Microsoft To Axe Windows Phone Lumia Hardware? CEO Satya Nadella Calls For "Tough Choices"

A memo obtained by GeekWire shows Microsoft Corp. CEO Satya Nadella believes the company needs to innovate more and make tough choices “in areas where things are not working.”

Recent developments and the tone of the memo suggest big changes are on the way at Microsoft, with Nadella only last week overhauling management and replacing four top executives. Microsoft’s devices team, which merged with the Windows team as part of the shake-up, has been underperforming. In the third quarter of fiscal year 2015, it posted a negative $4 million phone-hardware gross margin. Microsoft’s phone-hardware unit is in trouble, and it could be subject to one of the tough choices Nadella is describing.

Circulated internally to company employees, the memo also calls for a “one Microsoft” approach. Nadella also outlined his belief in listening to customers and working out what their needs are. “We will be insatiable in our desire to learn from the outside and bring that knowledge into Microsoft, while still innovating to surprise and delight our users,” Nadella said.

Microsoft’s three main areas of focus going forward will be on cloud computing, enterprise and more personal computing through products such as Xbox and HoloLens, according to the memo. The cloud-computing focus includes a commitment to third-party outreach and extensibility, which was shown in Microsoft’s recent addition to its Office suite of support for cloud-storage competitor Box.

Nadella also revealed Microsoft’s new mission statement is to empower every individual and organization on the planet to achieve more. “It is critical that we start the new fiscal year with this shared vision on what we can do and who we want to become,” Nadella said.