Foley on Microsoft

5 Ways Nadella Reshaped Microsoft in 2015

• By Mary Jo Foley
• 12/04/2015

Nadella, who has been in the CEO seat since February 2014, is leading Microsoft's charge to return to its productivity software and services roots. His first year was largely one of fulfilling and undoing moves his predecessor, Steve Ballmer, made. This year, Nadella and his team have made some interesting acquisitions and strategy decisions that are starting to go beyond plans already in the pipeline.

Here are my picks for the top five defining moments for Microsoft in 2015.

1. Windows as a Service (WaaS) arrives. Microsoft officials began talking up plans to turn Windows 10 into a regularly updated service in 2014. This year, the ‘Softies began fleshing out those promises by delivering Windows 10 in July; the Fall Update to Windows 10 in November and a number of Cumulative Updates in between. In some ways, WaaS is just a new name for the company's previous strategy of delivering regular updates to Windows more quickly. Yet Microsoft's new servicing strategy -- with its various update "branches" and evolving (but still not fully realized) Windows Update for Business mechanism -- is something new and different. Microsoft's strategy to convince existing Windows 7 and Windows 8 users to upgrade to Windows 10 by offering its OS is a bit heavy-handed and misunderstood. But Microsoft this year has started to deliver on the WaaS concept.

2. Windows Phone slide continues. Before Nadella became Microsoft CEO, he was a member of the company's Senior Leadership Team, where he was not a fan of Microsoft's decision to buy Nokia's handset business as a way to grow Microsoft's phone market share. In 2015, Nadella tried to clean up the Windows Phone mess cutting 8,000 jobs this year, the majority working on Windows Phone. The company planned to halt its unsuccessful strategy of fielding loads of Windows Phone models in multiple countries. Instead, Microsoft would make a maximum of six Windows Phone models per year targeted at three markets: flagship phones for fans; business phones for workers with targeted app needs; and budget phones for emerging markets. So far, however, the Windows Phone share continues to fall.

3. Apps. It was a big year for produc­tivity, with Microsoft rolling out long-awaited new versions of desktop Office for Mac and Windows. Microsoft also acquired a number of iOS and Android productivity apps, many of which were the share or revenue leaders in their respective categories (Sunrise, Wunderlist, MileIQ). Microsoft also ramped up its Garage tech incubator work, churning out lots of new highly targeted "experimental" apps, often for Android and iOS devices. Collaboration was key, too, with the ‘Softies adding more co-authoring, Skype communication and Delve functionality to apps across its portfolio.

4. Containers, containers, containers. Just when you thought Microsoft couldn't go any madder for container technology, the company's Cloud & Enterprise business unit went more wild for Docker, Mesosphere and more. Microsoft is building its own container technologies into Windows Server 2016 (which slipped from being a 2015 to 2016 deliverable this year). And the company has continued to push the container and microservices envelopes with its own Azure cloud platform, with its work around making over its Azure Platform-as-a-Service offering in the form of Azure Service Fabric.

5. HoloLens is still just a hologram, but the rest of Microsoft's hardware business is finding its footing. While Nadella & Co. have stated that Microsoft is in the hardware business to showcase its software and services, Microsoft proved it can find consider­able success delivering and selling premium Surface hardware. While Microsoft has more than a few developers chomping at the bit to get their hands on the first HoloLens developer kits, due in early 2016, the first business -- and later, consumer -- versions of the company's augmented-reality headsets will be lucky to make it to market in 2016.