Nadella made it official that Microsoft is no longer using the "devices and services company" mantra that former CEO Ballmer used to reposition the company in his last year-plus as CEO. Going forward, Microsoft is about productivity and platforms, Nadella said.
Microsoft's original mission was to put a PC on every desk and in every home. Then it was to be a devices and services company.
"While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy," Nadella said. "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 organization on the planet to do more and achieve more."
A diagram in Nadella's e-mail made it clear: Productivity software and services (a k a "digital work & life experiences") are at the center of the new One Microsoft. Device OS and hardware and the Cloud OS (anchored by Azure and Windows Server) are the extensions of that core.
Nadella made it clear in the email he sees Xbox as one of Microsoft's core businesses. He made it clear he sees it in a similar way that he has talked about Bing: Something that is tied to and influencing many other Microsoft products.
"Xbox is one of the most-revered consumer brands, with a growing online community and service, and a raving fan base. We also benefit from many technologies flowing from our gaming efforts into our productivity efforts – core graphics and NUI in Windows, speech recognition in Skype, camera technology in Kinect for Windows, Azure cloud enhancements for GPU simulation and many more. Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft."
Nadella's mail today didn't directly address when and whether Microsoft plans to reduce its headcount following its purchase of Nokia's handset business. Microsoft officials have said that Microsoft is expecting it can save $600 million by combining the two companies. A reduction in headcount is expected by some on Wall Street as one of the key ways that Microsoft is likely to achieve that savings. Nadella's mention of new employee training and development resources makes me think there definitely are cuts coming.
His mail also makes it clear that Microsoft is making changes to the way it develops products by streamlining its engineering process and focusing around data and applied science and software engineering across its teams. Each engineering group inside the company will be focusing on making better use of telemetry data in terms of predictive analysis and measurable outcomes. The Cloud & Enterprise team at Microsoft is in the midst of undoing the triad/functional management structure that was put in place at the end of Ballmer's tenure. I'd expect the other teams will all follow suit, if they haven't already.
Nadella's message is it's a whole new company these days. He wrote:
"Nothing is off the table in how we think about shifting our culture to deliver on this core strategy. Organizations will change. Mergers and acquisitions will occur. Job responsibilities will evolve. New partnerships will be formed. Tired traditions will be questioned. Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified. And if you want to thrive at Microsoft and make a world impact, you and your team must add numerous more changes to this list that you will be enthusiastic about driving."
Nadella said the month of July will be one of "dialogue" about Microsoft's future. He will be keynoting Microsoft's Worldwide Partner Conference in Washington, D.C. next week. He will be on the Microsoft earnings call on Tuesday July 22 (Tuesday instead of the usual Thursday due to his travel schedule). And he will be speaking to the company's salesforce at Microsoft's annual sales conference MGX and its //oneweek event for employees (believed to be the replacement for the annual company meeting) toward the end of this month.