What Facebook can learn from Microsoft’s mid-life crisis

Wednesday 05 February 2014 16.36

 

Satya Nadella is predicting a mobile and cloud-first world

Satya Nadella is predicting a mobile and cloud-first world

By Will Goodbody, Science & Technology Correspondent

@willgoodbody

It was something of a curious coincidence that Facebook celebrated its 10th birthday on the same day that Microsoft announced its new CEO. Indian-born Satya Nadella takes over from Steve Ballmer who signalled his intention to step down last year. He was most recently head of the global IT company’s cloud and enterprise division. And although he’s an insider, taking over at a time when many feel Microsoft needs a shake-up led by someone from the outside, he’s also considered a capable successor to Ballmer.

Other changes will see founder Bill Gates step down from his position as chairman, although he will remain on as technology advisor and retain a seat on the board. Independent director, John Thompson, takes over as chairman.

Much is riding on the success of Nadella’s (and the new leadership team’s) strategy. Microsoft’s fortunes have been somewhat flagging of late. The path pursued by Ballmer of converting it into a device and services company hasn’t been a fruitful one so far. The PC and laptop market, in which Microsoft has been so dominant for so long, is in severe decline, and Microsoft’s device and software offerings in the tablet and smartphone market are only slowly gaining traction.

Nadella gave some clues of what he is planning in an email to staff, in which he said their job “is to ensure that Microsoft thrives in a mobile and cloud-first world.” He added: “I believe over the next decade computing will become even more ubiquitous and intelligence will become ambient. The coevolution of software and new hardware form factors will intermediate and digitize — many of the things we do and experience in business, life and our world. This will be made possible by an ever-growing network of connected devices, incredible computing capacity from the cloud, insights from big data, and intelligence from machine learning. This is a software-powered world.”

In plain English, what he seems to be saying is that for Microsoft to remain relevant, survive and grow, its future lies in producing software that capitalises on the growing areas of internet based services, emerging artificial intelligence technology and the explosion of devices connected to the internet – the internet of things. In other words, to become less like Microsoft and more like Google and Apple.

These recent difficulties experienced by Microsoft should serve as a salutary warning to Facebook, as it celebrates ten years in existence. In many ways, it is hard to believe that it is a decade since the social network was born in a Harvard dorm. Facebook’s rise has been much faster and more spectacular than Microsoft’s. Today it boasts 1.2bn users around the world, and is worth an eye-watering $160bn.

Yet, such rapid growth to such a scale creates many challenges for the future. Questions are increasingly being asked about its relevance with the “yoof” of today; whether it will go the way of Myspace and Bebo; whether it can continue to attract and retain users amid growing concerns around internet privacy; whether the corporate motivations of Wall St can be reconciled with the fundamental social roots upon which it is based?

Facebook certainly has much “growing room”. There are billions around the world who are not even online, let alone on Facebook. And Mark Zuckerberg, an incredibly smart strategic thinker, is working on a project which essentially involves bringing the internet (followed presumably by Facebook) to the rest of the world.

But at the same time, social media changes more often than young people (who predominantly use it) change their clothes. Instant messaging services like WhatsApp and Snapchat are increasingly the means by which young people are staying connected. And every single day dozens of other potential new rivals to Facebook are born.

So it seems likely that unless it continues to reinvent itself and evolve with its users, Facebook could face the type of mid life crisis that 40 year old Microsoft is currently going through. And much sooner in its history than Microsoft experienced it.

The next ten years will tell a lot.

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