Satya Nadella, Microsoft, Code Conference

Asa Mathat

Mobile


Liveblog highlights:

  • Microsoft’s future is about building platforms and software for productivity.
  • Nadella says we’re entering a “post-post-PC era.”
  • Microsoft has no plans to sell its search business to Yahoo.
  • “I have no intent to do anything different on Xbox than we’re doing today.”
  • Microsoft’s software and services need to be available on “all devices,” Nadella says.
  • Nadella and corporate VP Gurdeep Singh Pall unveiled a version of Skype that translates live between languages.

In the three short months since Satya Nadella took over as Microsoft CEO, he has presided over a few developments that would have seemed almost inconceivable in another era.

He introduced the Office for iPad subscription service, a move long in the making but locked up for years in tense negotiations with Apple. It was a big decision for the software giant, which considered waiting until a touch-first version of Office was ready for Windows 8 before launching the iPad app. (It is still not available for Windows 8.)

Meanwhile, Nadella has also pushed Microsoft hard in several areas in which the company has long been toiling. He has presided over a big-data event as well as last week’s launch of the new Surface Pro, which executives positioned not just as a high-end tablet for business use, but as a device to help you get rid of your laptop altogether. So far, Surface has been an expensive gambit for Microsoft, resulting in steep losses and further alienation of PC makers dismayed by a slowing computer market.

That’s why tops on Nadella’s to-do list will be fixing the Windows business and getting Microsoft’s phone business to be more than an also-ran in what has been a two-horse race between Apple and Google/Samsung.

This is all part of his task to ensure the company lives up to its billing as a cloud and mobile-first company — to revitalize its image as a technology leader and to shake off the perception that it is your father’s tech company.

In his first few months, Nadella has gone to great lengths to show he is a new type of leader in Redmond — from speaking frankly about the competition and challenges to sporting hoodies rather than the Oxford shirts and sweaters of his predecessors.

We are looking forward to learning more about Nadella’s plans to take Microsoft in a new direction in his first in-depth interview with Walt Mossberg and Kara Swisher to kick off the inaugural Code Conference.



Ina Fried May 27, 20145:07 pm

Walt Mossberg and Kara Swisher are taking the stage, but expect a bit of conference welcome and maybe a surprise or two before we get to Satya.

Ina Fried May 27, 20145:11 pm

First big change from the AllThingsD days: No more dot drawings for speakers. Instead, there will be cartoons, like the Nadella one above.

Ina Fried May 27, 20145:11 pm

And, with that, cue Satya.

Ina Fried May 27, 20145:13 pm

No hoodie this time. He’s in a dark polo and brown pants. First question: Why did you want to be CEO?

Nadella: I’ve pretty much grown up at Microsoft. I’ve spent most of my adult life at Microsoft. It means a lot to me. Nobody joins and says “I am going to be CEO in 22 years.” 

It’s about having a world view that you can make a difference as a company. That’s, perhaps — more than anything else — why I wanted the job.
Ina Fried May 27, 20145:14 pm

Walt: You kind of missed the turn on smartphones and tablets, which is ironic given that Microsoft tried to pioneer the Tablet PCs.

Nadella: Life without challenges is not worth living. 

Ina Fried May 27, 20145:15 pm

Cue mobile first / cloud first, Nadella’s calling card since he took the job.

Kara: Why did you miss those turns?
Nadella: You have to have patience and you have to have the right amount of impatience. 


Ina Fried May 27, 20145:15 pm

Nadella says if everything has to be an instant hit, you may get lucky a couple of times but you won’t build a 100-year company. In its 40 years, Microsoft has built a number of key businesses.

Ina Fried May 27, 20145:16 pm

In order to build something that’s the next big business success, you have to have a big idea and get it to be used.

Nadella says we are in the beginning of the post-post-PC era.

john paczkowski May 27, 20145:17 pm

Ina Fried May 27, 20145:17 pm

Nadella says we finally have software that isn’t about being tied to a specific place or device. Today’s software platforms really span different devices.

john paczkowski May 27, 20145:18 pm

Ina Fried May 27, 20145:19 pm

Walt: What do you have to change that caused you to miss those turns? The smartphone was a pretty big deal. You were making them; you were making sort-of, kind-of smartphones. Then iPhone came along — and Android came along.

