that he's going to be involved a third of the time, but I don't really know
 exactly what that means and how involved he's going to be in the products. Notoriously,
 he used to be the worst person to put a product in front of because his product reviews were
 like he'd pick it apart basically. If he's going to be like that, then I guess it changes
 the dynamic in a sense that if you're a product manager and you've got a product and you've
 been building up and you're ready to go and you're waiting for the final sign off and
 review and stuff, who do you go to? Do you go to Gates or do you go to Nadella? Where's
 the dynamic there and who says yes and no? How does that stop there being some weird
 arguments between Nadella and Gates, which I'm sure when he was in the boardroom there
 used to be some heated arguments probably over strategies and stuff. I don't know. I
 can't see how he's going to make a massive difference as well because he walked away
 from his full-time work in 2008. You're coming up six years without him being intimately
 involved in product decisions and the meetings that they have every week with the various
 product teams and stuff. He would have been in a day or so a week doing the board stuff,
 but in terms of products, I don't know. I can't see how he knows intimately what Microsoft's
 product strategy is right now as well.
 Well, maybe, but I think if you're Gates, that's a huge opportunity to actually begin
 to shape that strategy without the baggage of knowing how you got there. I think if Gates'
 role is to basically be the editor and to say this is good enough, this isn't good enough,
 we can put this out, that needs to get baked a little bit more.
 And to be a product guy that can stand outside of Microsoft politics. I don't care whose
 fiefdom this came from. This is good. This is bad.
 Yeah. I hope if Gates' role in Satsu's job is to run the business, I think that is recreated
 across the industry and I think that would make sense.
 I guess what Microsoft really needs, the time they've needed in recent years at least, is
 like a gatekeeper. Similar to what Marissa Mayer used to do at Google, which is just
 sit there and block stuff that just wasn't working, send it back. And what Jobs used
 to do at Apple, nitpicking, if Gates can do that well and to the correct strategy and
 stuff then that's definitely what Microsoft needs because there's some products that they
 should just take a little bit more time and care on before unleashing them out and stuff.
 Just like some basic mistakes that it's just unthinkable really. If they could have a gatekeeper
 there that would do that, I don't know if Gates is the right one for that but just because
 there's a lot of emotion and history there. But yeah, it's definitely interesting to see
 how him and Nadella work together.
 To me that's exciting. Hopefully that re-energizes Microsoft to make better things and hopefully
 we see them resurgent in a way that they've got the businesses that are working. I think
 the Xbox is really interesting. But on mobile, the places where they're talking about mobile
 first, they need to make a big push and hopefully they do that again. So I just want to end.
 We've assembled, this is very sad for me to see Steve Ballmer leave Microsoft and I was
 alluding to it earlier but covering Ballmer has been amazing and a privilege in many ways.
 So we're just going to end with a little highlight reel of Steve.
 Thanks for sticking with us. We're going to have all kinds of news on this the rest of
 the week on theverge.com and if you want more of us talking about this, the Verge cast is
 on Thursday as usual so tune into that. So let's say hello to Sacha Nadella and to Bill
 Gates' new role but more importantly goodbye to Steve Ballmer.
 Microsoft's like a fourth child to me. Children do leave the house. In this case I guess I'm
 leaving the house.
 Hey Bill, what's up?
 What's up?
 Hey, what's up?
 We've been given an enormous opportunity and Bill gave us that opportunity. I want to thank
 Bill for that. I want you to too.
 The pace of innovation isn't going to slow. It's going to get faster and faster.
 There might be a few competitors that are unfortunately eliminated.
 I love this company. Yes! I am a PC and I love this company.
 Developers, developers, developers, developers, developers, developers, developers, developers,
 developers, developers, developers. Yes!
 Listen to what else you get at no extra charge. The MS-DOS executive, an appointment calendar,
 a card file, a notepad, a clock, a control panel and can you believe it? Reverse it.
 Send them to CD, post them to MSN, mail them to friends all with one click.
 One Microsoft, one strategy, one team, focused, disciplined, professional and expert in all
 that we do.
 Let me use a line from an old movie. Relationships are like sharks. They move forward or they
 die. I actually think tech companies are the same.