Satya Nadella explains Microsoft's one big mistake -- and resolves not to make it again

Microsoft Chief Executive Satya NadellaREUTERS/China DailyMicrosoft Chief Executive Satya Nadella gestures as he speaks during a forum at Tsinghua University in Beijing September 25, 2014.

Microsoft missed the shift to mobile because it was focused on the PC.

But now, to focus single-mindedly on smartphones would be making the same mistake again, says Microsoft CEO Satya Nadella in an interview with ZDNet.

“[One] big mistake we made in our past was to think of the PC as the hub for everything for all time to come,” Nadella says.

That worked for a long time. A decade ago, more than 90 per cent of devices connecting the Internet ran Microsoft Windows.

But the rise of the smartphone, and the attendant implosion of the PC market, has dropped that number to less than 15%, chief operating officer Kevin Turner admitted a year ago. And Windows Phone, Microsoft’s late-to-market (but still pretty good) phone platform, has only three per cent market share.

Meanwhile, Apple — which used to only be able to dream of getting on Microsoft’s level — has ridden the wave to success, selling tons of iPhones while revitalizing the market for Mac desktops and laptops.

But as we saw with the major restructuring of Microsoft’s phone business announced last week, Nadella isn’t going to throw endless amounts of money at trying to capture the mobile phone market. That ship has sailed.

Instead, Nadella says, the mission is to acknowledge that the “six-inch” smartphone is “the high volume device” while thinking about whatever comes next.

“To think that that’s what the future is for all time to come would be to make the same mistake we made in the past without even having the share position of the past,” Nadella says. “So that would be madness.”

That means moving beyond Windows to other platforms where Microsoft is popular — like Office, which still dominates productivity — and the new cloud-based Azure platform.

“We have three platforms I like to talk about: Windows, Azure and Office. I like to think all three of these will be open for others to extend and, of course, we will construct them together.”

In fact, Nadella says, he wants all of Microsoft’s armchair quarterbacks to understand that Microsoft isn’t about a single device or type of device, but about a common platform.

“If anything, the thing that I’m signalling most to the investors, to the employees is let’s stop this thing about trying to atomically dissect any one. They will all have a temporal current position and a future ambition. But it is one thing that we need to move on,” Nadella says.

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