Nadella: It’s an interesting question — but should it be the one he is worried about? We have a 4 percent global mobile market share. I think the question is, what is the next thing that is going to make us better? 

On the tablet side, I really wish we had taken the bet all the way.

john paczkowski May 27, 20145:19 pm

Ina Fried May 27, 20145:20 pm

On Surface Pro 3, Nadella said it was important to get the note-taking just right, from the pen technology to the hardware and operating system.

“You’ve got to complete the scenario,” Nadella said.

Ina Fried May 27, 20145:22 pm

Kara: Who needs to be promoted within Microsoft, and what is Bill Gates doing now that he is spending more time at Microsoft?

Nadella: We definitely are going to have more people coming to Microsoft. At the end of the day, though, it is about the renewal of the place. He wants people to focus on what they can say “yes” to rather than saying “no.”

Ina Fried May 27, 20145:22 pm

He notes that all successful companies struggle with this. You get a little more risk-averse. It just happens.

john paczkowski May 27, 20145:23 pm

Ina Fried May 27, 20145:23 pm

He notes that Wordament – the biggest word game on Windows — was the project of two people at Microsoft. It’s now a whole game studio within Microsoft and cross-platform. (For those who don’t know, it’s a bit like Boggle or Scramble with Friends.)

Ina Fried May 27, 20145:24 pm

Walt: With Nokia acquisition, Microsoft will have more than 100,000 people — that’s like a car company.

Nadella: Size can either be a great advantage or a disadvantage depending on how you work it. The efforts need to be loosely coupled, but tightly aligned.

Ina Fried May 27, 20145:25 pm

We are one Microsoft at the vision level, not trying to get all 100,000 people in some “Soviet system” doing the same thing at the same time.

john paczkowski May 27, 20145:25 pm

Ina Fried May 27, 20145:26 pm

Walt: So if you want to emulate Steve Jobs moving beyond the Mac, what’s the next big thing for Microsoft?

Nadella: All of us walk into the future with our backs to it. (Um…)

Ina Fried May 27, 20145:28 pm

Nadella says that Microsoft has to build apps and platforms that are not really about a specific device but for people. Often multi-device. 

One example is someone giving a PowerPoint presentation using the PC to show slides and the phone with associated notes.

Another is the role of the cloud. Pandora for life; apply machine-learning to everything. Instead of you having to find information, the information finds you. 

(This is Cortana and Q and A efforts within Microsoft, Google Now at Google)

Ina Fried May 27, 20145:29 pm

Kara on search: Are you still going to compete heavily against Google, and how?

Nadella says the core value of Bing is a lot more than Bing.com. But, he says, Bing has 18 percent market share on its own, 30 percent with the Yahoo traffic it serves — about the market share of the iPhone.
Ina Fried May 27, 20145:29 pm

No plans to sell search business to Yahoo. “We are very happy to partner with Yahoo serving the search results.”

Ina Fried May 27, 20145:33 pm

What about Nokia?

I definitely don’t want to compete with our OEMs. I want to create categories.

Walt: They certainly think you are competing against them.

Nadella: The PC ecosystem needs new innovation. It comes in apps, platform and hardware. We’ve got to put all those things together to create growth?
Why can’t Acer do that? Why can’t Dell? They can, and they do. I don’t think of it as zero-sum. 

He notes that the Windows hardware industry isn’t losing out because Microsoft is making hardware, it is losing out because it’s only 12 percent of the device landscape.

Kara: Were you in favor of the Nokia deal when it was first struck?

Nadella: I’m not going to answer that.

It is not about taking Nokia, the OEM of our phones and “let’s just run it like Nokia, the OEM of our phones.”

We are a software company at the end of the day.

Ina Fried May 27, 20145:34 pm

Nadella: Software is the most malleable experience and Microsoft’s strength, but not, alone, sufficient. You do need to, from time to time, build devices.

Are they just reference devices?

That’s one way of doing it. You have to be all in. Reference designs require our OEMs to do all the investing.

Ina Fried May 27, 20145:35 pm

Kara: Will you spin off Xbox?

