Microsoft's new CEO, Satya Nadella, took the unexpected step of addressing customers and partners in a 16-minute interview, and made it through without a misstep.
Previously, corporate messaging experts had said that it would be unwise for Microsoft to immediately put its CEO in front of hungry reporters because that risked an unforced error that could damage his cause before he even warmed the chair.
Instead, Microsoft circumvented reporters and staged a controlled interview - with Susan Hauser, a Microsoft executive in its enterprise and partner group, asking the questions - before a small crowd of employees. The interview, which Microsoft webcast, did not include a Q&A session with members of the audience or the media.
"Satya [Nadella] is perfectly capable of telling the story without a script," said Merv Adrian, research vice president at Gartner, and the firm's lead for its Microsoft coverage. "He is everything he showed himself to be in the videos. Ballmer was sales, loud and enthusiastic, moderately scripted. Satya will be less scripted, I think, because he has an extraordinary command of the content."
But Nadella did not stray far from the messaging that Microsoft has used for the last 20 months, that the company has pivoted from a purveyor of packaged software to one focused on devices and services. That over-arching continuity was not unexpected, said Adrian, who pointed out the need to maintain constancy when any company names a new chief executive.
"I heard continuity," agreed Rob Helm, an analyst with Directions on Microsoft, a Kirkland, Wash.-based research company that tracks only Microsoft's moves. "The business strategy and the rewards for following that will go forward, at least for the next year."
Nadella did depart from the regime of former CEO, Steve Ballmer, in places, however. At several times during his responses to Hauser's softball questions, he mentioned "software" or "software-powered world," harking to Microsoft's traditional strength. Ballmer had essentially dropped the word from his vocabulary as he pushed his devices-and-services strategy since its 2012 debut.
"The core evolution of hardware and software is going to define a lot of what's going to happen," said Nadella. "Everything is going to be connected to our cloud and data. All of this will be mediated by software. Software is the most malleable thing that's going to define the experiences, the insight, the ambient intelligence that's going to power these device experiences.
"To me, that capability, the heritage that this company has, is still very relevant. We have to renew it, we have to do new things, but at the same time we should be very, very confident in our ability around software as it comes to these new experiences," Nadella said.
Analysts interpreted Nadella's focus on software as a recognition that software remains, and will remain, Microsoft's focus and its best bet at continuing to remain relevant in the face of rivals like Amazon, Apple and Google.
"They're returning to what they once called 'The Magic of Software,'" said Helm, of a phrase co-founder Bill Gates used as long ago as 2003, and in a rally before employees, repeated yesterday.
"It doesn't refute the devices and services strategy [that Ballmer trumpeted]," added Adrian, "but he's saying that Microsoft will deliver its software in a variety of ways. If I am in the cloud, for example, I can be on both ends, not only on the cloud but also on the client."
Adrian wasn't sure whether Nadella's comments meant Microsoft would back away from hardware -- that would be very difficult to do in the short term, what with Ballmer spending $7.4 billion on Nokia's handset business -- but by stressing software, Nadella is putting a foot on a slippery slope.
"Microsoft has to get better at hardware design," said Adrian if, in fact, it intends to stay in the do-it-yourself device business, such as its Surface tablets, the Xbox game console, and now Nokia and its mobile phones.
"Satya and Elop will have to make these decisions together," Adrian argued, referring to Stephen Elop, the former CEO of Nokia who is slated to return to Microsoft to run the devices side of the Redmond, Wash. company's business. "How they do that will be one of the first 'tells' in Satya's time at Microsoft."
Nadella also touted another phrase, "mobile-first, cloud-first," several times in the Hauser-directed conversation, a line he used elsewhere on Tuesday, including in the email to employees that Microsoft made public.
"Our strategy going forward is about devices and services. What will define us going forward is a mobile-first, cloud-first world," Nadella said. "We're living in this mobile-first, cloud-first world, every day making progress."
The mobile - and Cloud-first mantra got the attention of the analysts.
"It's pretty clear that Microsoft will not only improve Windows on its mobile platform, but make its management tools available with other mobile platforms," said Helm.
Nadella did say as much, but, like Ballmer before him, could not bring himself to call out rivals like Google's Android and Apple's iOS by name.
"Hearing the CEO say that, someone like Satya, is a pretty strong endorsement," Helm added.
"Microsoft and Ballmer used ringing phraseology, like 'devices and services,' but history argued that was just lip service," said Adrian. "Satya's history says otherwise. He's broken down walls where he's had to. He's done what works. And if that breaks some eggs, he's prepared to."
A shift to mobile- and cloud-first, if it's a genuine, albeit subtle, change in strategy, could mean many things, Adrian contended. One that seemed most likely, is a further acceleration in the delivery pace of updates and new features, a hallmark of both mobile and cloud in general, a strength of Microsoft's biggest rivals, like Google and Apple, in particular.
Nadella's known for running agile groups, or at least more agile than the norm at Redmond, and Adrian expects that will rapidly percolate through the company.
"I see all of Microsoft delivering rapid, small releases instead of massive bloated upgrades," said Adrian. "That's the way this is going to go, and Satya will start it moving fast. I think he'll start rolling incremental updates as quickly as he can get the groups to do so."
Nadella hinted as much.
"Our strategic frame that we have around devices and services is great," he said Tuesday. "It's in motion. It's not like we're waiting. We are there. We are just going to keep coming to it, again and again with every one of our launches and every one of our services."
"I thought it was quite substantive, especially for a maiden customer appearance," said Helm of the orchestrated interview. "He was asked some fairly probing questions, and gave some pertinent answers. But the roadmap is intact for this year, and perhaps for some time to come."
