10 Ways Satya Nadella Is Changing Microsoft’s Product Strategy

By Don Reisinger

Satya Nadella said multiple times in his most recent letter to employees that mobile must come first in his company’s plans. Nadella has watched companies like Google, Apple and Samsung capitalize on the mobile space, and he now wants Microsoft to do the same. He plans to achieve that by leveraging both hardware and software, but it won’t be easy.

In addition to worrying about mobile, Nadella is convinced that the cloud is the future for Microsoft. He says that cloud solutions, led by Scott Guthrie, could be a key component in Microsoft’s enterprise growth and should also help the company appeal to consumers. His predecessor Steve Ballmer believed the cloud was important, too, but it appears Nadella is taking it to the next level.

Although Nadella has remained quiet on his plans for the Xbox division, he actually indicated on March. 31 that he has high hopes for that business in the coming years. Under Phil Spencer’s leadership, Nadella wants Microsoft to improve its game-franchise offerings, enhance the title’s software and make it work nicely across other platforms.

Following that, it’s important to point out that Nadella sees a lot of potential in bringing the Xbox software experience to other devices. In fact, Microsoft’s CEO says that the realignment of the Xbox division will allow his company to “bring more of the magic of Xbox to all form factors, including tablets, PCs, and phones.” What does that mean? Nadella didn’t say. But expect Xbox to play a bigger role in his company’s mobile plans in the coming years.

There’s no debating that Nokia will play a crucial role in Microsoft’s mobile hardware strategy. Nokia’s former CEO Stephen Elop will head up Microsoft’s Devices division, and Nadella says that the Nokia Devices and Services team will bring some expertise to the table that the company desperately needs. Nadella is counting on Elop and the Nokia team to “drive innovations” to his company’s mobile products.

Although Nadella has spent a considerable amount of time talking about the Xbox and Nokia lately, make no mistake: The enterprise is extremely important to him. Nadella comes from an enterprise-focused cloud-services division in Microsoft, and he specifically mentioned his desire to enhance his company’s Enterprise Mobility Suite. Although Microsoft might look a little more consumer-friendly, it’s still an enterprise-focused company.

So, how might Nadella find a way to toe the line between consumers and enterprise customers? If nothing else, he’s a benefactor of the period in which he’s become CEO. Consumers are now making more decisions in the workplace, and IT has taken a backseat when it comes to mobile and, in some cases, software solutions. That helps Microsoft. If Nadella can put the right product strategies together, he can appeal to consumers with OneDrive and Xbox software implementations across devices and build hardware that still works well in a corporate environment. Microsoft is one of the few companies in the industry that can deliver products that can equally appeal to consumers and enterprise customers. And Nadella seems to know that.

Office is central to Microsoft’s strategy over the next several years. Part of that is due to the fact that Office drives a significant portion of the company’s revenue and profit. But as Nadella proved last week announcing Office for iPad, he’s willing to accept that customer preferences have changed, and he’ll go where the customers are, instead of trying to force them to come to him. Ultimately, it’s the right move. Office is the platform millions around the globe rely on, and it’s the easiest way for Nadella to attract customers to his other services, like the cloud-based OneDrive.

Although the technology industry has fallen victim to a general lack of uniqueness, Nadella indicated in his letter that he wants to try to find what sets Microsoft apart from its competitors. Is it Xbox? Is it Office? Is it Nadella’s own vision? It appears based on Nadella’s letter that his product strategy centers on the idea of finding something unique in Redmond that he can leverage. Now we just need to see if he can pull it off.

One of the big complaints about Steve Ballmer was that he built a corporate structure at Microsoft that didn’t allow for enough collaboration. Divisions were just that—divisions—and he couldn’t see the value of allowing them to work together more efficiently. Nadella has changed that by integrating the Xbox division, putting it under the broader operating system umbrella and ensuring that the software experience Microsoft offers is consistent across devices. Nadella has also made mobile and both software and Xbox collaboration more achievable with his recent moves, putting leadership into the hands of just a few people. It’s a smart move that should improve overall collaboration on products.