Article

Dear Satya Nadella - an Open Letter

How you're failing Microsoft - and the world - and why.
Somebody out there thinks this is a good idea. It's not

Dear Satya Nadella,

Let me get straight to the point: You're a man with no vision.

Harsh, I know. But let me explain.

Your tenure at Microsoft has seen no new products and has seen dramatic scaling back or outright cancellation of all of Microsoft's consumer products. Instead, Microsoft has shrank its focus to a relatively small collection of business-oriented products, services, and applications all of which were already well-established before you became CEO. This lack of innovation in the consumer market will have lasting consequences as Microsoft continually loses ground to competitors whose deep entrenchment among every day consumers gives them leverage in the business market.

Your predecessor, Steve Ballmer, presided over some of the biggest successes in Microsoft's history:

  • Xbox / Xbox 360 (and associated blockbuster games, e.g. Halo)
  • Windows XP (moving Windows to the NT kernel)
  • .NET
  • Surface
  • SharePoint
  • Skydrive => OneDrive
  • Office 365
  • Azure
  • Just to name a few

And he presided over some of the most visionary innovations in Microsoft's history:

  • Kinect
  • Hololens
  • Windows 8
  • Windows RT
  • Surface
  • Microsoft Band
  • Windows Phone 8/8.1 and the beginning of the Universal Windows Platform
  • Cortana / AI

Meanwhile you have presided over some of the biggest failures or backslides in Microsoft's history:

  • Cancelled Windows Phone
  • Cancelled Microsoft Band
  • Cancelled Kinect
  • Cancelled Windows RT, Windows S, Windows S Mode, and cancelled? Windows Core OS (before it's even released!)
  • Cancelled? Invoke
  • Cancelled? Glas
  • Cancelled? Hololens
  • Cancelled? Windows Mixed Reality
  • Cancelled? Cortana

These lists are not exhaustive, but the point is only to illustrate a pattern. Where Steve Ballmer saw disruption, potential, and stunning innovation, you only see consolidation and cancellation. You have not produced any new products and have only produced incremental improvements in Steve Ballmer's greatest success stories. To wit: you've laagered up and are resting on your laurels.

I believe a more specific and in-depth example will help to illustrate this point. I will begin with one of Microsoft's greatest successes, the Surface.

The idea, the vision, of the Surface was a "Tablet that could replace your laptop". A bold vision and one that was beyond the reach of technology at the time (and hopeless for Microsoft, still publishing Windows 7). It would require intense engineering and development of completely new technologies and completely new OS to accomplish. But Steve Ballmer caught the vision and said "Go for it". Microsoft released the Surface 1 in 2012 alongside a new tablet-centric Windows with less than spectacular results. It was small, clumsy, and underpowered and the new OS caught desktop users unprepared. But Surface 1 did something incredible: it demonstrated that the vision of a tablet that could replace a laptop was achievable. A year later Microsoft followed up with the Surface 2, improving incrementally on the Surface, making it more practical, more usable, and closer to the vision. And in less than a year, shortly behind the Windows 8.1 update that fixed many of the problems with Windows 8, Surface Pro 3 hit the stores and disrupted the portable computing market with something nobody had ever thought possible: A tablet that actually could - and in many cases actually DID - replace your laptop.

The Surface created a whole new class of devices that has now been copied and emulated worldwide. Surface is a household brand name, even for those who don't have one. And to this day, Microsoft continues to reap the rewards of Steve Ballmer's patience and support during those first two lackluster iterations.

So let's compare Surface to another Microsoft product: the Band. The first iteration of the band was released in 2014, shortly after you became CEO. This suggests the product was already in R&D and nearing production when you started and that you were optimistic enough to let it continue. The first Band was wildly successful and sold out of its limited production run on day 0. (There's a LOT to unravel behind that highly successful initial launch, much of which revolves around the Microsoft fan-club Steve Ballmer succeeded in creating - more on that later. Full disclosure: I bought one of those on Day 0 and loved it.) A year later, Microsoft released the Band 2, an improved version that was also highly successful - at first. The Band 2 had a fatal design flaw in that the silicone used in the wristband was prone to failure, causing a tremendous amount of cost overhead for support cases and warranty replacements.

And this is where the story of the Band differs from the story of the Surface. Surface 1 and 2 weren't great, but Steve Ballmer gave the Surface a 3rd try and hit it out of the ballpark. The Microsoft Band 3 was already far along in development, had resolved all of the issues with the Band 2 (including the failing wristband), had significantly improved upon the design, and was almost ready for production. Fans of the Band (yes, at that time Microsoft actually had fans) and even Fitbit and Apple Watch owners awaited the release of Band 3 with bated breath. In spite of this, you cancelled the product, fired the team, and closed down the project. Band 3 never became a reality beyond the few test models created for the MS team developing it. You were moments away from pwning the smart wearable market in its infancy and you gave up. (And some online sources connect the cancellation of the Band with Microsoft's ultimate mobile failure as well, giving Android and Apple wearables ecosystem dominance.)

