Nadella looks to distance himself from Ballmer, does away with ‘Device and Services' model

Earlier today, Satya Nadella published his open letter to Microsoft and the world for fiscal year 2015. The letter, which you can read here, offers tremendous insight into the cultural shifts that will be occurring under his leadership.

The letter is a fantastic read if you are a fan of Microsoft and is filled with hints that what was done in the past is not necessarily what will be done in the future. More so, Nadella is looking to remove some of the things that Ballmer put in place during the last months of his reign.

For starters, Ballmer started to re-organize the company as he walked out the door with “Devices and Services” being the new theme for the company. Nadella is looking to undo that and is championing “productivity and platforms” and he takes it further than that, as he wants Microsoft to be the " productivity and platform company for the mobile-first and cloud-first world".

 "While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy."To avoid any ambiguity in his statement, Nadella politely says that "Devices and Services" is not his vision and is moving away from that of Ballmer. He wants to take the company back to its basics of software/productivity in a new mobile first, cloud first market. 

Besides the change of mantra for the company, which is a significant shift, Nadella will be looking to further reorganize the operations of the company. He said: "Over the course of July, the Senior Leadership Team and I will share more on the engineering and organization changes we believe are needed." 

Microsoft has a couple of conferences - some internal, some external - in July. The first will be held next week at its Worldwide Partner Conference in Washington, D.C. (and Neowin will be there too), and its MGX conference takes place the following week in Redmond. Look for Microsoft to get more specific at these events and talk further about the letter that was published today.

Prior to the release of this letter, it was rumored that Microsoft was preparing to reduce its headcount now that the Nokia mobile acquisition has been completed. There are hints of organizational change throughout the letter with talk of more streamlined operations and taking on more accountability. 

There is also a big effort from Nadella to push out new software and ideas even faster than under Ballmer. While Ballmer certainly gets credit for rapid release and moving up the launch cadence of Microsoft products, Nadella is looking to make that process even faster by reducing the friction points of the release cycle and holding more individuals accountable for the company's products.

It's quite clear that Nadella has no intention of living in the past and that the practices Microsoft had in place for the past decade or so will be changing dramatically in the very near future.

Report a problem with article
Previous Story

Which countries have the largest piece of the Windows Phone pie?

Next Story

Microsoft updates Skype for Mac

49 Comments

Commenting is disabled on this article.

The issue I see is the people who are willing to pay - i.e. corporate america - doesn't want cloud (outages, security breaches, data loss, loss of control) and aren't going to bet their company on Microsoft Azure running given it's constant and recent outages or performance issues. Nothing critical is on Office 365, and where important functions like e-mail are moved, departments are routing around by using other technologies than e-mail, or non corporate e-mail to make sure they can work through the regular delayed messages or lost e-mails etc...

Microsoft should not want to lose corporate accounts by pushing a consumer centric vision, instead, they should have kept and should re-instate a dual track system (or split into two companies maybe)... What business wants is almost diametrically opposed to what the consumer market wants in many cases.

I think potentially killing a cash cow via insisting on cloud services to use Windows, and lack of interest in desktops and laptops, and centrally managed devices is weakening their company when they could use that as a lever to support things like the XBox launch etc. If they had been a company that bet on the XBox and didn't have windows / office on launch, (the original XBox) they would have gone out of business. Instead in the XBox One they are one of two major game console competitors...

I don't think Microsoft is having anywhere near the same luck in mobile, gaming is still competitive and may be moving away from consoles, I don't know that they are going to ever be as good at search or advertising as Google. They are not going to get "premium value" users, Apple has those locked up. Amazon kind of owns cloud spaces in IaaS. Microsoft has some cloud with SaaS imo - providing AD as cloud, but I'm not really hearing of other companies building much on top of Azure, they're using it to get Exchange cheaper or free, but Box etc seem to use S3 etc as the backend in some cases . . .

So where does Microsoft really go as Mobile / Cloud? Do cloud services make sense to pay the Windows cost on the underlying infrastructure vs the common OpenStack OSS infrastructure? If you're building middleware or starting up a service company, why would you pay for licensing (in some way) Windows rather than the "free" *nix on the back end? Why would you pay for MSSQL vs PostgreSQL or MySQL or whatever... Why would you pay for IIS over Apache or nginx?

If Microsoft takes a loss or doesn't charge for their platform, where is their income over being another commodity cloud vendor? What makes them better than Rackspace or heck, Whitebox cloud vendor here? What is their draw? Where is their profit?