Nadella: I have no intent to do anything different on Xbox than we are doing today.

He notes that prior to Nokia, Xbox is where all of Microsoft’s hardware know-how came from.

john paczkowski May 27, 20145:35 pm

Ina Fried May 27, 20145:36 pm

Back to Bill Gates’ role. 

Kara: Do you have to go to lunch with him?

Nadella: He spent all day today at Microsoft in meetings. The founder of a company can galvanize people in ways that another CEO can’t. He’s got some specific interests on Office and how to reinvent it. He’s got an agenda which I subscribe to.

Ina Fried May 27, 20145:37 pm

I think Bill’s presence, Bill’s push, Bill’s high standards are helpful.
But there’s no confusion. I run the place. Bill’s helping.

Ina Fried May 27, 20145:38 pm

Walt: Why did touch Office come first to iPad?

Nadella: The intent here is to make sure our services are available on all devices. There are going to be Windows devices and there are going to be other devices and we have to make sure our services run on all of them.

That said, iPad has the most share. We are definitely going to have touch-first Office on Windows, and it is coming. But: “I didn’t want us to hold back.”

john paczkowski May 27, 20145:39 pm

Ina Fried May 27, 20145:39 pm

And it may not be the last time Microsoft launches first on others’ platforms.
From now on, you will see us do things on other platforms sometimes, when we feel those platforms will get us more usage.

John Paczkowski May 27, 20145:41 pm

Ina Fried May 27, 20145:43 pm

We are catching some trends and we have missed a few trends. How do we make sure we look for the next big thing, post-just mobile devices?

Take speech — and that leads up to a demo I wanted to show you. It’s been a dream of humanity ever since we learned to speak: We wanted to cross the language boundary. For computers, that has been the dream for some time. Code-breaking machines in WWII started the revolution.

Walt: They had it on Star Trek.

Nadella notes that Bing Translate actually does Klingon. But, he says, Microsoft has something cooler than that to show. 

Ina Fried May 27, 20145:45 pm

Onstage is corporate VP Gurdeep Singh Pall, who now runs Lync and Skype. He is going to have a conversation with a German-speaking colleague using Skype to translate.

Ina Fried May 27, 20145:46 pm

It’s doing pretty well — missed a word here and there, but pretty good as they talk about Singh Pall moving to London for a bit.

John Paczkowski May 27, 20145:46 pm

Ina Fried May 27, 20145:47 pm

It even handles long strings of texts. German is one of the languages Microsoft has working well.

John Paczkowski May 27, 20145:48 pm

Ina Fried May 27, 20145:50 pm

Here’s a story with lot more on that Skype translation technology Microsoft just showed off.

Ina Fried May 27, 20145:50 pm

Walt and Kara ask the German-speaking audience members how it did. Pretty good, but not perfect, say the group, including DLD head Steffi Czerny.

Ina Fried May 27, 20145:51 pm

That technology, by the way, is going to be a product later this year. It will be a beta in whichever languages meet Microsoft’s standards. It will be, first, in Skype for Windows, but it will eventually work on other devices as well.

John Paczkowski May 27, 20145:51 pm

Ina Fried May 27, 20145:52 pm

Microsoft can machine-translate among 40-some languages, but speech is trickier.

Ina Fried May 27, 20145:53 pm

“We’ll put it on all devices,” Nadella said. However, it will start with devices with better sound and may work more easily on devices it has control over, so it may show up earlier on Microsoft devices.

Ina Fried May 27, 20145:54 pm

Microsoft also wants to bring it to its giant Perceptive Pixel high-end displays.

Ina Fried May 27, 20145:55 pm

Walt: How long before I can make a call to somebody in Egypt, where neither of us speaks the language?

Nadella: I definitely think in the next two years — 2015, 2016.

Ina Fried May 27, 20145:55 pm

Will it be free?

Nadella: It is going to be part of the Skype value proposition. I don’t know. I will figure it out.

Ina Fried May 27, 20145:57 pm

Walt: Who do you think are principal competitors, and what do you think of them?

Kara: Let’s start with Google.

She notes that Ballmer would be screaming at this point.

