Here’s What Satya Nadella Really Said About Windows Phone and Regret (Premium)

In a heavily cited recent interview, Satya Nadella allegedly claims that killing Windows Phone was his biggest regret. But that’s not true. Instead, he had to be prodded into going down that rabbit hole.

Oddly, Nadella’s two predecessors did both make this claim. Steve Ballmer in 2017 expressed regret for not making Microsoft a “world-class hardware company” and Bill Gates in 2019 claimed that Windows Phone was his biggest mistake. Both people made horrible, horrible mistakes while leading Microsoft, but in both cases, these transgressions were not among them: Microsoft was never going to lead in hardware, and trying to do so would have distracted it from the cloud computing transition that turned it into the second-most valuable company on earth, setting itself up for its latest transition as an AI superpower. I appreciate being self-critical more than most, but for crying out loud, let’s identify the real problems first.

Speaking of which, every Windows enthusiast blog on earth is claiming that Nadella just did the same thing, claiming that he said in an interview with Business Insider that killing Windows Phone was his biggest regret. The diehards will clutch this testimony to their chests until their dying day. But there’s just one problem. He did not say that.

Here’s the quote all those stories are based on.

“The decision I think a lot of people talk about—and one of the most difficult decisions I made when I became CEO—was our exit of what I’ll call the mobile phone as defined then,” he answered. “In retrospect, I think there could have been ways we could have made it work by perhaps reinventing the category of computing between PCs, tablets, and phones.”

This has been misquoted, misinterpreted, and over-analyzed. But let me set the record straight. Because there is much more going on there.

First, and I think this is important, the transcript of this interview is over 7,300 words long—questions and answers—and it touches on an amazingly broad set of topics from Nadella’s early life to Microsoft to AI to consciousness. And yet what the saddest little part of our enthusiast community is dwelling on constitutes just 63 vague words of that interview.

Worse, this was not the answer he gave when asked about his biggest regret. This is what he answered:

“I wish I could say there was one mistake, but I’ve made many, many mistakes,” he said originally. “I would say that my biggest mistakes were probably all about people.”

The interviewer then asked for clarification. Did he mean “not picking the right people or keeping the wrong people?”

To this, he answered “Yes,” by which I assume he meant “both.” He then blabbed on about culture and being a leader for another 85 words, longer, I will remind you, than he discussed phones.

In other words, Windows Phone is not Satya Nadella’s biggest regret. The first thing he blurted out when confronted about this, was to talk about bad personnel decisions. Not phone.

The interviewer continued, asking a second follow-up: “Is there any kind of real strategic mistake or just wrong decision that you regret in retrospect?”

And it is here that Nadella uttered the quote that stopped so many enthusiasts’ heart, the quote that triggered the writing of so many editorials, including this one.

Here it is again for clarity. Because we’re discussing the hell out of this.

“The decision I think a lot of people talk about—and one of the most difficult decisions I made when I became CEO—was our exit of what I’ll call the mobile phone as defined then,” he answered. “In retrospect, I think there could have been ways we could have made it work by perhaps reinventing the category of computing between PCs, tablets, and phones.”

Prompted multiple times and perhaps sensing what the interviewer was pushing towards, Nadella finally mentions “the decision a lot of people talk about.” Not the decision that weighs heaviest on him necessarily (or literally, given his original answer). No, this is the decision that bothers those in the community or ecosystem who never understood the economics of floating an expensive, money-losing business that was further hobbled by the acquisition of most of Nokia, which had its own expensive, money-losing factories and facilities worldwide, most out of date and in need of mothballing because the rest of this world had long since moved to outsourcing. I can get emotional too, but that’s all this is: Nadella was right to kill Windows Phone. It was a boat anchor on profits, revenues, and every other resource you can name.

But there’s more.