Of course Band isn't the only product that Microsoft gave up on. Windows 8/8.1 is another example and it's EXTREMELY important to understand how Windows 8 influenced the success of the Surface. Without Windows 8 - a tablet-centric OS - even the incredible Surface Pro 3 would have failed. And yet, because of poor social media feedback, you backpedaled and returned to a Desktop/Laptop OS with Windows 10. Windows 8 and Windows RT are perfect examples of you choosing to cancel or scale back a product moments before it becomes a smash hit. Kinect and Band are perfect examples of products that were smash hits that failed because you gave up too soon.

One important lesson to learn here is that success, especially for Microsoft, rarely happens on the first attempt at any new idea. There are a number of examples of Microsoft only "getting it right" by the third version of any particular product. (Conventional wisdom of the 90s was to only install Windows updates and service packs with odd version numbers.) And yet the number of products Microsoft has cancelled after a disappointing initial release is staggering. Microsoft has a long history of releasing fantastic new products only to discontinue support for them moments later because they don't immediately reach stellar sales goals.

So I have to ask you, rhetorically, why?
Why did you cancel Band 3 when it was poised to take the wearable market by storm?
Why have you given up on all of these other products that you have cancelled?
Why couldn't you see the potential in these products?

I've thought about it a lot and I can only conclude: you simply have no vision. You can't see the way these products will impact the world, how they will be successful if given just one more chance, or how they are necessary to Microsoft's future growth.

You lack vision because one thing that Steve Ballmer succeeded in doing, something that nobody ever thought could even be done, was to change consumer perception of Microsoft: Steve made Microsoft a desirable brand. He fostered a consumer culture that saw Microsoft as a brand they could embrace, that they could trust, and that they could be proud of. For a brief moment in history, people actually wanted to buy Microsoft products because they were Microsoft! People wanted a Microsoft Band because the Microsoft Brand was cool and they bought Microsoft t-shirts and Windows window stickers for their cars. This was an incredible shift from the Microsoft of the 90s that everyone hated and berated. And public perception is everything.

And in the last 5 years, where is the public perception of Microsoft? I'll give you a hint, nobody wants to buy Azure "because it's cool".

The story of the Surface isn't over. You did change a few things there.

  • Surface Pro 4 - we made it lighter
  • "New Surface Pro" - we slapped a "New" on the box
  • Surface Pro 6 - a slightly newer generation of processor
  • Surface Studio - we made it bigger
  • Surface Book - we made it… laptoppier? What... What's happening?
  • Surface Laptop - we made it… a laptop? Wasn't the Surface supposed to make laptops obsolete? Wait why are we crushing our brand? What happened to our vision?

The brand Microsoft released as the laptop-killer, the brand of tablet that would replace your laptop and make laptops obsolete, the brand of tablet with the power of a laptop, now has an ordinary laptop. The brand that created a whole new class of devices now exists solely to throw crumpled spit wads at Apple's iPad and MacBook. The story of the Surface is the story of fallen glory.

One more point to drive this home. That list of successful products I mentioned earlier? Steve Ballmer didn't come up with these successful ideas. Steve Ballmer didn't invent Kinect, or Surface, or Office 365. He was not the genius innovator. Other people at Microsoft came up with the ideas, other people had the vision to see these explosive new products, and Steve Ballmer had the vision to say "OK, go do it". Many of those people who created these products, the innovators with the spark of genius to see what the future can hold for Microsoft, are still working there for you. And that means you are actively turning away good people with good ideas, cancelling or declining projects that don't fit with your myopic view of what Microsoft is.

I've struggled to understand why you’ve allowed Microsoft to fall so far in the consumer space and I think I finally have it figured out, and that drove me to write this open letter. You simply have no vision. All you see for Microsoft is a consolidated business apps & IaaS provider. You don’t see a Cortana-run smart home with Surface-branded light switches and an intelligent Surface counter top. You don't see a Surface Phone. You don't see joggers and yoga instructors wearing Microsoft Band. You don't see Holographic Halo Wars in a local park - hell you don't even see HOLOGRAMS, you think Hololens is an AR device for delivering notifications like Google's failed Glass. (Dude, have you even TRIED Hololens???)

All of this being said, Microsoft still has an incredible future in the consumer market. Your mobile fan base still won't die and may even be able to rekindle a small market share that could expand (with some hefty investment). HoloLens is still a world-changing technology that is truly science fiction come to life, and it would change the world if you would just release it to consumers with a Halo Holographic Edition. Surface is still an incredible device that true to its word did replace my laptop and it could disrupt the PC market again if the OS was once again tablet-friendly.