Nadella: Competition is not going to kill us. It’s our own ability to have an idea and go after the idea and make it happen. That’s what, at the end of the day, defines success. I’m not confused. We live in a world where people will choose between us and competitors.

John Paczkowski May 27, 20145:57 pm

Ina Fried May 27, 20145:57 pm

He notes he has talked to Google’s Larry Page, Apple’s Tim Cook and Amazon’s Jeff Bezos. They are all good companies and will do a set of things well. 

Ina Fried May 27, 20145:59 pm

“The currency is data,” Nadella said, noting a lot of things like speech get better with more data. You need a balanced business model that’s ad-funded so that  some products can be given away for free. 

It’s not just technology competition. It’s business model competition.”

But not everything should fit that model, which he says Google relies on.

“I think it is important to have balance.”

Ina Fried May 27, 20146:00 pm

One danger of being all advertising-led is that more cautious countries will enact regulation, leading to uneven world, Nadella said.

Ina Fried May 27, 20146:01 pm

He doesn’t give Google’s strengths and weakness, so Kara and Walt move onto Apple. 

Apple has focused on vertical integration. “I think they have done a good job of that.” Samsung has done that, too.

Ina Fried May 27, 20146:02 pm

Kara: Do you need a large acquisition? What would you like to buy? You can give a list. I have suggestions if you need it.

Nadella: I think we have to build something big. If, along the way, we have to buy something, that’s fine.

Microsoft has built three big things, he said. “It’s time for us to build the next big thing.”

John Paczkowski May 27, 20146:03 pm

Ina Fried May 27, 20146:04 pm

Kara: Talk about your background growing up in India.

Nadella notes quite a journey from the dusty cricket pitches in India. Initially, he said, he didn’t really have ambition to go further west than Bombay. He eventually went to Wisconsin.

He was only child of parents successful in their own fields.

His dad was an economist and his mom was a Sanskrit professor. Nadella quips his L1 cache was filled with information. (Who says we don’t talk code at Code?)

Ina Fried May 27, 20146:06 pm

Nadella notes that he’s also shaped by his family today, knowing two of his three children have special needs, including a son who is a quadriplegic. He notes one of his daughters helped build a system that allows that son to use a computer.

Ina Fried May 27, 20146:06 pm

“All of us are shaped by our personal experience, and those who are closest to us teach us the most.”

Ina Fried May 27, 20146:07 pm

“I don’t know if I will ever know what a balanced work-life looks like. I’m far from perfect.”

“I spend far too much time at work for it not to mean something more than just work.”

Ina Fried May 27, 20146:07 pm

On to audience Q and A for Nadella.

Ina Fried May 27, 20146:08 pm

First questioner up, CEO of OnePublic, who says he loves Microsoft almost as much as he loves Apple. (He carries an iPhone 5 and a Windows 5.) He asks why Microsoft isn’t taking advertising more seriously.

Ina Fried May 27, 20146:09 pm

Nadella: The ad business is a big business for us. It is a multi-billion dollar business. The more important thing for me is that balanced monetization model.

John Paczkowski May 27, 20146:10 pm

Ina Fried May 27, 20146:10 pm

On Microsoft retail stores, Nadella says it’s a great showcase for Microsoft’s consumer business.

Walt: Are you going to open hundreds of stores?
Nadella: We are going to expand this year. It’s a means to an end. The goal of our retail business is to support our consumer business. As long as it makes sense for us to expand, economically, we will.
Ina Fried May 27, 20146:11 pm

We want to be all-in, but it is not the only thing we do. Microsoft also has Microsoft stores in Best Buy.

Same thing in hardware.

We will build Surface. We want to create new categories. But we will also support the PC ecosystem.

Ina Fried May 27, 20146:13 pm

Steven Levy notes that Facebook bought Oculus because it sees it as the next big platform. What did you think?

Nadella notes Zuckerberg had been asking him about the Xbox business.
“Little did I know.”

But that is the big question, he says: What is the next big platform, and how do you get there?

“There are a lot of cheaper ways for me to get there without spending $2 billion.”

Ina Fried May 27, 20146:15 pm

Ross Levinsohn asks, what won’t Nadella do?

Nadella says he wishes he had a crisp answer. 

