By contrast, Windows Phone controls only 4% of the U.S. phone market, Nadella says.
Nadella says later in the earnings call that the unification of the engineering teams behind the Microsoft operating systems is enabling the blending of today's three operating systems into on scheme that supports universal apps.
Meanwhile, Nadella says Microsoft will forge ahead with making phones, Surface tablets and Xboxes despite criticism by some financial analysts that they ought not to. But he acknowledges that they warrant special attention in order to maintain profitability and overall value for the company.
For example, the company is trimming back its investment in Xbox by closing its Xbox entertainment studios and focusing instead on just games. Similar care will be given to phones, he says, by rationalizing the models of phones it will sell based on its acquisition of Nokia. And the company will refine its Surface tablets to showcase unique aspects of Windows 8.1, such as note-taking, that devices by other vendors don't do as well, he says.
"Our approach to first party hardware going forward is clear," he says. "At times, we will develop new categories like we did with Surface and we will responsibly make the market for Windows phone. However, we are not in the hardware for hardware sake, and the first party device portfolio will be aligned to our strategic direction as the productivity and platform company."
Sign up for CIO Asia eNewsletters.