'It's not enough': Satya Nadella says Bill Gates’ idea that made him world's richest person is now obsolete

Microsoft CEO Satya Nadella has reflected on the company's 50-year evolution, stating that Microsoft must once again fundamentally reinvent itself. In an internal memo, Nadella noted that even Bill Gates’ revolutionary “software factory” vision, which created the world’s largest software company, is now outdated in the era of artificial intelligence.

The timing of Nadella’s message is notable, coming as Microsoft celebrates record financial results while simultaneously implementing workforce reductions—a paradox the CEO termed “the enigma of success in an industry that has no franchise.”

Satya Nadella says Microsoft can no more be a software factory, must become an intelligence engine

“When Bill founded Microsoft, he envisioned not just a software company, but a software factory, unconstrained by any single product or category. That idea has guided us for decades. But today, it's no longer enough,” Nadella wrote. He outlined Microsoft’s new mission: empowering all 8 billion people worldwide to create their own tools through AI, rather than merely building tools for specific roles.

Nadella highlighted the paradox Microsoft faces—achieving success by every measure while reducing its workforce. “This is the enigma of success in an industry that has no franchise value,” he explained, noting that technological progress is “dynamic, sometimes dissonant, and always demanding.”

AI transformation becomes core priority for Microsoft

The company is now restructuring around three key priorities: security, quality, and AI transformation. Nadella stressed that Microsoft will “reimagine every layer of the tech stack for AI,” spanning infrastructure, applications, and agents. He likened the current moment to the PC revolution of the early 1990s, when personal computers became household and workplace staples.

“Just imagine if all 8 billion people could summon a researcher, an analyst, or a coding agent at their fingertips,” Nadella wrote, emphasizing the transformative potential of AI. He noted that Microsoft’s differentiation will come from integrating these technological layers to deliver seamless end-to-end experiences, while maintaining a platform-focused strategy that creates ecosystem opportunities for partners and developers globally.

[With TOI inputs]