Top 10 Microsoft Moments of 2013

by Pedro Hernandez

In a surprise move this past summer, Microsoft CEO Steve Ballmer announced that he was retiring within 12 months. After 13 years at the helm of the software empire, Ballmer is making room for new leadership. “There is never a perfect time for this type of transition, but now is the right time,” he said in a statement. Time will tell.

Despite reports that Microsoft wanted to install a new CEO before year’s end, Ballmer will have to wait until the new year to clear out his office. A selection committee, which includes co-founder and former CEO Bill Gates, is narrowing its list of candidates for the job, which reportedly includes Ford CEO Alan Mulally (pictured left). The auto executive’s evasiveness surrounding the nod is causing turmoil at the car manufacturer. Another candidate, Steve Mollenkopf, former COO of Qualcomm, has effectively taken himself out of the running after accepting the CEO position at the chipmaker. Meanwhile, Satya Nadella (pictured right, Microsoft’s own head of cloud and enterprise software) continues to float near the top of the list.

Apple builds its own iPhones and iPads. Google has Motorola. Soon, Microsoft will control Nokia’s handset and mobile device business. In September, Microsoft announced that it was paying a hefty $7.1 billion for Nokia’s Devices & Services division. “We are receiving incredible talent, technology and IP. We’ve all seen the amazing work that Nokia and Microsoft have done together,” Ballmer said, referencing Nokia’s Lumia Windows Phones, which have found modest success in some markets. Currently, the deal has hit a bit of a snag in China, where regulators are wary of Nokia’s IP licensing plans.

Surface RT failed to catch on, much less provide much competition for Apple’s iPad and an ever-expanding collection of Android tablets. Although it sported impeccable build quality and class-competitive specs, consumers and IT buyers balked, causing Microsoft to write off $900 million during its fiscal fourth quarter ended June 30. During an internal town hall meeting, Ballmer would later admit, “We built a few more devices than we could sell.” Indeed.

Microsoft embarked on its biggest reorganization since 2002 this past summer. As part of the “One Microsoft” strategy to evolve into a “devices and services” company, Microsoft kicked off sweeping changes that consolidated its sprawling array of engineering areas into just four, namely OS, Apps, Cloud and Devices. Noting that Microsoft’s “strengths are in high-value activities, powering devices and enterprise services,” Ballmer in a memo announcing the change said the One Microsoft “strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most.”

After a scathing article in Vanity Fair, Microsoft ended a controversial employee review process that often pit colleagues against one another, stifled innovation and tore teams apart. Under the program, called “stack ranking,” managers were often forced to rank employees relative to one another. As a result, even brilliant coders risked being labeled as underperformers if they landed on a team of more experienced, genius developers. Yahoo may learn the same lesson, as a similar system is said to have taken root at the company.

Microsoft released the Windows 8.1 update (code-named Windows “Blue”) on Oct. 17 with a staggering array of enhancements that promote secure, mobile-enabled workflows. The OS also now supports a wider variety of hardware, including small, sub-8-inch slates, which are taking the tablet market by storm. Acknowledging Windows’ desktop heritage—and responding to negative feedback—the company restored the Start button and gave users the option to boot directly into the desktop view (versus the tiled, touch-optimized Start Screen).

Windows 8.1 launched with another major feature: 3D printing support. “Making a 3D object on your PC will be as easy as writing a document in Word and sending it to print. Just as desktop publishing transformed how we write, we think desktop manufacturing will transform how we create,” boasted Shanen Boettcher, general manager of Microsoft’s Startup Business Group. The company subsequently released a 3D Builder app for the OS (pictured).

Microsoft was relentless in issuing Windows Azure updates in 2013. For instance, Microsoft officially launched its Linux-friendly infrastructure-as-a-service (IaaS) play—and Amazon Web Services competitor—Windows Azure Infrastructure Services in April. Big businesses are jumping on board. In June, Windows Azure General Manager Steven Martin reported that the cloud platform’s 200-plus services offerings had attracted 250,000 customers. Additionally, “more than 50 percent of the Fortune 500 are using Windows Azure already,” he said.

Microsoft took the bold risk of bundling its Kinect sensor with the new Xbox One and showcasing the device’s multimedia prowess and cloud-enabled services offerings, like Skype and SkyDrive—sometimes at the expense of games. Despite costing $100 more than Sony’s latest console, the Xbox One delivered “the biggest launch in Xbox history, with more than one million consoles sold … in less than 24 hours,” reported the company. At last count, Xbox One is neck and neck with the PlayStation 4 in terms of sales (2 million versus 2.1 million, respectively).