What Microsoft’s revival can teach other tech companies

IT MUST FEEL good to be back on top—and this time, almost liked. Twenty years ago Microsoft was considered an evil empire, scheming for domination and embroiled in a bruising antitrust battle with America’s Justice Department. Five years ago, having dozed through the rise of social media and smartphones, it was derided as a doddery has-been. Now, after several stellar quarters—this month it reported revenue of $33.7bn, up by 12% year on year—Microsoft is once again the world’s most valuable listed company, worth over $1trn. How did Satya Nadella, the boss since 2014, pull off this comeback? And with American trustbusters starting on a new review (see article) of “search, social media, and some retail services online”—ie, Google, Facebook and Amazon—what can the other tech giants learn from Microsoft’s experience?

First, be prepared to look beyond the golden goose. Microsoft missed social networks and smartphones because of its obsession with Windows, the operating system that was its main moneyspinner. One of Mr Nadella’s most important acts after taking the helm was to deprioritise Windows. More important, he also bet big on the “cloud”—just as firms started getting comfortable with renting computing power. In the past quarter revenues at Azure, Microsoft’s cloud division, grew by 68% year on year, and it now has nearly half the market share of Amazon Web Services, the industry leader.