In Mid-July, incoming Microsoft CEO Satya Nadella released an internal memo presenting his new vision for the company, which was a call to action for employees to accelerate Microsoft's innovation and rediscover its core.
The industry doesn't respect tradition, only innovation, Nadella wrote in the memo. And so Microsoft's core is evolving from a devices and services company to a productivity and platform company in a mobile-first and cloud-first world, he said.
Looking past the buzz words, Microsoft's redefined core means something specific, according Merv Adrian, research vice president for Gartner.
We're all inside the cloud and moving through it, he said, and the cloud and our mobility interact seamlessly creating new opportunities for Microsoft to move away from PCs and be present in its customer's lives through productivity-enhancing products and across platforms -- from a desktop computer at the office, tablet while traveling, and phone and Xbox at home.
Cuts to the Microsoft Workforce
Along with other recent internal changes, Microsoft has made a drastic change in its workforce.
Microsoft recently cut 18,000 jobs, totaling 14 percent of its workforce, and thousands of contract workers, too, according to Forbes.com. Although this is the largest layoff in company history, taken within context, these cuts are not cause for alarm, according to Merv Adrian, research vice president for Gartner.
"Most of this stuff is quite rational -- it doesn't make it any happier," he said. "But it doesn't make it any less rational."
The majority of the cuts, 12,500 of them, were made from the Microsoft acquisition of the mobile phone company Nokia due to thousands of staff redundancies with such an acquisition, Adrian said.
Another reason for the cuts now is that Microsoft CEO Satya Nadella got them out of the way at the beginning of his tenure and the new fiscal year. He was being bold and decisive, Adrian said, which is in step with his other actions at Microsoft's helm.
Also, even as the company is cutting, it's making investments in other areas, including bringing new products to market quicker.
"It's important to understand that Microsoft is not only cutting," Adrian said. "Microsoft is also hiring and creating new jobs and creating new things."
"In all of those places, Microsoft has a way to reach you and you to reach them, and that makes things easier and more productive for you in both your professional capacity and your personal life," said Adrian, who is also Gartner's vendor lead for Microsoft.
Some of the first changes fueled by Microsoft's new vision can be noted in product decisions, like Microsoft's decision to release Office on the iPad now instead of waiting to release it on a Microsoft platform first, as was planned by former CEO Steve Ballmer. A small but meaningful move.
Changes can also be noted in new products. Microsoft's Enterprise Mobility Suite helps people to be productive across all devices, Microsoft and nonMicrosoft, and across on-premises and cloud environments, while giving organizations control of privacy and security.
A new way of thinking was also evident at the start of Nadella's tenure when the company announced that Windows would be free for devices under nine inches. "That's a big deal. That's about proliferating their footprint," Adrian said. This model, he added, is similar to the iTunes one where Apple has never charged for its software on a client product. The goal, then, is to get the product in front of you and the relationship can be monetized later.
"All of these changes were made in the direction of opening up Microsoft, because you have to participate in the heterogeneous market if you're going to lead there," Adrian said.
A mobile-first strategy extends to the public sector too -- Pennsylvania CIO Tony Encinias, who wouldn't comment directly on Microsoft's new vision, said the trend is that the majority of the commonwealth's population wants to interact with government easily and efficiently, and one way to do that is through e-government mobile applications.
"We are adopting a mobile-first strategy in everything we do from an IT perspective," Encinias said, adding that the strategy is a business one as well.
Bill Kehoe, CIO of King County, Wash., said he supports and is encouraged by Microsoft's new vision. The county has used Microsoft cloud environments for several years, and is rolling out Microsoft's government cloud, Windows Azure. Kehoe said he has seen a new focus and investment in cloud computing environments, specifically for governments, and that the Microsoft's vision is beneficial for the county.
"The more that Microsoft matures and improves and is focused on the cloud environments like Office 365, the better it's going to be for our customers in terms of the customer satisfaction, the usability and the feature set that we're going to have," Kehoe said.
Adrian said Microsoft's SharePoint and Office Suit products have evolved in the cloud era with a focus on joint ownership and work flows among people, but also on managing and protecting boundaries. Privacy is something that Microsoft is especially serious about, ensuring that customers opt in and make choices about what they want, he said.
"Cloud is the future for everybody," Adrian said, adding that generally government is moving more slowly in adopting cloud technology -- but that's changing.
Microsoft has made a substantial investment in cloud technology, and is already a top competitor. The company is educating and setting a vision for customers through direct sales and through Microsoft-trained and -certified partners, Adrian said.
According to a Microsoft spokesperson, the company is "investing in our vision to deliver the best cloud-connected platform and experience by offering the most comprehensive, end-to-end cloud solution for government customers and partners."
Changing Microsoft and World
Before Nadella's tenure and his shake-up of the company's core, Microsoft has been stagnant for years, with an industry perception that significant changes were needed, Adrian said. The changes that have come with Nadella are a substantial break from the past -- and were not done by accident.
"The kind of vision [Nadella has] already talked about and the kinds of decisions he has already made in his first five months have very much been in keeping with his prior assignments within the company, where he was routinely challenging and breaking down barriers that existed in the Microsoft culture," Adrian said.
All of this change, too, has been in response to the changing marketplace. As was Bill Gates' original vision, Microsoft has nearly put a computer on every desktop. And for awhile, Microsoft continued down that path of building better, faster and cheaper products, Adrian said.
And now, Microsoft has the unique ability to harmonize the world's devices, apps, docs, data and social networks, according to Nadella's memo.
"We've become accustomed to this ability to be connected and to be able to act whenever we need to, and that's a fundamental change," Adrian said. "It changes our ability to build software, it changes the software we build, it changes the way we interact."
Within this changing environment, companies have to reconstruct themselves on an ongoing basis, he said. And Microsoft is no different.