Satya Nadella: Microsoft Will Show 'Courage In The Face Of Reality'

Satya Nadella isn't trying to sell people on an overly rosy future for Microsoft.

On Thursday, he talked with Wall Street analysts on the quarterly conference call, which is something that Steve Ballmer didn't do.

Right off the bat, he told them:

As I told our employees, our industry does not respect tradition. It only respects innovation.

... the past two and half months have been a period of significant change at Microsoft

... in the months ahead we will continue to be focused on two things: rock-solid execution and pivoting the company towards the future. ...

What you can expect from Microsoft is courage in the face of reality. We will approach our future with a challenger mindset. We will be bolder in our innovation. We will be accountable to our customers, partners and shareholders.

It's an interesting line Nadella has to walk between confidence and humility.

On Thursday, Microsoft delivered an as-expected quarter. It reported $20.5 billion in GAAP revenue, flat year-over-year, and GAAP EPS of 68 cents, which was a beat on expectations of 63 cents but down 6% year-over-year.

The world is shifting to mobile devices, mostly from Apple and Google Android, and Microsoft's answers, Windows 8 and Windows Phone 8, haven't been well received.

For instance, the company said that revenue for Windows licenses on consumers devices was down 15% from the year-ago quarter.

Sales of Microsoft's own tablet, Surface, slowed, too. Microsoft said Surface revenue was $500 million up about 50% from the year-ago quarter, but a big drop from the $893 million in Surface revenue the company reported for Q4 2013.

Fortunately, businesses still love Windows 7 and are buying it like mad now that they have been forced to finally abandon old Windows XP machines. Windows revenue to companies was up 19%.

So, Nadella promised analysts, "We are asking the hard questions. ... At the end of day, I want to be accountable."