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Microsoft not abandoning mobile market, Nadella tells ZDNet

The tech titan's CEO says he sees the company's mobile future in Windows 10, the next-generation operating system that will run across a variety of devices.

Microsoft CEO Satya Nadella still sees promise in mobile market. CNET

Despite rumors to the contrary, Microsoft CEO Satya Nadella says the company is not getting out of the mobile market.

That was the concern of many after the tech giant announced last week it planned to restructure its mobile phone business and lay off more than 7,800 employees. However, Nadella sought to dispel those fears in an exclusive interview with ZDNet's Mary Jo Foley.

"I view the mobile opportunity, even today in its broadest sense, and in the future, as being richer," Nadella said. "I want to be able to be present on every mobile endpoint. That's a very explicit core goal."

Indeed, Nadella is looking to Windows 10, Microsoft's next-generation operating system, to lift its mobile market fortunes. Microsoft has long been trying to make a greater dent in the smartphone market, but it's mired in a distant third place in the market with a 2.5 percent share, far behind Apple and Android.

Central to Microsoft's strategy is keeping developers on board, which Nadella says is where Microsoft's Universal Windows apps -- apps that can run on a variety of devices -- come into play.

"The reason why anybody would want to write universal apps is not because of our 3 percent share in phones. It's because a billion consumers are going to have a Start Menu, which is going to have your app," he said. You start the journey there and take them to multiple places.

"This strategy is path dependent, which is a term I use that means where you start is not where you end up," Nadella continued. "The fundamental truth for developers is they will build if there are users. And in our case the truth is we have users on desktop."

Nadella also acknowledged that its position as maker of the dominant desktop operating system contributed to mobile market myopathy.

"If anything, one big mistake we made in our past was to think of the PC as the hub for everything for all time to come," Nadella said. "And today, of course, the high volume device is the six-inch phone. I acknowledge that. But to think that that's what the future is for all time to come would be to make the same mistake we made in the past without even having the share position of the past."

The company has lofty goals for the new operating system, its first big chance to move beyond the missteps of Windows 8. Microsoft has promised that Windows 10 -- due July 29 -- will run across every device, from desktops with large hard drives all the way down to low-cost smartphones with barely a gigabyte to spare.

But observers suspected Microsoft was signaling a withdrawal from the mobile market last Wednesday when it announced its job cuts, the majority of which would come from the company's smartphone unit, which it bought from Nokia last year to the tune of slightly more than $7.2 billion.

Adding to that concern was the announcement last month that Stephen Elop, the former CEO of Nokia who headed Microsoft's devices group, was leaving the company. Joining him on the exit line was former Nokia executive Jo Harlow, who reported to Elop.

Addressing reports that Microsoft plans to significantly reduce the number of Lumia-branded devices it produces each year, Nadella said "we will have premium Lumias coming this year" and its hardware partnerships won't dictate its mobile plans.

"If there are a lot of OEMs, we'll have one strategy," he said. "If there are no OEMs, we'll have one strategy."

Read the wide-ranging interview at ZDNet.