Microsoft CEO Satya Nadella hinted at a major shakeup as he outlined his company's goals for the next fiscal year.
Nadella, who took over from Steve Ballmer last February, is looking to redefine what his predecessor designated as Microsoft's core.
"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," Nadella said in a letter to employees. "At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world."
The letter, which was as much a press release as it was a company-wide memo, pointed to major changes within the company. Nadella said that he is looking to "flatten" the company and streamlining its processes. It is not yet clear if this would mean layoffs. Nonetheless, Nadella mentioning Friedrich Nietzsche may not be a good sign for Microsoft employees. Nietzsche was a 19th century German philosopher who criticized morality and disputed the idea of heaven.
"Every team across Microsoft must find ways to simplify and move faster, more efficiently. We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes," Nadella said.
"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."
While Nadella stopped short of making any concrete announcements, he outlined what would be his company's new focus. "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," he said. Nadella was also optimistic about Windows Phone and the recently released Surface Pro 3, which he identified as growth segments for the Windows ecosystem.
In its latest earnings report, for the third quarter of fiscal year of 2014, Microsoft's profits dropped by 6.6% to $20.4 billion. The decline was caused by weak PC sales. The annual report for fiscal year 2014 will be released on July 22.