But there's more. Picture this, if you will:

At 6:30am your Microsoft Band detects that you're coming out of REM sleep and vibrates to wake you up comfortably. When you're awake, it sends a signal to Cortana who automatically gives you updated weather and a traffic report for your commute over your Invoke speaker. You look in your Microsoft Mirror and Cortana suggests that you wear that green tie you got for your birthday to that business meeting this afternoon. You walk into the living Room and Cortana follows you, turning on the lights and, telling you some of the latest headlines from the news items you choose to follow. You put on your Hololens and have a Skype Holocall with your family, who is halfway around the world yet holographically sitting on your living room couch. (Seriously, imagine a couple holographic cameras in your living room allowing you to have a skype holo-call where the person you're talking to from 1000 miles away is sitting on your couch! Dude have you played Fragments on Hololens?????) There's a traffic delay on the way to work, so Cortana sends an updated commute to your Surface Phone (or your Surface CAR!). On your drive to work you see a group of kids in the park all wearing "Holobox" Hololens Xbox headsets, playing life-sized holographic minecraft or Holographic Halo together. (If you have not imagined multiplayer holographic Halo, your imagination is dead - which it is and that's the entire point of this letter.)

Can you imagine starting your day like that?

Corning can: 

Can you imagine if everything in that video was powered by Microsoft? Windows UI, Cortana voice integration, Azure AI intelligence. Can you see it?

No, you can't. You're too focused on Microsoft's slow-moving cloud B2B to have any room in your office for a consumer device revolution. And you're too focused on the guaranteed money-makers (that Steve Ballmer approved) to take a risk on a future you can't comprehend. And Microsoft is paying the price for it. Your lack of vision is going to destroy your company. I know it may not look like it now, with Azure profits and investor enthusiasm so high. But consumer opinion about Microsoft is at an all-time low, and those consumers are entrepreneurs and administrators and board members of companies making business decisions about which cloud platform they want to trust with their data.

Why does any of this matter? Why should you care if Microsoft has any share in the consumer devices market?

I work in the IT industry at a small MSP in a relatively small town. And every single one of the schools in our town relies on iPads and Chromebooks for their students. In some schools the only PCs they have are for the staff (maybe 10-20 in a school) and those are going away as cloud-based solutions replace their Windows-based curricular apps. Kids in schools - who COULD have been using a "Surface 10 RT" (see what I did there?) - are using Chromebooks and iPads. When those kids graduate and go to college, they're using Android tablets and MacBooks, signing up for Gmail and Google Docs. When they finish college and enter the business world you love so much, they bring their Gmail and their MacBooks with them. They become managers and business owners and decision makers, and they sign up for G-Suite instead of Office 365 and Amazon instead of Azure and they use DropBox instead of OneDrive because Satya Nadella's Microsoft keeps giving up. Because you gave up on the Surface RT, Windows Phone, and a long list of consumer products, the next generation of CIOs and business owners and IT administrators are growing up on Apple and Google. And when they make their infrastructure decisions, they're going to choose what they know - they're going to choose Apple and Google.

This all matters because the cloud business Steve Ballmer built and which you love so much depends upon Microsoft devices in the trenches in schools and in the hands of children. The future of Office 365 depends upon Microsoft mobile and Microsoft wearables and a trusted, consumer-loved Microsoft brand. Your competitors in the consumer devices market are also competing with you in the business market and their advantage in the home gives them an advantage in the office. Without a Microsoft presence in the home, Microsoft will lose its dominance in business. And because of your lack of vision, you don't see what's happening down here where Microsoft is losing the long-war.

Bill Gates founded Microsoft with the vision of a PC in every home. He succeeded in that vision and that success has led directly to Microsoft's success in the office. When kids grew up on DOS and Windows in the home, they chose Windows when they ordered computers for work. Bill had vision.

Steve Ballmer led Microsoft with the vision of Microsoft as a trusted consumer brand. He succeeded in that vision and that success has led directly to Microsoft's success in the cloud. He had Microsoft fans literally wearing Microsoft computers and evangelizing Microsoft to their friends and coworkers and pitching Microsoft products to their bosses. Steve had vision.

Satya Nadella has led Microsoft without vision, cutting and cancelling every consumer product Microsoft makes. This has led to complete failures in every one of these markets, because you only dabbled and refused to fully commit. And this failure will lead directly to the failure of the core business market that your Microsoft now relies on. And now you have kids growing up on Google and Apple fans evangelizing MacBooks to their coworkers. Satya has no vision.

Ten years from now, will my Surface Pro 9 run a Microsoft OS? I doubt it. Without any vision, Microsoft won't even be around in ten years.

And if the Surface Pro 9 ever exists, it will be an Android tablet.
(And I'll bet you might even think that's a good idea.)

Sincerely,

-T

 

P.S.

Talking about a problem without proposing a solution is just complaining. I have a solution for you, but you're not gonna like it. It's gonna mean pissing off your investors and trusting someone else to make executive decisions. The solution, or at least one solution, is to create a "consumer devices division" that oversees everything from Surface to Xbox to Hololens to whatever they come up with, putting someone in charge of that division who has the vision to see what Microsoft could become, and giving that person a helluva budget and full autonomy. 

Microsoft needs a leader who sees a place for Microsoft in the home and not only in the office.

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