Microsoft faces an identity crisis — Satya Nadella fears AI could run the company and products like Office into the ground

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Microsoft recently hit a $4 trillion market value, largely thanks to its significant investments in generative AI. The company’s success is also due in part to the early work of co-founder Bill Gates in software development. However, CEO Satya Nadella has indicated that Microsoft is now looking to expand beyond its traditional focus on software.

When Bill Gates started Microsoft, he didn’t just want to create a software company-he wanted to build a place that could constantly produce new software, without being limited to any one product or type. That vision has driven us for many years, but now we need to go further.

The executive is proposing a new direction for the company, prioritizing security, quality, and using AI to improve its business. Focusing on security is a natural step, as the company has already been investing more in this area – even linking the compensation of top Microsoft leaders to achieving specific security goals.

The AI bubble could be a pitfall for Microsoft

Despite a strong financial quarter with $76.4 billion in revenue – an 18% increase compared to the previous year – Microsoft has recently undergone significant layoffs, affecting over 9,000 employees. The company’s success is largely thanks to the growth of its cloud computing and artificial intelligence businesses.

Recent layoffs have changed the company’s atmosphere, leaving many employees worried about job security, especially as the company invests heavily in AI and the possibility of automation (according to The Verge).

As a long-time Microsoft fan, I’m starting to get a little worried about where things are headed with AI. It feels like Satya Nadella is really having to prove himself as the AI landscape changes so quickly, especially with all the layoffs happening around the tech world. And honestly, the relationship between Microsoft and OpenAI doesn’t seem as solid as it used to. OpenAI’s new $500 billion Stargate project – building all those data centers across the US – feels like they’re going in a direction that could potentially leave Microsoft behind.

Salesforce CEO Marc Benioff believes Microsoft will stop relying on OpenAI’s technology. Microsoft’s AI chief, Mustafa Suleyman, has since stated the company is building its own AI models, hinting they’re trying to become less dependent on OpenAI, especially given recent disagreements about OpenAI’s plans to become a for-profit company.

Microsoft is investing as much as $80 billion in data centers this year, but CEO Satya Nadella worries the company could become outdated in the rush to adopt artificial intelligence – a concern that frequently occupies his thoughts.

At a recent company meeting, the executive shared that the story of Digital Equipment Corporation – a once-successful computer company known for affordable machines – stayed with him. He explained that while Digital Equipment had early wins, it eventually lost its position as companies like IBM quickly gained dominance by making smart decisions in the 1970s.

Interestingly, the executive shared that Microsoft actually hired some former employees of Digital Equipment Corporation, and they played a role in creating Windows NT, which came out in 1993.

Despite being hugely profitable, Microsoft is facing new challenges in the rapidly evolving world of AI. Even Elon Musk is entering the competition, developing an AI-focused software company called ‘Macrohard’ that aims to directly compete with Microsoft.

It’s still uncertain if Elon Musk will create a program to rival Microsoft Office. But if artificial intelligence advances to the point of making products like Office unnecessary, Microsoft’s CEO, Satya Nadella, says the company is prepared to move on and accept any resulting losses.

Everything we’ve worked on, even things we’ve cherished for decades, might become irrelevant. As a company and as leaders, we need to focus on creating things that will remain valuable in the long term, rather than relying on past successes.

I’ve been wondering, should Microsoft keep pushing hard on AI, even though it feels like a constantly moving target? Or would they be better off focusing on the things they already excel at? I’d love to hear what you all think – let me know in the comments!

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2025-09-23 14:10