I think it's the other way around. MS has been much more successful in Enterprise than the Consumer markets. They are trying to bring their Enterprise solutions (i.e. Cloud via Azure and whatnot) to the Consumer space. It seems as if you are suggesting that MS shouldn't be doing these Cloud and Mobile efforts at all, which seems counter to what the market is doing.

Google & Apple both provide strong Cloud-based services for consumers, so I see it makes tremendous sense for MS to leverage its Enterprise knowledge to the Consumers. Why do you think Apple is now also providing iCloud Drive to compete with Google Drive and OneDrive?

Nadella looks to distance himself from Ballmer by not sweating profusely on stage, not howling, whooping and generally behaving like a monkey, and not repeating the same word 14 times just to get his point across.

Right, so you'd prefer if he said they need to "work better together" without mentioning a single thing about how or in what fields exactly. Stop complaining for the sake of complaining, there's not a single redundant thing about this guy, and everything he writes has a purpose.

audioman said,
Right, so you'd prefer if he said they need to "work better together" without mentioning a single thing about how or in what fields exactly. Stop complaining for the sake of complaining, there's not a single redundant thing about this guy, and everything he writes has a purpose.

I would not characterize his letter as specific; I agree that everything he says is very carefully pondered though and, quite obviously being an open letter, is worded in a way that, depending by the mindset and orientation of the reader, can be read as asserting one concept.... or its exact opposite. A perfect Sibilla cumana speech.

"Mobile-first and cloud-first"

So, two firsts?

A well-thought, clearly defined strategy would indicate which has priority. Otherwise it's all buzz-word bingo, and it comes across as "we don't know what we're doing, so we're gonna try to cover all the bases and see what sticks".

Is it really that hard to understand?

Mobile devices rely heavily on cloud services, so they have an equal place

Try doing anything with your phone these days when it's not connected!

Stoffel said,
Try doing anything with your phone these days when it's not connected!

I even get prompted when I'm disconnected and just want to play Solitaire.

Stoffel said,
Try doing anything with your phone these days when it's not connected!

I don't own a phone, exactly because it's useless when it's not connected. I really wish companies still paid attention to what happens when you're totally in disconnected mode.

i think that he has no vision.. he is acting like a novice... also thinking he will make microsoft an advertising company and perish it's heavy "Microsoft" name... is he thinking distance from ballmer? yes definitely... he is miles and miles far from Ballmer and he's vision and profession.. i am very sad for Microsoft and it's future..

As much as folks don't want to hear it, desktops aren't where the "action" is, and that isn't Microsoft's fault. Where has development been focussed (not just gaming, but even applications) since just the launch of Windows 7? Desktops have become (if anything) an afterthought, if they are thought about at all - Microsoft, oddly enough, has actually been the ONE company devoting much, if anything, in terms of major resources to the desktop space.

And what has Microsoft's increased focus on the desktop space gotten it? Largely scorn; Windows 8.0 was criticized mostly for what it lacked (the overlong-in-the-tooth Start menu) as opposed to increased capability AND backward-compatibility, even compared to the successful Windows 7. Who is championed? Google (which has next to zero focus on the desktop at all) and Apple (surprisingly, the same thing, despite OS X - let's face reality here; OS X plays second-fiddle to iOS within Apple). The services focus fits Nadella's skill set (remember, he came from Azure), as opposed to Ballmer (who came from Office - not Windows). All too many of us (as users, mind you) are fine with that, because we really don't want desktop software to change much, if at all. Yes - Microsoft IS becoming IBM (services) - however, that is because we as users are not letting Microsoft advance the state of the desktop application art; in other words, what else have we left it?

you may say google is IBM then because the vision he painted is not of an IBM which is business services. He re-iterated MSFT will be a leader for "work" and "personal" computing in both services for the enterprise and consumers. IBM doesn't talk like that at all.

I said services - not necessarily business-only (Office365, for example, is not a business-only service, though businesses make up the majority of the userbase). What product does Google actually MAKE for consumers other than the in-beta Google Glass? (Android and the Chrome line of software and services are - except for Chromecast - manufactured by third-parties OR are services and therefore leased - and yes; I include the Chrome browser and the Chromium FOSS clone in that "services" category.) Whenever Microsoft has TRIED to advance the state of the desktop software art - even if merely to make use of advances in the HARDWARE that desktops are including, it has gotten massive/monstrous pushback - hence my referring to the "scorn factor". (Ballmer came from Office, and Sinofsky from Windows - and their own respective focusses and visions reflect those roots; to expect Nadella's focus to NOT be heavily focussed on HIS roots - namely services - is silly. That is straightforward logic. It also means that Nadella is likely paying attention to the pushback that Microsoft has been getting - the overwhelming theme of which is "Back in your cage, Microsoft - we don't want to move!".

