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Microsoft Corporation: Can Google, Inc.'s Vic Gundotra Succeed Steve Ballmer?

 April 17, 2013 04:15 PM

(By Mani) The CEO succession rumors for Microsoft Corporation (NASDAQ: MSFT) intensified after its much-hyped Windows 8 is said to be curtailing the PC market instead of reviving it.

As the Redmond, Washington-based Microsoft reports its quarterly numbers on April 18, investors may look for any comments over the succession plans. Analysts have speculated several names who could succeed Steve Ballmer and Google, Inc.'s (NASDAQ: GOOG) Vic Gundotra is one among them.

Time for a little background on why Microsoft needs a CEO change. Microsoft's Bing continues to be a distant second in queries, with a market share of about 12 to 15 percent.

[Related -Microsoft Corporation (MSFT) Earnings Preview: What To Watch In Q2 Results?]

Bing is probably a distant third in terms of monetization, with probably less than 5 percent market share. The top two positions have been taken by Google's Search and YouTube. Among Web browsers, Microsoft is losing market share to Google Chrome.

Above all, the company's cash cow Windows is struggling due to weak PC market while the tablet and mobile initiatives have not gained the expected momentum.

In cloud computing, Microsoft is losing to Amazon.com, Inc. (NASDAQ: AMZN), Salesforce.com, Inc. (NYSE: CRM) and VMWare, Inc. (NYSE: VMW). In Data Fabric layer, Microsoft is struggling against Pivotal and VoltDB.

[Related -Google Inc (GOOG): Why Nest Labs Deal Is A Wakeup Call For Apple Inc.?]

"Microsoft has failed to understand the new-IT landscape and has missed on numerous opportunities," Global Equities Research analyst Trip Chowdhry said in a client note.

Microsoft has missed many opportunities created in the multi-screen computing, which resulted in Apple, Inc. (NASDAQ: AAPL) and Google taking the lead.

"Converged view is that the current Microsoft CEO is technologically weak, and hence is unable to get the much needed respect from Microsoft Engineers and Software Developers. The current CEO is unable to understand and define the winning strategies against its key competitors," Chowdhry said.

Vic Gundotra, as the new CEO of Microsoft, may provide the much needed fresh perspective to Microsoft, which the current CEO lacks. Since Gundotra, has worked with rival Google, he will have the best competitive insights than anyone else in the industry.

Gundotra, currently the Vice President Engineering at Google, is probably the best executive who has first hand experience working with a new generation company and creating several new ecosystems, which Microsoft needs right now

Moreover, Gundotra could boost the Microsoft and Yahoo, Inc. (NASDAQ:YHOO) relationship that has hit a rocky patch since Yahoo has still not been able to achieve the desired RPS (Revenue Per Search) from Microsoft's Bing Search.

"Converged view is that the Microsoft and Yahoo relationship may get much smoother if Vic is the CEO of Microsoft, since both Marissa Mayer and Vic have worked at Google and have shared a good business relationship," Chowdhry noted.

At Google, he has been involved in new cloud centric services and ecosystems, including Google Plus and Google Mobile and has been at Google for nearly 6 years. He is responsible for Google's mobile phone applications, and its developer efforts, including OpenSocial, Google Gadgets and Google Gears.

As a result, Gundotra has a strong understanding of Social, Cloud and Mobile computing, which Microsoft currently lacks.

The key factor that works in favor of Gundotra is he is an ex-Microsoft employee. So, he is aware of the Microsoft culture and working style. Gundotra had spent 15 years at Microsoft. He was the General Manager of Platform Evangelism at Microsoft, before joined Google in June 2007.

His duties at Microsoft included promoting Microsoft's APIs and platforms to independent developers and helping to develop a strategy for Windows Live online services to compete with Google's web-based software applications.

"Vic Gundotra, will have instant credibility as the New CEO of Microsoft, as he had been a part of Microsoft for 15 years. Gundotra is technically very competent as compared to the current Microsoft CEO, Chowdhry said.

Gundotra is probably the only executive, who can bring the much-needed fresh perspective to Microsoft while still having a deep understanding of Microsoft culture.

On the whole, Vic Gundotra is a perfect blend of being a Microsoft Insider and bringing a fresh perspective from Google and an executive who could improve Microsoft's strategic position against new and emerging competition from Google, Amazon.com, VMWare, Pivotal and VoltDB.



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