Analysts interpreted Nadella's focus on software as a recognition that software remains, and will remain, Microsoft's focus and its best bet at continuing to remain relevant in the face of rivals like Amazon, Apple and Google.
"They're returning to what they once called 'The Magic of Software,'" said Helm, of a phrase co-founder Bill Gates used as long ago as 2003, and in a rally before employees, repeated yesterday.
"It doesn't refute the devices and services strategy [that Ballmer trumpeted]," added Adrian, "but he's saying that Microsoft will deliver its software in a variety of ways. If I am in the cloud, for example, I can be on both ends, not only on the cloud but also on the client."
Adrian wasn't sure whether Nadella's comments meant Microsoft would back away from hardware — that would be very difficult to do in the short term, what with Ballmer spending $7.4 billion on Nokia's handset business — but by stressing software, Nadella is putting a foot on a slippery slope.
"Microsoft has to get better at hardware design," said Adrian if, in fact, it intends to stay in the do-it-yourself device business, such as its Surface tablets, the Xbox game console, and now Nokia and its mobile phones.
"Satya and Elop will have to make these decisions together," Adrian argued, referring to Stephen Elop, the former CEO of Nokia who is slated to return to Microsoft to run the devices side of the Redmond, Wash. company's business. "How they do that will be one of the first 'tells' in Satya's time at Microsoft."
Nadella also touted another phrase, "mobile-first, cloud-first," several times in the Hauser-directed conversation, a line he used elsewhere on Tuesday, including in the email to employees that Microsoft made public.
"Our strategy going forward is about devices and services. What will define us going forward is a mobile-first, cloud-first world," Nadella said. "We're living in this mobile-first, cloud-first world, every day making progress."
The mobile- and cloud-first mantra got the attention of the analysts.
"It's pretty clear that Microsoft will not only improve Windows on its mobile platform, but make its management tools available with other mobile platforms," said Helm.
Nadella did say as much, but, like Ballmer before him, could not bring himself to call out rivals like Google's Android and Apple's iOS by name.
"Hearing the CEO say that, someone like Satya, is a pretty strong endorsement," Helm added.
"Microsoft and Ballmer used ringing phraseology, like 'devices and services,' but history argued that was just lip service," said Adrian. "Satya's history says otherwise. He's broken down walls where he's had to. He's done what works. And if that breaks some eggs, he's prepared to."
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