Nearing the
half-year mark as CEO, Satya Nadella issues a call for change. But he
tells CNET News, one thing that won't change is the future of Xbox at
Microsoft.
Microsoft CEO Satya NadellaIn case you still had any doubt, it's no longer Steve Ballmer's Microsoft.
Nearly six months into his tenure, CEO Satya Nadella issued a broad-brushed call for change at Microsoft in a 3,100-word note he sent to employees Thursday morning urging the rank-and-file to improve the corporate culture and "obsess" over customers.
Although
his memo did not offer specifics, Nadella also promised that Microsoft
would "flatten the organization" while creating "leaner business
processes."
That's for another day. More immediately, think of
this as Nadella's most visible attempt to publicly stamp the direction
of the company he began leading last February.
"I used this as a
good opportunity for me to just mark the passing of one fiscal year
into the next and make sense of the changes," Nadella said in an
interview with CNET, during which he described the need for Microsoft to
redefine, if not expand, the concept of user productivity.
"The
real emphasis for us is what's our soul and contribution in this
mobile-first, cloud-first world. And that's where redefining
productivity and rethinking platforms is a core sensibility we have,"
he said, adding that he wants Microsoft to think about it more
ambitiously.
"At the end of the day, it's all about culture -- you
kind of eat your strategy for lunch if you don't have a culture that
reinforces what you want to have done," he said.
The following is an edited transcript of the interview. Q: I think you missed your true profession. You wrote one hell of a lead, as we say in journalism.Satya
Nadella: I want the least number of decision makers. We want to empower
people to get more things done and also give permission to question
orthodoxy. So it's not about being static, or here are a few changes and
that's it. I want us to be able to say, "Look we can change. And we
should change and don't be beholden to any of our past." Because the
nature of work is changing.
At
the core of the products we build, I want to think about productivity
centered around people. I don't want to think about OneDrive and
OneDrive for Business as two things. I want the system to think about it
on behalf of me. There are some documents that are my personal
documents that should go to OneDrive; there are documents that are Word
documents that should go to OneDrive for Business. That should all be
quote-unquote, auto-magic. That's the kind of innovation we should be
able to contribute to, and that's what we're pursuing Your note also seems to be a declaration that Xbox isn't going anywhere, that it's staying with Microsoft?Nadella:
I wanted to be very, very explicit about how a large company -- and a
successful, large company -- like ourselves can have a core and should,
in fact, have a core and also have ambition to do a few other things
where we can have high impact. And to me, I'm so glad to have Xbox as a
franchise, especially at a time when gaming is becoming even more
important -- as a digital life category and in the mobile world. The
most time spent? Games. The most money spent? Games. Xbox is one of the
most revered, loved brands in games. I look at that and say I want that
team to be super ambitious about gaming...It doesn't matter that it's
not core to productivity. In fact, there's so much technology transfer
that actually happens. Take all the speech recognition that we have in
Skype. It came because of Kinect on Xbox. But that's not the reason that
I'm in Xbox. We're in Xbox because we want to win in gaming, delight
customers in gaming, and want to grow that fan base. I wanted to make
that explicit because I think it's OK for a large company like ours to
be proud of things where we are having a high impact outside of the
core. Are you still thinking over whether to keep Bing?Nadella:
Bing to me is a core part of task completion and productivity...A lot
has happened underneath Bing where a lot of Bing technology is now a
significant part of a lot of what we do in Azure and Office 365, so
that's what I wanted to reference (talking about it) as part of the
core. You're coming up on six months on the job. I think a
lot of people would be curious to know: What's been your biggest
surprise so far?Nadella: The thing that I've found is this
hunger for being clear on what is it that is our soul, our core, and
that unique contribution and sense of purpose that we can make -- and
have a bold ambition around it. There were a lot of things. It's not as
if we're suddenly doing things completely differently. But the cool
thing is, I love the fact that people are getting galvanized and much
more clear about "Oh wow, yeah that's right; we can think about
platforms and productivity differently." We should not, in fact, think
about our own efforts in fractured ways, but let's put the user in the
center and bring things together so that we harmonize it for the user.
We
have a lot of work ahead of us. At the end of the day, I'm not a
believer in memos but a believer, obviously, in products that draw
inspiration from what we said we would do. And I see good progress in
the last six months about work that was started even before I started as
CEO . That's been good, and now I'm feeling great about our pipeline. What's your sense: Do you think Microsoft's ahead or behind in each of the categories where the company operates?Nadella: Think about it. We're 39 years old and here we are on Techmeme
every day, every week. There's something right about this place. How
does one be relevant in such a broad way across digital life and digital
work? There are so many new competitors. In my own 22 years at
Microsoft, I started competing with Novell and Lotus. It's just
different. Now we have new competitors. It's great. I have a lot of
respect for these new competitors. Some places we're ahead, some we're
behind -- but we're in it. We're in the mix. And we're a profitable
company. So I'll take our hand any day of the week. But at the same
time, like I always say, this industry has no respect for any past. So I
want us to be on our toes and forward-looking and aggressive and
ambitious. But I feel it's our time when it comes to thinking broadly
and ambitiously about productivity and platforms.
