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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.

Surface and Xbox are worthwhile. "At times we'll develop new categories like we did with Surface," Nadella said, implying Microsoft isn't looking to compete with partners so much as guide or motivate them. Online rumors of a fitness-oriented Microsoft smartwatch have been on the rise over the last few weeks, so Nadella might show off a "new category" sooner rather than later.

As for the Xbox, Nadella said, "The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming." He said Microsoft will continue to vigorously support and develop the Xbox line, and pointed out how Skype, Kinect, and Azure development completed for Xbox has benefited other products, such as Windows.

4. Nadella feels Microsoft can only innovate if it changes its culture.
Microsoft was already in the middle of a company-wide reorg when Nadella ascended to the top job, and based on his letter, he's ready to begin making adjustments of his own. "Nothing is off the table in how we think about shifting our culture to deliver on [our] core strategy," he wrote, adding, "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."

Tech website Gigaom recently reported, citing unnamed sources, that Microsoft might lay off as much as 10% of its workers, so Nadella's statements might make some Microsoft employees uneasy -- especially the 25,000 or so Nokia workers who just joined the company.

Nadella wants to do more than trim the ranks, however. "I truly believe that we spend far too much time at work for it not to drive personal meaning and satisfaction."

To make Microsoft's culture more rewarding and innovative, corporate bureaucracy must be replaced by better communication and collaboration, Nadella declared. He also promised better training resources, and that employees looking to change roles within the company will have more options to do so. Nadella repeatedly said Microsoft employees must use data and a "customer-obsessed" attitude to make decisions, adding "You will see fewer people get involved in decisions and more emphasis on accountability."

5. Nadella spoke broadly, but promised specifics soon.
Aside from the aforementioned, Nadella's letter mostly reiterated talking points from his appearances earlier this year. He name-dropped Delve, Cortana, and other products that demonstrate his concept of "ambient intelligence" and "ubiquitous computing." He said mobility isn't about devices but rather experiences that should translate seamlessly across devices. He talked about tech's disrespect for tradition, and the challenges Microsoft will have to overcome in order to innovate.

Most of this discussion was general, if not vague. But Nadella promised by the end of the month to share more details about the "engineering and organization changes we believe are needed." He and other Microsoft execs will have several chances to do so, starting Monday with the company's Worldwide Partner Conference in Washington, D.C. On July 22, the company will announce earnings for the past quarter, and its Global Exchange conference starts the same day in Atlanta.

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