Cisco's Chambers: Nadella Will Be Successful At Changing Microsoft

Cisco CEO John Chambers is betting that new Microsoft CEO Satya Nadella has the right stuff as a hard-driving "change agent" to lead the software giant successfully into the future.

"It's a hard job and I don’t underestimate the challenges that Satya will face, but if I were betting on whether he's going to be successful, I think he absolutely will be," Chambers said in a recent interview with CRN.

Chambers, noting that he doesn't usually speak so candidly on his industry "peers," deemed Nadella a "breath of fresh air" in terms of his willingness to make changes at Microsoft.

[Related: Cisco, Microsoft Team Up On Three-Year Data Center Initiative]

Nadella in July -- just six months after taking the top spot at Microsoft -- told employees in an email that he is not going to follow the same "devices and services" strategy that former Microsoft CEO Steve Ballmer pursued through moves like Microsoft's $7.2 billion purchase of Nokia's phone business last year.

Just days after Nadella's email, Microsoft revealed plans to cut 18,000 jobs over the next year, with 12,500 of them coming from its Nokia division. Microsoft partners dubbed the move tough, but "overdue" in order to simplify Microsoft's corporate structure and make the company more nimble overall.

"While some people might second guess [Nadella] on his strategy or his implementation or his decision to size the organization right, those are decisions leaders have to make," Chambers said, adding that you can "probably count on one hand" the successful high-tech CEO transitions over the last 30 years. "You can't lead if you don't make the tough decisions."

The Cisco-Microsoft partnership could become the strongest it's ever been with Nadella at the helm, Chambers said.

"We have probably done more with Microsoft with Satya in the last year than we had in multiple years before that," Chambers said.

Chambers expects Cisco and Microsoft to especially strengthen their ties in the data center market while Nadella is at the helm. He pointed out that Nadella joined Cisco on stage last November for the launch of Cisco's Application Centric Infrastructure (ACI) SDN solution.

"It wasn't that we didn't get along well with the [previous] leadership at Microsoft; we got along very well," Chambers said. "But watch our data center announcements together. Watch what we do in terms of the market."

While still long-time competitors in markets like unified communications, Microsoft and Cisco are, in fact, taking steps to team up in the data center. Chambers' comments on Nadella came just one week after Microsoft and Cisco inked a new three-year partnership through which the companies will work together to drive deeper integration across their data center offerings, including Cisco's Unified Computing System (UCS) and Microsoft's Windows Server, System Center, SQL Server and Microsoft Azure.

NEXT: The New Microsoft-Cisco Partnership

Microsoft and Cisco said one of the first integrated solutions to come from the partnership is a Cisco Nexus 1000V Switch for Windows Server 2012 Hyper-V. The move could be seen as a shot across the bow at Cisco software-defined networking rival VMware, whose own virtualization technology competes with Hyper-V.

Microsoft and Cisco are also rolling out a joint initiative aimed at migrating Windows Server 2003 customers to Windows 2012 R2 on the Cisco UCS platform. Jim McHugh, vice president of UCS product marketing at Cisco, said Windows Server 2003 migrations represent a significant greenfield opportunity for Cisco partners.

"The nice thing for us is when Windows 2003 came out … there was no UCS," McHugh said. "So for us and for our partners, as we go after this program, it's a greenfield opportunity because we are taking a lot of legacy servers that, in the beginning, weren't developed for virtualization back then. It's a real opportunity to bring value to our customers.

Jason Parry, vice president of client solutions at Force 3, a Crofton, Md.-based Cisco and Microsoft partner, said the Microsoft-Cisco partnership makes sense, given the synergies that already exist between both companies' data center offerings.

"I think it's positive," Parry said. "They are two companies who have driven innovation in the data center space before. When you look at their strengths -- Microsoft obviously [being] more application-centric and software-centric and then Cisco focused more on the hardware side of the data center with UCS and the data center networking strategies they have -- it makes a lot of sense for the two to work together and make a formalized relationship."

An executive from another Cisco and Microsoft partner, who asked to remain anonymous, said he was surprised to hear of the Microsoft-Cisco partnership given Cisco's other alliances in the data center, such as those with EMC and NetApp.

"Even from a Cisco training perspective, Cisco comes in a lot talking about their partnerships with EMC and NetApp and VMware," the partner said. "I really just don't see a lot of industry buzz or hype [around Cisco and Microsoft]."

That said, the partner continued, his company would be interested in going to market with integrated Microsoft-Cisco solutions, given that he is "definitely seeing more interest in Hyper-V."

Microsoft and Cisco are also aligning their partner incentive programs to reward solution providers for selling joint Microsoft and Cisco data center solutions. Moving forward, for instance, integrated Microsoft-Cisco products that have been validated through the Microsoft Fast Track and Cisco Validated Design (CVD) programs will be included in Cisco's Solution Incentive Program (SIP) for partners.

Microsoft and Cisco said the new data center agreement will last three years. In the first year, they are specifically targeting customers and partners in the United States, Canada, U.K., Germany, France and Australia. Expansion into further countries is planned for the second and third years, the companies said.

PUBLISHED AUG. 7, 2014