Microsoft was criticized after its E3 media event barely mentioned the Kinect motion sensor or new TV initiatives. But the Xbox maker had its reasons.
Microsoft's Phil Spencer says Xbox is "not winning today, so I'm focused on winning."
LOS ANGELES -- Phil Spencer is laser-focused on games for this holiday shopping season.
The new head of Microsoft's Xbox group, who was named to the position in March, said in an interview at the Electronic Entertainment Expo here that he has been working to bring focus to the team, particularly for this upcoming holiday shopping season.
"I wanted gamers, Xbox fans, and everyone else to know we are a games-led platform," he said.
That was underscored by Microsoft's E3 media event Monday, during which Spencer and his teamshowed more than two dozen games over the period of an hour and a half, including crowd pleasers like an update to the Halo space-age war games and a new racing title from its Forza series.
While the company claimed this represents the best lineup of titles in its history, it's unclear if the market agrees with its message.
When Microsoft's Xbox One video game console launched in November of last year, sales were swift. The device sold more than 1 million units in its first 24 hours on the market, the best launch in the company's history. But Microsoft has since fallen behind its rival, Sony's PlayStation 4, which hit store shelves a week earlier than the Xbox One.
Microsoft in April said it had sold more than 5 million units to retail shops since Xbox One launched. Sony, meanwhile, has said it confirmed more than 7 million units had been sold to consumers over a similar time frame.
The Xbox maker has shifted position in response.
Spencer is enthusiastic about video games. As the former head of Microsoft's game-making division, he says he makes a point of playing every title his company creates, and often plays those by competitors as well.Its Kinect motion sensor, which had launched as an accessory in 2010, was a mandatory purchase with the Xbox One in 2013, contributing to a price tag of $499, higher than Sony's $399 sticker price for its PlayStation 4. Last month, Microsoft said it will offer a version of its Xbox One for $399 by removing the Kinect from the packaging and selling it separately.
He also recognizes Microsoft isn't at the top of the heap right now.
"We have a lot of work to do," he said, adding that his team has identified its lineup of games as its biggest strength this year. "I'm never going to look at being in second place and say I'm fine."
The message within his organization has been to focus back on core customers, a stark contrast from the company's marketing message last year that discussed games in addition to television capabilities, video chat, and other functions. Spencer said the customers he will target this holiday are the ones who have so far sat out because the games haven't compelled them to buy.
No rush to virtual reality or set-top boxes
Spencer said he's intrigued by virtual reality technology, an effort Sony plunged into when it announced its Morpheus goggles in March. Facebook, the social-networking giant, surprised the industry when it purchased Oculus VR, the virtual reality headset maker, shortly after that for $2 billion.
But Spencer isn't convinced the devices appeal to the mass market yet.
The same goes for streaming-media set-top boxes -- like the one Sony talked up on Monday. ThePlayStation TV, as it is called, will retail for $99, with a catalog of nearly 1,000 games on tap in addition to other capabilities streaming video and entertainment.
Spencer said he's unsure what price point is the right one, noting that Google's Chromecast streaming device, which also plugs into a television, costs $35. Roku, another competitor, sells its device for as little as $49. And both Apple and Amazon sell their respective devices for $99.
Microsoft has quietly worked on its own set-top box, but so far has yet to bring it to market.
Right now, Spencer said, Microsoft is focused on the devices it does make, and getting back to the top of the sales chart.
"I'm not winning today, so I'm focused on winning," he said.
Microsoft dedicated its Xbox One press conference to assuring players that it's not the company that trotted out a controversial console last year. This time, games come first.
LOS ANGELES -- Microsoft kicked off the annual Electronic Entertainment Expo (E3) Monday with a simple message, one part confident boast and one part plea.
The takeaway: Trust us, we've listened and learned since last year -- the Xbox One entertainment vision is in the backseat, and it's now all about the games.
"You are shaping the future of Xbox and we are better for it," said Xbox head Phil Spencer, the first Microsoft executive to take the stage before the conference launched into its first demo, a gameplay showing of Call of Duty: Advanced Warfare. "We are dedicating our entire briefing to games," he added to strong applause.
So began a press conference where barely a sliver of time was dedicated to even acknowledging the existence of the Kinect camera and motion sensor, which was unbundled from the Xbox One last month, or any of Microsoft's original television programming or entertainment features.
