Microsoft is going through big changes, and company CEO Satya Nadella in a new interview with Sources Podcast he spoke openly about two topics that currently perhaps best define the future of the company - Xbox and artificial intelligence.
Xbox is undergoing a major reset
Despite the changes and restructuring of the Xbox division, Nadella says that he is very satisfied with the gaming portfolio that Microsoft currently owns.
Microsoft has a huge number of famous franchises and studios behind it, and Nadella believes that the company has enough quality IPs to continue creating great games.
But the sheer quantity of games is no longer enough.
One of the most interesting messages from the conversation is that Microsoft is now trying to find a sustainable business model that will bring gaming closer to even more people.
Nadella describes the future of Xbox in two key directions: Microsoft wants to be a major game publisher, but at the same time a strong provider of gaming platforms on PC and Xbox.
In other words, Xbox can be seen less and less as just a console.
Microsoft wants to build a much broader gaming ecosystem.
Restructuring is part of the plan
The changes, the reduction in the number of employees and the reorganization of Xbox caused a lot of negative reactions among players and developers.
Nadella, however, describes the process as "streamlining" and believes that the changes the Xbox team is currently implementing are necessary.
The company's plan is for Xbox to return to growth during the next fiscal year.
Microsoft is therefore obviously not giving up on the gaming industry, but is trying to find a different way for Xbox to function in the long term.
And then we come to AI…
Much of the conversation was devoted to Microsoft's huge bet on artificial intelligence.
Nadella acknowledges that there is a serious problem with user trust, especially in the West.
Instead of promoting AI simply because it represents a new technology, his message is that companies like Microsoft must demonstrate the real benefits of AI and earn people's trust.
That is perhaps the most important message of the entire conversation.
AI can be technologically impressive, but if users don't see why they need it, the technology alone won't be enough.
What does this mean for Xbox?
This is where the story becomes particularly interesting.
Microsoft is simultaneously trying to reset the Xbox, make a more sustainable gaming business, and invest huge resources in AI.
Nadella clearly still sees great potential in Xbox and Microsoft's gaming franchises, but the future Xbox probably won't look like the Xbox we knew ten years ago.
The focus is no longer just on selling consoles.
Games, PC, Xbox platform, services and new business models are becoming parts of Microsoft's much broader gaming strategy.
And how much AI will fit into that future remains to be seen.
One thing is clear: Microsoft has no plans to give up on either Xbox or AI. The more important question is Will the players accept the direction the company is taking?
Source: Satya Nadella in conversation with Alex Heath for Sources Podcast "Satya Nadella on Copilot, the AI backlash, and Microsoft's future".