Why should Nadella pay any attention to the desktop when the voices clamoring loudest don't want desktop software to move forward?

Yes, desktops. Millions of us working in traditional office settings are using desktops on our desktop and full-size laptop hardware. Not everyone has the luxury of using tablets.

Dot Matrix said,

Deskwhat?

The desktop is still important for businesses with on site infrastructure and people who require more power for their computers.
I do agree with that mobile based form factors are coming increasingly popular and will out pace desktops in innovation, but the desktop should have its place at Microsoft.

So ... basically MS is becoming IBM. The guys focused on productivity, therefore mostly enterprise, moving away from the consumer space.
Shame.
Now our lives will be driven by an advertising company, and we will become Google's puppets.

dopydope said,

Now our lives will be driven by an advertising company, and we will become Google's puppets.

Consumers want stuff for free and companies like MSFT are addicted to profit. The two don't mix.

recursive said,

Consumers want stuff for free and companies like MSFT are addicted to profit. The two don't mix.

Uh, What? Are you forgetting all the wonderful tools Microsoft makes available for free? Not to mention the new reduced and free prices of Windows and Office itself?

dopydope said,
So ... basically MS is becoming IBM. The guys focused on productivity, therefore mostly enterprise, moving away from the consumer space.
Shame.
Now our lives will be driven by an advertising company, and we will become Google's puppets.

well if you read neowin's headline that is so, but if you read his post that is not what he said whatsoever. In fact, windows, windows phone, and devices are all over his post making me think Neowin's headline is just missing the point entirely.

dopydope said,
So ... basically MS is becoming IBM. The guys focused on productivity, therefore mostly enterprise, moving away from the consumer space.
Shame.
Now our lives will be driven by an advertising company, and we will become Google's puppets.

I don't know how you could see an email that says things like "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." and think he's saying they're abandoning consumers.

The infographics at the top of the article says : "MS is the productivity and platform company".
Productivity = Office & enterprise ; Platform = Azure
As a consumer, i want entertainment, consumption. Times have changed, people are not using computer just to be productive anymore. I'm concerned even someone like Nadella (slightly more clued up than Ballmer) doesnt see that ; or if he sees it he doesnt want to go for that market.

Platform is not JUST azure. He called this the cloud OS, so you're kind of mixing his words there. Azure services, are the "services" part of his strategy which deliver on the productivity aspect he talks about on the devices and "device OS" he also speaks of. Azure's platform as a service is one aspect, but he mentioned windows both server and consumer (that is the other platform).

He's being all inclusive. I don't really get why people are trying to make him look like he's killing anything. This guy just re-affirmed everything. The only changes were:

-he is about to do a massive flattening and re-org. If I was a MSFT manager, I'd be going on monster today.
-the functional divisions of MSFT which were popular with stven S, are about to be nuked.
-windows will no longer be a bastard child, as he says so ensuring windows gest the best experiences.

dopydope said,
....

Read the letter, not just the infographic.

jhoff80 said,
I don't know how you could see an email that says things like "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." and think he's saying they're abandoning consumers.

I read the letter, yes. He talks a lot about work, being productive, work, and work, and achieve stuff. He talks about "dual users", ok. But what about "non dual users", people who just use technology to do nothing and achieve nothing ? (like i do a lot, browsing stuff, reading stuff, share cute kitty videos, ...).
So far in the last decades we have used technology mostly for being productive, but the reality is technology is going to more and more present for other purposes. In car technology - is that productivity ? intelligent home - is that productivity ? home entertainment - is that productivity ? How much time do people spend on their smartphone, and how much of that time is "productive" ?
My point is the growth of technology usage is not on the productive use, but on the leisure/day to day use, and even what i would call the passive use, when you dont even feel like you're using technology.
Now all of this generates data, and he states that MS should be the platform to process this data (=Azure), but not the platform that will generate it (i.e. windows or any lightweight embedded system).
I was hoping he would be more aggressive in chasing that market - the market at the source of the data ; which makes it look like he has given up on trying to fight android (which is maybe the best decision as far as investors are concerned to be honest)

