Nadella Charts Microsoft's Future: 5 Key Points - InformationWeek

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Nadella Charts Microsoft's Future: 5 Key Points

Microsoft CEO Satya Nadella distances himself from predecessor Ballmer's vision, pins company's future on a "mobile-first, cloud-first" agenda.

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In a 3,000-word letter to his employees, Microsoft CEO Satya Nadella on Thursday distanced himself from predecessor Steve Ballmer's "devices and services" game plan. Nadella also called for sweeping cultural changes at Microsoft, including possible organizational shakeups, as it pursues his "mobile-first, cloud-first" agenda. What does Nadella's missive mean for the company and its customers? Here are five key takeaways.

1. "Devices and services" are out, "productivity and platform" are in.
Ballmer's critics said his "devices and services" strategy was too influenced by Apple's vertically integrated, hardware-reliant approach. In his letter, Nadella said the "devices and services" focus was "helpful" in accelerating Microsoft's strategic transition toward mobility and the cloud, but that the company must now turn its focus to its unique strengths. "At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world," Nadella wrote.

At a high level, then, if Ballmer's tactics hedged closer to Apple's strategies, then Nadella's plans hedge closer to Google's. That is, Microsoft is more interested in attracting users to its cloud services than to any particular device, such as the Surface.

2. Microsoft's unique strengths involve the cloud and productivity, but consumers are still important.
In expounding on Microsoft's unique strengths, Nadella referenced not only the company's heritage in productivity and management products, but also how this skill and expertise has translated to the cloud. He called Microsoft's cloud OS, which supports its hybrid cloud offerings, the company's "largest opportunity," for example. He also made repeated references to, not only existing products such as Office 365, but also upcoming offerings such as Power BI Q&A, which combines business intelligence tools with user-friendly natural language queries.

[Windows 8 has been divisive, but will Microsoft turn things around with Windows 9? Read Windows 9: Desktop Resurgence?]

"Cloud" and "productivity" suggest Microsoft's core enterprise customers more than the iOS- and Android-loving consumers. Some Microsoft shareholders criticized Ballmer's willingness to dedicate so many resources to consumer projects, so some of the company's past critics will appreciate Nadella's business focus. Nevertheless, Nadella made clear that consumers are still important to the company's strategy.

Microsoft will consider every user to be a potential "dual user" likely to rely on a device for both work and play, Nadella said. He promised not only that Microsoft will deliver more personalized experiences to both business and consumer roles, but also that the company's tech would keep the two roles separate and secure.

"We're really in the infant stages of the mobile-first world. In the next few years we will see many more new categories evolve and experiences emerge that span a variety of devices of all screen sizes," Nadella wrote. "Microsoft will be on the forefront of this innovation with a particular focus on dual users and their needs across work and life."

3. Microsoft won't stop making devices, including the Xbox.
Nadella evidently doesn't consider devices to be as strategically vital as Ballmer did, but the new CEO still thinks projects like

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio

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Charlie Babcock
Charlie Babcock,
User Rank: Author
7/11/2014 | 6:24:02 PM
Escaping the Apple envy
Satya Nadella is trying to build on Microsoft's existing strength in the enterprise data center and its own cloud data centers, as well as in devices and on the desktop. This is much smarter than just succumbing to Apple-envy. Ballmer with his preoccupation with touch in Windows 8 and Surface seemed to have a very severe case. 
Thomas Claburn
Thomas Claburn,
User Rank: Author
7/11/2014 | 4:10:32 PM
Re: Play to your strengths
If Microsoft retreats from hardware, that's good news for Apple. Apple will remain the only vertically integrated consumers hardware, software, and services platform company. And it will have an easier time defending its turf as a result.
Shane M. O'Neill
Shane M. O'Neill,
User Rank: Author
7/11/2014 | 2:54:01 PM
Play to your strengths
Though the message is still pretty vague, it sounds like the beginning of the end for Microsoft's efforts at attracting consumers through hardware. Good thing. Ballmer was chasing a ghost there. Nadella realizes Microsoft needs to really zero in on its strengths: software, the cloud, and the enterprise.
User Rank: Author
7/11/2014 | 10:55:23 AM
Trying Too Hard?
Nadella's making some strong moves, but mobile first, cloud first? Does anything else come first? And I find "platforms and productivity" to be an apples and oranges mix. One is a product category; the other is a business outcome or goal. The simpler the message the better.

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