For Xbox One, confirming what we already knew, with a few surprises
The slew of expected demos and trailers included Xbox One exclusives Sunset Overdrive -- which now has a release date of October 28 -- Forza Horizon, and Dead Rising 3, which Microsoft announced would be available starting today. The moral-focused fantasy role-playing game Fable was also given screen time for its new cooperative installment, Fable Legends.
Of course, Halo 5: Guardians was one of the central highlights of the conference, though its release date still remains ambiguous at sometime next year, with history telling us fall 2015. In place of any substantial new info, developer 343 Industries announced Halo: The Master Chief Collection, which will include a multiplayer beta for Guardians.
"On November 11, 2014, you can play the entire Master Chief saga on a single console with Xbox One," said Bonnie Ross, head of 343. Beyond the beta, the collection will include Halo: Combat Evolved, Halo 2, Halo 3, and Halo 4. The games will all run at 60 frames per second, 1080p, and the collection will retain the original Halo 2 multiplayer, a longtime jewel of the series' original Xbox roots that many players have clamored for since the franchise made the jump to Xbox 360 with Halo 3.
"Halo launched the original Xbox, Halo launched Xbox Live and Halo was a cornerstone of the Xbox 360," Spencer said after returning to the stage following 343.
Microsoft also threw in a short stint on independent games, highlighted by the reveal of a new exclusive from Limbo developers Playdead Studios. Developers of the indie variety have been an increasingly important focus for Microsoft in 2014. After the company was forced to play catch-up against Sony -- which brought indie developers onstage way back at the February 2013 unveiling of the PS4 -- Microsoft has been making a more substantial effort with its ID@Xbox publishing program, courting small developers like Asher Vollmer of mobile sensation Threes, which is coming to Xbox One later this year. That said, Microsoft didn't spend too long on indies, and fans didn't get refreshed glimpses of any of the confirmed higher-profile Xbox One exclusives like Capybara Games' Below, let alone see an indie developer onstage.
When it comes to other large, third-party properties slated for late 2014 and 2015, Microsoft showed off a gameplay demo of CD Projekt RED's The Witcher 3: Wild Hunt. And ahead of publisher Ubisoft's press conference later today, fans even got gameplay demos of the next title in the revisionist history series Assassin's Creed -- titled Unity and set during the French Revolution -- and Tom Clancy's The Division. Both are high-profile, multi-platform Ubisoft games, with the latter delayed until 2015. Assassin's Creed Unity is on track for its now-standard annual fall release.
Previously unannounced titles were in short supply, peppered throughout the conference with nothing but short videos and the flash of a title screen. Microsoft showed off a trailer for the sequel to last year's successful Tomb Raider reboot from Square Enix, and there was also a reveal of a fighting title called Phantom Dust. Trailers for a dragon-focused Xbox One exclusive action game, Scalebound, from Bayonetta-creator Platinum Games and the much-anticipated sequel to the open-world, crime-fighting game Crackdown made appearances as well to finish off the game announcements.
This year, a different Xbox One
Last summer marked a trying time for Microsoft as the company headed into E3 only a month after unveiling the Xbox One at a dedicated event in May 2013. It was then -- as well as the days and weeks after E3 in June -- that Microsoft began stumbling on its corporate messaging, with executives unable to state clearly which elements of its next-gen console would be more restrictive than the last.
The backlash was immediate. Microsoft soon began walking back its policy shifts, including the requirement that players connect to the Internet once every 24 hours and keep the Kinect motion camera and sensor peripheral plugged in and powered on to use the console. In the wake, Don Mattrick, now CEO of social games company Zygna, left his role as president of Microsoft's interactive entertainment department. Spencer, once solely responsible for Microsoft's game development arm, has since assumed that role in the form of Xbox division head.
Microsoft's Xbox One vision one year later is starkly different. While the Kinect remains intact, its importance has been scaled down drastically since the console's launch. Xbox One now sells as a standalone unit for $399 after the bold Kinect unbundling shift in May that put the console in price parity with Sony's competing PlayStation 4. That choice, while consumer friendly, undermined the original Xbox One vision for a motion and controlled living-room experience that moved beyond games.
Still, Microsoft seems content with that pivot, having lost serious ground in worldwide sales to the PS4 with its options few and far between. Sony's last sales figures put its console at 7 million units sold to consumers globally, while Microsoft has only announced that it's sold to retailers 5 million units. Since the unbundling of the Kinect, sales figures have yet to be released.
"We will continue to listen to you -- our community -- and continue to make Xbox for you. That's not just my personal commitment but the commitment of the entire Xbox team," Spencer said, taking the stage to close out the 90-minute event.
"Thank you for making your voice heard and thank you for helping us shape the future of the new Xbox."
