This article was first published in the Winter 2014 issue of OnWindows
It was back in July 2014 that Microsoft CEO Satya Nadella first mentioned the new strategy that has since come to define Microsoft’s path for the future: becoming a productivity and platform company for the mobile-first, cloud-first world.
Nadella’s e-mail – titled ‘Starting FY15 – Bold Ambition & Our Core’ – explained to employees that throughout July they would focus on synthesising the company’s strategic direction and find out more about the “fundamental cultural changes required to deliver on it.” Top of Nadella’s agenda was redefining the company’s ‘core’.
“While the devices and services description was helpful in starting our transformation, we now need to hone our unique strategy,” said Nadella. “At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world. We will reinvent productivity to empower every person and every organisation on the planet to do more and achieve more.”
To execute on this productivity and platform vision, Nadella explained that Microsoft’s “cloud OS infrastructure, device OS and first-party hardware will all build around this core focus and enable broad ecosystems.” As a result, over the last few months, the company has continued to evolve popular productivity products such as Skype, OneDrive, OneNote, Outlook, Word, Excel, PowerPoint, Bing and Dynamics, while the cloud OS remains at the centre of all of its product offerings. The company has also reaffirmed its commitment to build its own hardware. “We’ll develop new categories like we did with Surface,” said Nadella. “It also means we will responsibly make the market for Windows Phone.”
Speaking at the company’s annual Worldwide Partner Conference in Washington DC, Nadella explained that Microsoft’s goal is to be “the company and the ecosystem that is going to reinvent productivity for this new generation.”
“We’re going to get very focused on building digital work and life experiences – this next generation of productivity broadly defined,” he said. “We will build platforms in the cloud for it, we’ll build platforms on the device for it. We will make sure our experiences are pervasive and ubiquitous.”
Three months since he announced his vision, Nadella took the opportunity to reflect on the progress the company has made so far in October’s quarterly earnings conference call. He highlighted four indicators of success: cloud, Windows, hardware and the company’s ecosystem momentum.
“First, our cloud offerings continue to grow at a rapid rate,” he said. “More people and organisations are signing up and we’re generating more revenue across both commercial and consumer customers. Our commercial cloud revenue grew 128% year over year, the fifth consecutive quarter of triple digit growth. In fact, we’re the only company with cloud revenue at our scale that is growing at triple digit rates. And 80% of the Fortune 500 are now on the Microsoft Cloud.”
Discussing the company’s expanded set of Windows offerings, Nadella explained that they are helping to drive consumer unit growth and will also provide incremental opportunity for use of Microsoft services such as Bing. “With these new offerings, OEMs are delivering exciting new devices at extremely attractive price points, including Windows PCs at US$199 and below,” he said.
In September, Microsoft unveiled its latest operating system – Windows 10 – which Nadella is confident “will unlock new experiences for customers to work, play and connect across an incredibly broad set of devices with screens from four-inches to 80-inches, and even internet of things devices.”
“Windows 10 will deliver a single unified application development platform, one way to write a universal app across the entire family of Windows devices, and one store with a unified way for applications to be discovered, purchased and updated across all these devices,” he said. “When I talk about putting customers at the centre of everything we do, it’s especially true for Windows. We’re incorporating customer feedback earlier than ever in the development cycle, especially with our enterprise customers. This will be the best Windows release ever for businesses and with hundreds of thousands of pieces of feedback flowing into the team already, Windows 10 will be the most collaborative version of Windows we have ever shipped.”
Nadella also took the opportunity to highlight some specific markers of advancement in hardware and gaming. “Across the entire hardware portfolio I’m encouraged by the reception from customers, and our continuously improving execution. Surface had strong results this quarter, driven by positive customer response to Surface Pro 3. The product line up is the right one and customers are responding favourably. Surface Pro 3 is now in 28 markets and importantly we have improved the business economics of this product line.”
Discussing the role that Microsoft’s partners play in making the company’s vision a reality, Nadella said: “Technology leaders across the board recognise the customer value inherent in products like Office 365, Azure and Windows. And they want to align their businesses with our healthy and growing ecosystem. You’ll see more partnerships in the months ahead. It’s the best way to deliver the best possible experience for our customers in today’s heterogeneous mobile-first, cloud-first world.”
In November, at the Future Decoded event in London, Nadella addressed a UK audience for the first time since he took the helm at the company, and praised the country for its rapid adoption of the cloud, explaining that “cloud infrastructure and mobile experiences is where the world is heading.”
He said he believes that today consumers have access to more devices than ever before and that there are even more sensors than devices. As a result, the “richness of that compute fabric” used in conjunction with cloud computing is making new mobile services possible.
Giving Cities Unlocked – the recent project Microsoft has launched for the visually impaired – as an example, Nadella said that technology exists for one reason, which is to augment human potential. He added that for businesses to thrive, “three concentric circles need to click into gear”: new concepts complemented by new capabilities in a culture that embraces change.
Nadella also said that as more human capital is expressed through digital tools, we need to “make access to education available everywhere” and then create further opportunities from it. “Technology’s role in society is to empower people,” he said.
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