Microsoft still does everything in a big way, discovers Holly Ryan.

Orlando, Florida. A crowd of 12,000, flown in from across the Unites States, cheers and screams as Justin Timberlake performs and fireworks boom in the background. It could be any concert or music festival, but for the Microsoft branding.

At just 41 years old and with almost 115,000 employees globally, Microsoft is one of the world's largest companies and everything is done on a grand scale.

Its annual staff get-together has evolved into a week-long celebration, titled Oneweek, where employees are encouraged to create new projects and products. Corporate events feature guests such as Timberlake or Katy Perry, and its headquarters in Redmond, Seattle are a city. As one employee puts it, "if you didn't want to leave the campus, you wouldn't have to - everything is here".

As the technology industry boomed in the 1980s and 90s, Microsoft expanded at a phenomenal rate, comparable only to the likes of Apple. But recent years have delivered more challenges, as the company faced diminishing personal computer (PC) sales and captured only a minimal share of the growing mobile market. Although it is branching out into new industries, Microsoft is having to make some tough decisions.


Not that a visitor to the Microsoft campus gets any sense of impending doom. The company HQ feels like a separate city and at just over 200ha, it is roughly the size of Monaco. The campus caters to Microsoft staffers' everyday needs - the 125 buildings house 32 cafes, 31 coffee locations, 20 24-hour convenience markets and more than 500 kitchen areas.

A full service healthcare centre offers optometry, dentistry and general health check-ups and there is a 24-hour health-line for staff, as well as childcare, gym memberships and funding for sports equipment. If you don't fancy the gym, you can use the campus basketball, beach volleyball, soccer or cricket areas.

Throw in free public transport and flexible working hours, and it's not surprising that walking through the vast headquarters feels like stepping into a Disney movie.

"We're in an industry where our success depends heavily on our ability to attract and retain the best people," says Tim O'Brien, general manager of global communications at Microsoft. "We do that not only through [the benefits], but also through fostering a diverse and inclusive work environment."

As O'Brien sees it, however, things have not always been so golden, though company inclusiveness has improved in recent years, something that has accelerated since Satya Nadella took on the chief executive's role in 2014.

We're in an industry where our success depends heavily on our ability to attract and retain the best people.


"[The culture] has improved, and the emphasis on collaboration among teams is a key part of a cultural shift we've seen since Satya has taken on the CEO role," O'Brien says.

"Our culture had historically been one that placed significant value on knowing everything and being right, but over the last two years, the collective mindset of the company has shifted more towards learning everything and being open to new ideas. It's truly become a different place."

The company has given Nadella much of the credit for the change in values and vision. And he has been well rewarded: according to the 2015 Equilar 100 CEO Pay Study, which looks at publicly listed companies, Nadella topped the list with a pay packet of US$84.3 million ($117.5 million).

The company's latest quarterly profit, to March 31, showed sales of US$22.1b - below analysts' expectations. Microsoft attributed this to the lowest PC sales since 2007, as well as higher tax.

The company has been forced to make some tough decisions including cutting up to 4700 staff - around 4 per cent of its total workforce. In May, 1850 job cuts were announced from its smartphone business, with another 2850 over the next 12 months.

Tom Batcheler, a Kiwi working at Microsoft's Seattle headquarters as senior product manager for Office 365.
Tom Batcheler, a Kiwi working at Microsoft's Seattle headquarters as senior product manager for Office 365.

One of Microsoft's biggest problems has been its inability to make much headway in the mobile market, dominated by Apple and Google/Android. In 2014 Microsoft tried to take on the market leaders by buying handset maker Nokia- a move which is now widely regarded as a costly failure.

Microsoft said phone revenue dropped by US$4.2b or 56 per cent for the 2015 financial year.

As the computer market declines, tablets and other mobile devices are becoming an increasing component of revenue for businesses such as Apple, Google and Microsoft. Worldwide, smartphone sales increased by nearly 4 per cent in the last quarter, but sales of Microsoft's Windows Phone operating system fell, dropping below 1 per cent market share.

The tech giant has been shifting its focus to become a company that sells cloud services, computing platforms and the Office 365 software package - software that users pay for by subscription, rather than buying outright - as well as investing in products such as its virtual reality headset, HoloLens.

A company that rests on success in the form of core products and services puts itself at risk of missing the next era, the next wave.


O'Brien says it recognises the need to expand in an increasingly competitive environment.

"Any company that rests on its success in the form of core products and services puts itself at risk of missing the next era, the next wave," he says.

"You need to continually reinvent yourself or the industry leaves you behind.

"That's why we're so excited about things like natural-language interaction with computers, artificial intelligence, machine learning and mixed reality.

"These are not core businesses today, but we think they represent what's next, and by investing today, we earn the opportunity to compete in these categories tomorrow."

In an industry like technology, where change is hard to keep up with and innovation is everything, O'Brien says the old model hadn't worked as well, with the company unwittingly rewarding risk avoidance.

In the past few years, however, Microsoft had pushed this model aside in favour of a work environment where mistakes could be made and lessons learned, and where collaboration is key.

Scary workplace can be inspiring too

Tom Batcheler, a Kiwi working at Microsoft's Seattle headquarters as senior product manager for Office 365, says the company has been changing lately as it tries to adapt.

"Microsoft certainly has changed over the last few years," says the Auckland University graduate. "The company today places a heavy emphasis on trying new things, taking risks, failing fast and learning. It can be scary adapting to a culture like this, and under [chief executive Satya Nadella] the shift has accelerated."

With one in seven people in the world using Office software daily, the 26-year-old Batcheler says the experience of working for the company is empowering, if sometimes nerve-racking.

Working on projects at Microsoft's annual "hackathon" has been an amazing experience, he says, providing a forum for staff to collaborate in an attempt to tackle global issues through technology.

"It's been great working on projects like solving gun violence, to increasing crop yields for organic farmers - things I'd never thought I'd be able to help solve," he says. "It's also been really interesting to see the power of this organisation. When you bring this number of incredible, intelligent employees together it can be fascinating to watch them mobilise and achieve new things."


• Founded in 1975 in Albuquerque, New Mexico

• Moved to its present campus in 1986, with just four buildings

• Today has 125 buildings, one of the largest corporate headquarters in the world

• 44,441 employees in Seattle alone

• Worth an estimated US$69b (NZ$95b)

• Has one of the most extensive corporate art collections in the world

• Has more shuttle vehicles on campus than the rest of Seattle put together