Satya Nadella to the World: Cloud is Microsoft’s Core


Xbox is pretty good too, even if it isn’t core.

During the Microsoft CEO struggle the question was asked: would Microsoft sell off the Xbox division? One candidate came out and said that, if he were chosen, Xbox would be on the chopping block soon afterward, and we were left wondering what the others thought. Then Satya Nadella, former head of the Cloud computing division, got the top spot, and promptly said that Microsoft still needed to be in the devices business, if only so it could test out its software theories. Now Nadella’s issued his first statement to the world about the future of Microsoft and, as you might have guessed, the future is the Cloud.

“We live in a mobile-first and cloud-first world,” says Nadella. “Our passion is to enable people to thrive in this mobile-first and cloud-first world.” As far as Nadella’s concerned, Microsoft wants to be the productivity and platform company in this brave new world. Microsoft will “reinvent productivity,” help people “organize and accomplish things with ease,” empower people; in short, Microsoft will build experiences, and focus less on devices.

Which is not to say that devices aren’t cool. Nadella made special mention of Xbox and its place in Microsoft’s hierarchy. The Xbox division definitely isn’t core to the company, but it’s a handy thing to have. “The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming,” says Nadella. Microsoft intends to keep its gaming division, so it can grow its online community and provide new services.

How seriously should this be taken? Well, Nadella’s statement is ultimately as much public relations as it is a statement of intent, and the whole point of PR is that it says much but informs as little as possible. It’s interesting that Nadella goes on to pose the rhetorical question, one of several: “What orthodoxy should I question?”

When Nadella talks about Xbox, it’s in terms of the technologies that arise from the division: speech recognition in Skype, camera technology in Kinect for Windows, and so on. The thing is, those are the same technologies that Microsoft’s customers have had the most difficulty with, particularly Kinect. Microsoft stuck by the Kinect for months after the Xbox One launch despite customer dislike and lacklustre sales numbers, only to finally decide in June that, yes, it could sell the Xbox One without Kinect. Heck, not having Kinect might even improve the console’s processing power, but that didn’t stop Yusuf Mehdi dashing to the Kinect’s defense.

“We remain deeply committed to the Kinect as a core component of a next-generation console,” said Mehdi. “We think that the bio-metric sign-in, voice controls of the menu, ability to say ‘record that’ and capture a moment of gameplay are all critical to the experience. We have never wavered from that since the launch.”

The thing is, of course, that if you question that orthodoxy – that Kinect is critical to the experience – then you question a significant part of the basis for hanging onto the Xbox division. In Nadella’s cloud-based, mobile-first world, the Xbox division is only as useful as the technologies it helps Microsoft develop. If those technologies don’t work out, the division starts looking like an anomaly on the balance sheet.

All that aside, Nadella’s public email to the world probably isn’t to be relied on as a firm statement of intent. It’s telling as many people as possible what they want to hear, while at the same time trying to sound bold, visionary, and full of hope for the future. It’s aimed as much at investors and employees as it is the likes of us. So will Microsoft get rid of Xbox? Probably not, but it doesn’t want to be a devices company any more. So long as Xbox fits its “experiences” mantra, great; the minute it stops doing that is when Nadella may start singing a different tune.

Source: Satya Nadella

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