Satya Nadella, CEO of Microsoft, has openly expressed deep concerns about the company’s future in the AI era, admitting that some of Microsoft’s most successful products may lose relevance. Speaking during an internal town hall, Nadella revealed he is haunted by the fate of Digital Equipment Corporation (DEC), a once-dominant tech company that failed to adapt to shifting industry trends. He recalled that his first computer was a DEC VAX, and he once dreamed of working there—ironically, many of the engineers who helped build Windows NT came from DEC labs that were shut down. Nadella’s reflections came in response to employee concerns about a colder, more rigid culture at Microsoft, which many insiders say has led to a sharp decline in morale. Despite the company’s strong financial performance and long-standing success, Nadella acknowledged the immense challenge of staying relevant in a rapidly evolving tech landscape. He emphasized that no company has a permanent right to exist—every day must be earned through innovation and value creation. This anxiety has fueled a wave of restructuring and layoffs, including a recent round of 9,000 job cuts. Nadella described the process as one of “unlearning and learning,” stressing the need for renewal. He warned that even beloved products like Office, which still generate a fifth of Microsoft’s revenue, might not matter in the future. The rise of AI tools capable of writing documents, generating spreadsheets, and designing presentations threatens to render traditional productivity software obsolete. In response, Microsoft is aggressively investing in AI infrastructure. Mustafa Suleyman, Microsoft’s AI chief, confirmed the company is building compute clusters six to ten times larger than those used for its MAI-1-preview model, signaling ambitions to compete with Meta, Google, and xAI at the frontier of AI development. Microsoft is also reshaping its internal priorities. Charles Lamanna and Pavan Davuluri were promoted to President, reflecting the company’s push toward AI-driven business tools and enterprise innovation. Lamanna, in particular, has been central to unifying Microsoft’s Copilot offerings across business and industry. Meanwhile, Microsoft is expanding its gaming ecosystem. The Xbox PC app now aggregates games from Steam, Battle.net, and other platforms, and the Xbox mode is being tested on handheld devices like the ROG Ally. The full rollout is expected in spring 2026. Additionally, the Xbox controller on Windows 11 now supports a Task View shortcut via the Xbox button, enhancing the experience for handheld users. On the software front, Microsoft is rolling out free Copilot Chat features across Word, Excel, PowerPoint, Outlook, and OneNote for all Microsoft 365 business users. While the free version offers helpful drafting and summarization, the full-featured $30-per-user Copilot license remains superior, especially for complex data reasoning. Other updates include AI enhancements to Notepad on Copilot Plus PCs, a new Spotlight-like search bar from Google on Windows, and Microsoft’s $30 billion investment in the UK to build AI supercomputing infrastructure. Despite growing pressure from Consumer Reports to extend Windows 10 support, Microsoft remains firm on its October 14 end-of-life date. Nadella’s message is clear: Microsoft must evolve or risk becoming irrelevant. The company’s future hinges not on protecting the past, but on embracing the next platform shift—AI—with urgency and boldness.