You can see from Nadella's decisions so far that he doesn't want to be in the hardware business. Yet the Nokia monkey sits firmly on his back. It's a bit alarming that they don't have any concrete plans about Nokia phone integration. But at least Nokia Windows Phones are in an explosive smartphone market, and have a chance as a solid No. 3. Surface, on the other hand, is is really up a creek. It hasn't been able to compete in the tablet market, and the tablet market itself is starting to cool.
Microsoft's way forward is through enterprise tools, cloud with Azure, Office 365, Lync, and spreading out Windows to new devices beyond PCs and tablets. And Nadella gets it.