5 Comments From Microsoft CEO Nadella's Email To Employees That Really Jumped Out

Reading Between The Lines

Microsoft CEO Satya Nadella recently sent a 3,200-word email to employees outlining his vision for the company at the dawn of its fiscal 2015 year. Most of it is the same talking points Nadella has been using since taking over as CEO in February, but the email also contains some very interesting tidbits that show Nadella is about to put his own unique stamp on Microsoft.

Nadella will address Microsoft channel partners for the first time this week in a keynote at its Worldwide Partner Conference in Washington, D.C. In advance of this historic event, CRN obsessively parsed Nadella's email and here presents our interpretation of what we consider to be its most important points.

1. 'Tired traditions will be questioned.'

Nadella's email was addressed to Microsoft employees, so he could have meant they'll no longer be required to bring a pound of M&Ms into the office to celebrate yearly employment anniversaries.

More likely, Nadella was referring to Microsoft's long-held practice of putting Windows at the center of everything it does, and propping up the Windows empire with protectionist tactics. The ball was already rolling this way under former CEO Steve Ballmer, but Nadella seems willing to solidify this approach.

With Microsoft's launch of Office for iPad, and its development of Office for Android, the software giant is already showing a break from the past, when it would've waited to release such products until Windows versions were available.

2. 'Nothing is off the table in how we think about shifting our culture to deliver on this core strategy.'

Companies talk all the time about changing their culture. Usually, it's just a bunch of hot air. But Nadella's position is unique, because he's only the third CEO in Microsoft's history. And the last two guys were pretty much identical in terms of the kind of culture they fostered during their time as CEO.

Nadella has a huge opportunity here to take Microsoft in a new direction. And he's been at Microsoft since 1992, so he probably has some good ideas about what works and what needs to change. Saying "nothing is off the table" is both terrifying and thrilling if you're a Microsoft employee, and it's the sort of statement that shows the next few months at the company are going to be anything but boring.

3. 'Organizations will change. Mergers and acquisitions will occur. Job responsibilities will evolve.'

Microsoft just closed a massive acquisition -- its $7.2 billion purchase of Nokia -- and that one is going to take a while to digest. But Nadella wants it known that more deals are coming, though he didn't offer a timeframe.

Acquisitions don't have to be expensive to have a big impact. Microsoft just beefed up its Azure backup and recovery by acquiring InMage, a vendor of business continuity software. In May, Microsoft bought SyntaxTree, maker of the UnityVS plugin for Visual Studio, which developers use to build games for Windows, iOS and Android.

Xamarin, which talked with Microsoft earlier this year about an acquisition or strategic investment, is another small (by Microsoft's standards) deal that could have a huge impact on its standing in the mobile space.

4. 'New partnerships will be formed. Our priorities will be adjusted. New skills will be built.'

Nadella, in the email to employees, said he's not going to follow Ballmer's "devices and services" path. "While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy," Nadella said in the email.

Exactly what that unique strategy is remains to be seen. But Nadella hasn’t been shy about the fact that he sees Microsoft as a software vendor first and foremost.

While devices like Surface and Xbox are still part of the strategy, Nadella wants Microsoft to infuse data analytics into everything it does, so every Microsoft engineering team will now have a data science component, he said in the email.

As for new partnerships, there's been chatter for the past couple of years about some sort of joint venture between Microsoft and Apple, which both loathe Google far more than they do each other. Perhaps something could be revealed at WPC that brings this relationship into sharper focus.

5. '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 watchers took this to mean Nadella is planning a reorg as well as layoffs, mostly coming from the base of 25,000 Nokia employees that joined recently via acquisition. Wall Street analyst Rick Sherlund of Nomura Securities believes Microsoft will cut between 5 percent and 10 percent of its 125,000-member workforce.

Eliminating 25 percent of Nokia's 25,000 employees would enable Microsoft to shed around $1 billion in costs, Sherlund estimated in a recent note to clients.