Microsoft CEO Sees Big Changes Ahead, ‘Nothing Is Off the Table’

by Pedro Hernandez

Windows is an undeniably critical pillar of Microsoft’s software empire, but in the post-PC era, the OS doesn’t casts as large a shadow as it once did. Nadella’s memo contains more than 3,000 words. The total number of Windows mentions: 13. Eleven, excluding Windows Phone. Enough said.

Nadella wants Microsoft to shed its image as a slow-moving, monolithic software maker. “The day I took on my new role I said that our industry does not respect tradition—it only respects innovation,” he said. “I consider the job before us to be bolder and more ambitious than anything we have ever done.”

Microsoft is not going the way of IBM. Instead of turning its focus exclusively to enterprises, the company sees an opportunity for solutions that work just as well in one’s professional and home life. “We will think of every user as a potential ‘dual user’—people who will use technology for their work or school and also deeply use it in their personal digital life,” said Nadella.

Microsoft Azure’s business-friendly offerings are key to the company’s aim to become the go-to cloud IT services vendor. “We will transform the return on IT investment by enabling enterprises to combine their existing data centers and our public cloud into one cohesive infrastructure backplane,” stated Nadella. “We will enable our customers to use our Cloud OS to accelerate their businesses and power all of their data and application needs.”

Nadella plans to streamline Microsoft’s development practices, improve communication and deliver software that anticipates where the market is going. “Each engineering group will have Data and Applied Science resources that will focus on measurable outcomes for our products and predictive analysis of market trends, which will allow us to innovate more effectively,” said Nadella.

In terms of hardware, mobile devices in particular, Microsoft is just getting started, hinted Nadella. “Our first-party devices will light up digital work and life. Surface Pro 3 is a great example—it is the world’s best productivity tablet.”

Despite encouraging gains in some markets, Windows Phone still lags far behind Android and iOS smartphones. Microsoft, said Nadella, “will responsibly make the market for Windows Phone, which is our goal with the Nokia devices and services acquisition.”

Microsoft’s CEO quieted persistent rumblings that the company was considering setting the Xbox division loose. “Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft,” said Nadella.

Microsoft will emerge a less bureaucratic organization in its fiscal 2015. The company “will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes.” Does that also entail job cuts?

The indignities of stack ranking and other rigid employee policies that drove away talented coders and innovators are in the past. “I am committed to making Microsoft the best place for smart, curious, ambitious people to do their best work,” said Nadella.