Why Satya Nadella says Microsoft's original vision isn't enough and his plan to turn it into an 'intelligence engine'

Microsoft is rewriting its playbook. Satya Nadella has told employees that the company’s identity as a “software factory” is no longer enough for the challenges and opportunities ahead. In a memo, he wrote: “We must reimagine our mission for a new era. 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’s plan is to turn Microsoft into what he calls an “intelligence engine” — a platform designed to make artificial intelligence available to everyone, everywhere.

From making products to enabling creation
For decades, Microsoft has been known for building finished software products. Nadella now wants to hand the tools of creation to users themselves. “It’s not just about building tools for specific roles or tasks. It’s about building tools that empower everyone to create their own tools,” he explained.

He envisions a world where “all 8 billion people could summon a researcher, an analyst, or a coding agent at their fingertips, not just to get information but use their expertise to get things done that benefit them.”

This means Microsoft will no longer focus solely on producing apps or platforms for fixed uses. Instead, it will concentrate on creating AI systems that allow anyone — from individuals to organisations — to build the intelligent solutions they need.

Rebuilding the technology stack for AI
Nadella made it clear that this is not a surface-level change. “We will reimagine every layer of the tech stack for AI — infrastructure, to the app platform, to apps and agents,” he said.

The competitive edge, he added, will come from how these layers are brought together into “end-to-end experiences and products”, rather than from isolated offerings. By taking this integrated approach, Nadella believes Microsoft can “create local surplus in every company, community, and country”, bringing powerful AI capabilities far beyond the walls of large corporations and technical teams.

Layoffs amid transformation
The announcement comes during a year of significant job cuts at Microsoft. Last week, the company laid off 40 employees in Washington state, according to a state filing. This follows a series of layoffs in 2025, including around 9,000 jobs — roughly 4 per cent of its workforce — earlier in the year.

The latest cuts were preceded by 6,000 job losses in May and more than 300 redundancies just a week before that. Microsoft confirmed that the layoffs have affected teams across its global operations, including the sales division and Xbox gaming business.

Despite the reductions, Microsoft continues to report strong financial results and is doubling down on its AI investments, with Nadella’s “intelligence engine” vision now guiding its next chapter.