Nadella: The one thing I won’t want to do is muddle along. It’s not the short-term business metrics. But is it stuff with great work and great usage. If it’s the case, we will stick with it. If there are things we are doing that are sub-scale and aren’t great, then we won’t do it.

Kara: Are there things you are thinking of?

Nadella: No.

Kara and Walt notes there have to be. What about Surface?

Windows and Server started slow too, he notes.

“You’ve got to have patience and the right amount of impatience,” Nadella says. Otherwise you will just start exiting everything.

John Paczkowski May 27, 20146:15 pm

Ina Fried May 27, 20146:16 pm

Take Surface. This third one, “it’s promising.”

Walt: That’s a heck of an endorsement.

Nadella: Anything that’s not a hit, it’s promising.

Ina Fried May 27, 20146:17 pm

Next question is about Windows Azure, the company’s cloud-based OS.

First and foremost, Nadella notes that Microsoft built Azure for its own services, such as Skype. “For our set of first-party services, we have had to build Azure. Whatever we build for ourselves, we will expose it to third parties.”

Good success with enterprises, but more work to do for start-ups.

Ina Fried May 27, 20146:17 pm

He notes 15-20 percent of Azure is Linux-based, and says he is pleased with that. 

Ina Fried May 27, 20146:18 pm

The name is actually now Microsoft Azure. “We did that to signify that change.”

Ina Fried May 27, 20146:19 pm

One can easily describe Ballmer or Gates as CEO. How would you describe what you want your CEO-ship to be?

Nadella: Am I learning and setting higher standards on a continuous basis? At the end of it all, if Microsoft is in a better place and through that journey I have learned, that’s what I want.

Ina Fried May 27, 20146:19 pm

And with that, Walt, Kara and Satya exit stage right making way for special surprise guest: Gwyneth Paltrow

Ina Fried May 27, 20146:21 pm

She’s one of a bunch of special “Spotlights” that are new to Code this year. She kicks off by noting that she has been between lots of men in her life, but never thought she would be between Satya Nadella and Sergey Brin.

“I didn’t suspect, in my life, I would be in their sandwich.”

Ina Fried May 27, 20147:25 pm

No hoodie this time. He’s in a dark polo and brown pants. First question: Why did you want to be CEO?

Nadella: I’ve pretty much grown up at Microsoft. I’ve spent most of my adult life at Microsoft. It means a lot to me. Nobody joins and says “I am going to be CEO in 22 years.” It’s about having a world view that you can make a difference as a company. That’s, perhaps — more than anything else — why I wanted the job.
Ina Fried May 27, 20147:25 pm

No hoodie this time. He’s in a dark polo and brown pants. First question: Why did you want to be CEO?

Nadella: I’ve pretty much grown up at Microsoft. I’ve spent most of my adult life at Microsoft. It means a lot to me. Nobody joins and says “I am going to be CEO in 22 years.” It’s about having a world view that you can make a difference as a company. That’s, perhaps — more than anything else — why I wanted the job.

Ina Fried May 27, 20147:43 pm

Walt: So if you want to emulate Steve Jobs moving beyond the Mac, what’s the next big thing for Microsoft?

Nadella: All of us walk into the future with our backs to it. 

(Um…)

Ina Fried May 27, 20147:45 pm

Nadella says that Microsoft has to build apps and platforms that are not really about a specific device but for people — often multi-device. 

One example is someone giving a PowerPoint presentation using the PC to show slides and the phone with associated notes.

Another is the role of the cloud. Pandora for life; apply machine-learning to everything. Instead of you having to find information, the information finds you. 

(This is Cortana and Q and A efforts within Microsoft, Google Now at Google)

Ina Fried May 27, 20148:02 pm

“The currency is data,” Nadella said, noting a lot of things like speech get better with more data. You need a balanced business model that’s ad-funded so that  some products can be given away for free. 

It’s not just technology competition. It’s business model competition.”

But not everything should fit that model, which, he says, Google relies on.

“I think it is important to have balance.”

Ina Fried May 27, 20148:10 pm

And with that, Walt, Kara and Satya exit stage right making way for special surprise guest: Gwyneth Paltrow.




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