Nadella: 2011 Cloud Move Points to Microsoft Reorganization

With chatter building that Microsoft (MSFT) is readying a Steve Ballmer-crafted makeover to retool the company around “devices and services”—a phrase that’s fast become the chief executive’s go-to company description—clues are seeping out from Redmond that something substantial may be in the works.

A big hint just came from Satya Nadella (pictured), president of Microsoft’s Server and Tools business, which houses a raft of hot products, including Windows Server, SQL Server and the growth-driving Windows Azure cloud platform. Ballmer installed Nadella in Feburary 2011 to lead what is now the company’s third largest business unit—a move that pushed Bob Muglia, a highly regarded 22-year company veteran, right out the door to Juniper (JNPR).

One scenario in the rumored Microsoft restructuring has Nadella and execs Tony Bates, Skype Communications Division president, and Don Mattrick, Interactive Entertainment Division president, perhaps gaining larger roles.

Against a TechEd 2013 backdrop of new Windows Server 2012 R2, System Center 2012 R2 and SQL Server 2014 releases slated for preview later this month, Nadella sent a rallying-cry internal email to company employees subsequently posted as a blog entry.

In it he touted Microsoft’s 2011 about face move to the cloud:

“Two years ago we bet our future on the cloud and quietly refocused our 19 billion-dollar software business by completely transforming our products, culture and practices to be cloud-first. We knew the journey would be long and challenging with plenty of doubters. But we forged ahead knowing that the cloud transition would change the face of enterprise computing. As it turns out we were right to take this risk.”

He promoted Windows Azure:

“Windows Azure is going through hyper-growth. Half the Fortune 500 companies are using Windows Azure. We have over 1,000 new customers signing up every day and over 30,000 organizations have started using our IaaS offering since it became available in April… Hyper-V has taken 4 points of competitive share in the last 12 months and our Datacenter Editions across Windows Server and SQL Server continue to grow in double digits. This all adds up to an enterprise cloud business that is at significant scale.”

And, by looking back at Microsoft’s cloud-centric reorg, he hinted about what may be in the offing:

“To enable this transformation we had to make deep changes to our organizational culture, overhauling how we build and deliver products. Every one of our division’s nearly 10,000 people now think and build for the cloud – first. Our engineers live a “live-site” first culture to better respond to our customers in real time. And we are laser-focused on building more complete end-to-end service scenarios, or modern workloads, to deliver more value to our customers and partners.”

Might Microsoft be singing a similar tune to set up this next sweeping corporate overhaul? Stay tuned …