Hope that clarifies what i'm trying to say ?
In any case, it's just a company ... he does whatever he wants at the head of the company, taking the direction that is best for the shareholders ! As a hardcore google-hater myself, i would just have loved to see him be more aggressive ; but this wouldnt make his shareholders happy obviously.

recursive said,
Consumers want stuff for free and companies like MSFT are addicted to profit. The two don't mix.
ROFL. Yes, I know it's all the fancy (again: Internet Boom #1) to not care about profits. But trust me, all companies care about profits.

recursive said,

Consumers want stuff for free and companies like MSFT are addicted to profit. The two don't mix.

Is that also why they throw money at Apple and Google year after year?

recursive said,

Consumers want stuff for free and companies like MSFT are addicted to profit. The two don't mix.

You mean Google isn't trying to make a profit? I guess they're doing everything out of the kindness of their hearts.

Dot Matrix said,

Not to mention the new reduced and free prices of Windows and Office itself?
Prices for Windows wasn't reduced - Windows 8 and 8.1 is exactly the same price as Windows 7 was/is. There's been some price promotions though.

Office... depends on how you use it, really, because in the long term it can work out more expensive if you're the sole person using it over a multi-year period, but a group of people using it who would have normally upgraded every time a new version came out could well see it be cheaper.

testman said,
Prices for Windows wasn't reduced - Windows 8 and 8.1 is exactly the same price as Windows 7 was/is. There's been some price promotions though.
Win 8 OEM are much lower (or "free") depending on retail price and form factor.
Office... depends on how you use it, really, because in the long term it can work out more expensive if you're the sole person using it over a multi-year period, but a group of people using it who would have normally upgraded every time a new version came out could well see it be cheaper.
Office Online is free. Pricing keeps coming down for personal. Judging from the Small Business version of Office 365 being changed to 8.25 for installed office I imagine we'll see them dropping the price of the Personal and Family editions. Also, you can still buy boxed non-subscription versions.

I can understand why he wants to distance himself from Ballmer. I don't want to sound rude or impolite, but Ballmer was a big sweaty joke of a CEO... never liked this dude, never liked his "vision" (did he really have a vision?) and never liked how arrogant he looked.

As far as I'm concerned, Nadella is a better, more intelligent, more visionary and more credible CEO. With the departure of Sinofsky (responsible for the Windows 8.0 fiasco, thanks God 8.1 is better) and Ballmer, Microsoft is a better company! The next major Windows version will be legendary

We'll just have to see just how well he listens to his major classes of customers and provide suitable Operating Systems and/or hardware for them. Remember: one size does not fit all and that very relevant statement "Those who forget the lessons of history are doomed to repeat them."

Clearly this guy is a huge improvement over Ballmer. He has the technical skills and knows how technology works. However, the 'mobile-first and cloud-first world' strategy is going to be a tough one for Microsoft when it controls a significant share of neither. That's not to say under Nadella, Microsoft couldn't grow in those areas, just that it's going to be an uphill battle.

I wouldn't call their share of the cloud pie insignificant. In fact, I would probably say they are one of the main leaders in the cloud market.

Stokkolm said,
I wouldn't call their share of the cloud pie insignificant. In fact, I would probably say they are one of the main leaders in the cloud market.

No, cloud seems to be going great, Its mobile that you can call insignificant. It will be very interesting to see what he does there.

Stokkolm said,
I wouldn't call their share of the cloud pie insignificant. In fact, I would probably say they are one of the main leaders in the cloud market.

Well since 57% of Fortune 500 companies are using Azure, I would have to agree with you.

the word services and first party devices from MSFT appears far too much. He is saying the same thing Ballmer said but now he added productivity on top. In other words, he didn't do away with anything. That's just missing his point.

What he did was to say MSFT needs to focus less on JUST devices and JUST services and more on customers and productivity in addition to the services and devices they will KEEP making.

This is by far not a MSFT goes back to its roots of just software or back to basics. That's utter nonsense when you read how many times he touts first party devices experiences in several paragraphs and even had a whole lot to say on the one device everybody wants to see him ditch: XBOX.

MSFT is firmly a devices and services company. That stayed. But now it is trying to re-invent itself as a mobile company. Time will tell if his vision and execution match his hype.

Edited by neonspark, Jul 10 2014, 3:01pm :