I find it interesting that he didn’t use the term Windows Phone here even once. Instead, he referred to the business that he killed as “the mobile phone as defined then.” And the mobile phone, as defined then at Microsoft, given its acquisition of Nokia’s mobile phone assets, wasn’t just Windows Phone. It also included dumb phones and some tweener devices that bridged the gap between dumb and smartphones. (And you can see them here in this snapshot of Microsoft’s website in 2014, which neatly straddles the time between Microsoft’s Nokia acquisition in 2013 and Nadella’s decision to kill the phone business in 2015. There is Windows Phone, and there are Nokia devices.)

His comment that Microsoft could have perhaps “made it work by perhaps reinventing the category of computing between PCs, tablets, and phones,” has gotten a lot of scrutiny, and for good reason: Had Microsoft executed on the right strategy, there was indeed a chance that its phone efforts could have been successful and that in creating a universal platform of sorts that ran across all three device types, they might have had something there. This is very true.

But the mistake to not do this was made in 2009 to 2012, when Steve Sinofsky, seeing what the Windows Phone team was doing, decided to not work with them and adopt and expand that platform for PCs and tablets. Instead, he created something similar but incompatible, setting off a three-year period—from 2012 to 2015—in which Microsoft would fail to capitalize on the technical advances in Windows Phone. Satya Nadella became Microsoft’s CEO in 2014 and one year later, Sinofsky’s successor announced the Universal Windows Platform and the integration of Windows Phone—now called Windows Mobile—into Windows 10 proper.

Had that happened during the creation of Windows 8 (again, 2009 to 2012), things might have been different. But it was too late by the time Nadella took over, too late by the time Microsoft corrected the mistake with Windows 10/Mobile. So there is no need for him to take credit for a mistake he did not make and could not have made.

Of course, he didn’t do that anyway. Satya Nadella’s biggest regret is not Windows Phone. It was some bad personnel decisions he never got specific about. Alex Kipman? Panos Panay? We can’t say.

But while we’re speculating, I’d like to openly ponder how Nadella’s decision to kill phone might have impacted other businesses at Microsoft. More specifically, other money-losing businesses. Other money-losing consumer businesses.

I am referring, of course, to Surface and Xbox.

When Nadella killed phone, we learned that the then-new Microsoft CEO had a simple rule: Every business within Microsoft had to justify its existence. They had to be profitable or have a plan for getting there. And the subsidization strategies of the past would no longer apply: Some business could not just stick around because it may benefit Windows, or whatever, in some vague way. It had to literally make sense as a business.

Casting this hard cold light of reality on the Surface and Xbox of 2014, one wondered how they survived. I certainly did: I love both, but I’d argued for years that Microsoft should spin off Xbox, and I never believed that Surface should have ever happened, let alone continued. So what happened?

Well, we know what happened with Xbox: Phil Spencer convinced Nadella that not only was gaming a huge market, but that the future of Xbox aligned with Microsoft’s cloud ambitions. He sold Nadella on Game Pass subscriptions—mimicking Microsoft’s successful enterprise licensing model—and on Azure-based cloud gaming. Xbox could make sense in Nadella’s Microsoft, and could grow.

Surface, well. That one is not clear at all.

Surface was always a money-losing hardware business that could never transition to the cloud. Its leader was undeserving and untechnical, and yet he failed upward further under Nadella somehow, taking over Windows in time and then, one year later, joining Microsoft’s Senior Leadership Team. This one is hard to explain. But when I mentioned Panay in terms of personnel regrets, I meant it explicitly. Nadella is smart, and while he was clearly snowed under for some amount of time, I wonder if he didn’t eventually come to his senses. After all, the rumor is that Surface has been cut back dramatically. That’s exactly what we heard about Windows Phone publicly around the time that the whole thing had been killed internally.

Whatever anyone thinks of that—it is, again, just speculation—I will also point out that there are far more interesting topics in that interview you’ve probably forgotten about already. For example, Nadella was asked whether he was “the anti-Ballmer.”

So maybe instead of focusing on the nonsense in there, anyone who cares about Microsoft should actually read the entire interview. You’ll find that phone isn’t top of mind at all.