Here are 5 problems that Satya Nadella will have to solve at Microsoft

India is cheering the appointment of a fellow-Indian as Microsoft CEO and there are a slew of views on the man himself but beyond the gushing headlines, it’s also a fact that Microsoft isn’t at the top of its game.

The reason Steve Ballmer had to exit as CEO was to get in new blood who could possibly turn things around for Microsoft. And now, using an illustration from a game he claims to love, as Nadella walks in to bat, here are five problems he’ll need to solve while at the crease:

Nokia and Windows phones

Microsoft shelled out $7.2 billion to acquire Nokia’s handset business but Windows phones have a long way to go when it comes to competing against Apple and Google powered phones. Techcrunch in a detailed article on the challenges facing Nadella points out that despite a great 2013, the last quarter saw sales slump. The problem is that even at its best, Windows Phone’s meagre few percentage points up in marketshare isn’t going to help unseat the smartphone market’s reigning giants, Google and Apple.

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Worse, last quarter’s falling sales threaten to hit developer interest which in turn could hit the sale of Windows phones further. Developer interest is key if apps are to come to Windows Phone and a big name like Instagram once in a while isn’t enough to attract customers. The other smartphone player in the dumps, BlackBerry, has pretty much thrown in the towel on going completely independent as an app platform, and its latest 10.2.1 release offers users the ability to directly download Android apps from a BlackBerry 10 smartphone and use them.

It doesn’t help that Nokia’s integration with Microsoft is nowhere close to complete and falling profitability is threatening to pull down the software giant’s along with it. Nadella will have his hands full ensuring that the two firms not only integrate but also manage to yield results.

[caption id=“attachment_74808” align=“alignleft” width=“380”]  Can Nadella reverse the ground lost while Ballmer was in charge? Image courtesy: Microsoft[/caption]

Those damn Windows tiles

Microsoft revamped the way Windows looked in Windows 8, with the universal tile interface called Metro across all devices, only to howls of protest from consumers who have struggled with it and are searching for the familiar, though clunky Windows interface. Windows 8 actually managed to make things worse.

BBC quotes Chris Green, principal technology analyst at the consultancy Davies Murphy Group, saying that apart from consumers struggling to use it, most core business consumers aren’t upgrading to it.

Many companies are preferring to wait with their previous editions of Windows to see the next version of the operating system. It doesn’t help that many (around 30 percent) still have machines running Windows XP and the software giant plans to do away with support for it in April.

Microsoft is already reportedly planning to do away with the much maligned tile interface in a version of Windows 8, but Nadella will need to ensure that the OS remains popular, in an era where the PC form factor is losing appeal.

Falling PC and corporate spending

In its article Techcrunch points out that PC sales have been on the decline, which has been hitting Microsoft, and the company would also need to hope that business climate doesn’t get any worse.

“Worse-than-expected PC sales would also harm OEM revenues for Microsoft, both from consumers and enterprises,” the article notes.

Nadella wouldn’t really be able to ensure PC sales, which have been on a constant decline, improve, he can perhaps work towards ensuring that Windows has wider acceptability across devices to make up for it.

The Cloud

Nadella’s claim to fame has been the boost he’s given to Microsoft’s cloud services but a big challenge still remains in bringing out new products that will compete with existing products and they all need to do well. In the last quarter cloud revenues brought smiles to Microsoft investors and any slip-up will mean that investors will seek Nadella’s head, even as revenues from Windows are falling and where Microsoft is spending more money on hardware than it makes.

BBC points out that Windows Azure is still targetted at businesses and Microsoft may take on Google with something similar to the ChromeOS and could also take on consumer cloud storage services like Dropbox with its revamped OneDrive.

Techcrunch fears Microsoft could drop the ball with Nadella’s attentions drawn to the various other problems confronting the company and the new Microsoft CEO will be hoping to ensure that he proves them wrong.

Ensuring talent stays on at Microsoft

Whilealmost everyone in hindsight believes that Steve Ballmer wasn’t really the best man to lead Microsoft, Nadella will need to show that he has the vision to develop products that are ahead of the curve.

It doesn’t help that the software giant has been bleeding senior level executives and Nadella, who is seen as a amiable team leader, will need to ensure he manages to hold on to senior executives with a vision for the company and hire new talent to replace those who have vacated their seats.