Bold Ambition & Our Core

Team,

[ … ] Not shown: Thanks for the past year.

The day I took on my new role I said that our industry does not respect tradition – it only respects innovation. I also said that in order to accelerate our innovation, we must rediscover our soul – our unique core¹ (Editorial note 1)Editorial · 1Known at the timeThe email presents the new strategy as a return to something Microsoft already had, not a break from it. That lets a new CEO change direction without telling staff they had been wrong; the cost is that “core” has to carry a great deal of weight in what follows.. We must all understand and embrace what only Microsoft can contribute to the world and how we can once again change the world. I consider the job before us to be bolder and more ambitious than anything we have ever done.

[ … ] Not shown: July plans, and a worldview of mobile and cloud computing.

More recently, we have described ourselves as a "devices and services" company. While the devices and services description was helpful in starting our transformation, we now need to hone in on our unique strategy.² (Editorial note 2)Editorial · 2Known at the timeOne sentence retires the company’s own recent self-description. It keeps devices in the strategy but stops them defining the company, which is the real change: the identity moves from what Microsoft sells to what customers do with it.

At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world.³ (Fact note 3)Fact · 3With hindsightA year later Microsoft’s press boilerplate read “the leading platform and productivity company for the mobile-first, cloud-first world and its mission is to empower every person and every organization on the planet to achieve more.” The order had flipped and “do more and” had gone, but the line had become Microsoft’s press boilerplate.SourceMicrosoft, Form 8-K filed with the SEC (Internet Archive copy)Microsoft announces restructuring of phone hardware business (Exhibit 99.1)8 Jul 2015 We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.

[ … ] Not shown: What productivity means, dual users, and work and life apps.

Cloud OS: Our cloud OS represents the largest opportunity given we are working from a position of strength.⁴ (Fact note 4)Fact · 4With hindsightIn the quarter to 30 June 2026, Microsoft reported Intelligent Cloud revenue of $39.3 billion, against $37.8 billion for Productivity and Business Processes and $12.9 billion for More Personal Computing. Nadella said Azure revenue “surpassed $100 billion for the first time” that fiscal year.SourceMicrosoft Investor Relations (Internet Archive copy)FY26 Q4 - Press Releases - Investor Relations - Microsoft29 Jul 2026 With Azure, we are one of very few cloud vendors that runs at hyper-scale. The combination of Azure and Windows Server makes us the only company with a public, private and hybrid cloud platform that can power modern business. We will transform the return on IT investment by enabling enterprises to combine their existing datacenters and our public cloud into one cohesive infrastructure backplane. We will enable our customers to use our Cloud OS to accelerate their businesses and power all of their data and application needs.

[ … ] Not shown: Enterprise mobility, cloud services and Windows on every screen.

Our first-party devices will light up digital work and life. Surface Pro 3 is a great example – it is the world's best productivity tablet. In addition, we will build first-party hardware to stimulate more demand for the entire Windows ecosystem. That means at times we'll develop new categories like we did with Surface. It also means we will responsibly make the market for Windows Phone, which is our goal with the Nokia devices and services acquisition.⁵ (Fact note 5)Fact · 5With hindsightA week later Microsoft announced up to 18,000 job cuts, about 12,500 of them from the Nokia business. On 8 July 2015 it took an impairment charge of about $7.6 billion on that business, and Nadella said Microsoft was “moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family.”SourcesMicrosoft News Center (Internet Archive copy)Microsoft announces steps to simplify organization and align devices strategy17 Jul 2014Microsoft, Form 8-K filed with the SEC (Internet Archive copy)Microsoft announces restructuring of phone hardware business (Exhibit 99.1)8 Jul 2015

I also want to share some additional thoughts on Xbox and its importance to Microsoft. As a large company, I think it's critical to define the core, but it's important to make smart choices on other businesses in which we can have fundamental impact and success. The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming. We are fortunate to have Xbox in our family to go after this opportunity with unique and bold innovation. Microsoft will continue to vigorously innovate and delight gamers with Xbox.⁶ (Fact note 6)Fact · 6With hindsightThe email puts Xbox outside the core but keeps it. Microsoft completed its acquisition of Activision Blizzard on 13 October 2023. In the quarter to 30 June 2026 it reported that Xbox content and services revenue fell 10%, and its results included “severance expense and impairment charges in XBOX”.SourcesThe Official Microsoft Blog (Internet Archive copy)Welcoming the legendary teams at Activision Blizzard King to Team Xbox13 Oct 2023Microsoft Investor Relations (Internet Archive copy)FY26 Q4 - Press Releases - Investor Relations - Microsoft29 Jul 2026 Xbox is one of the most-revered consumer brands, with a growing online community and service, and a raving fan base. We also benefit from many technologies flowing from our gaming efforts into our productivity efforts – core graphics and NUI in Windows, speech recognition in Skype, camera technology in Kinect for Windows, Azure cloud enhancements for GPU simulation and many more. Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft.

[ … ] Not shown: Mobile defined by experiences; the case for culture change.

Nothing is off the table in how we think about shifting our culture to deliver on this core strategy.⁷ (Fact note 7)Fact · 7With hindsightThe list never mentions job cuts. Nadella’s next email, on 17 July 2014, opened “Last week in my email to you I synthesized our strategic direction as a productivity and platform company” and announced a reduction of “up to 18,000 jobs in the next year”.SourceMicrosoft News Center (Internet Archive copy)Starting to evolve our organization and culture17 Jul 2014 Organizations will change. Mergers and acquisitions will occur. Job responsibilities will evolve. New partnerships will be formed. Tired traditions will be questioned. Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified. And if you want to thrive at Microsoft and make a world impact, you and your team must add numerous more changes to this list that you will be enthusiastic about driving.

[ … ] Not shown: Customer obsession, engineering changes, training and simplification.

A few months ago on a call with investors I quoted Nietzsche and said that we must have "courage in the face of reality." Even more important, we must have courage in the face of opportunity.⁸ (Editorial note 8)Editorial · 8Known at the timeThe email’s final section, about a quarter of its length, is about culture, and it makes culture change each employee’s job. That is hard to measure, so this page does not score it: we have found no primary source that tests whether the culture changed as the email asks.

[ … ] Not shown: Purpose, a Rilke quotation and questions for each employee.

With the courage to transform individually, we will collectively transform this company and seize the great opportunity ahead.