How Microsoft's CEO sees growth for Windows Phone and Lumia

Nadella signals dual-use function coming to phones, confirms single Windows OS for all platforms

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Recognizing that Windows Phone has barely reached 4% market share in the U.S. and more than 10% in some European countries, Nadella talked generally about how Microsoft will focus on "productivity scenarios" to differentiate Windows Phones from other phones to improve sales.

"A key place where we're going to differentiate is looking at productivity scenarios or these digital work and life scenarios that we can light up on our phone in unique ways," he said, in response to a question.

Nokia Lumia 635
The Nokia Lumia 635 is one of the lower-cost phones in Microsoft's Lumia line.

As an example, he brought up Office Lens as a "unique scenario" for taking a picture of anything to have it automatically recognized with optical character recognition software and stored in OneNote. He added that screen innovations in Surface tablets "show us the way, that there is a lot more we can do with phone by broadly thinking about productivity."

Future phones, he said, will have innovations like note-taking with a stylus and a high pixels-per-inch count as seen in the Surface Pro 3.

While Lumia phones with Windows Phone 8.1 have Office software capabilities, Nadella said the coming focus on productivity "is not about just Word or Excel on your phone ... It is about thinking about Cortana, and Office Lens, and those kinds of scenarios in compelling ways."

Nadella wasn't specific about when a dual-use software component will come to Windows Phone, but he did say he wants Microsoft to "have the software to have the smarts about separating out the state, caring about IT control and data protection, while ... an end user gets to have the experiences that I want. That's how we are thinking about harmonizing those digital life and work experiences."

Dual-use smartphones are not new. BlackBerry introduced the concept with the Z10 in early 2012 with its BlackBerry Balance software. Samsung's Knox enterprise-focused software also provides dual work and personal software for its Android phones, and Google picked up on the same idea in its coming version of Android, dubbed "L," for later this year.

Nadella also said that with Cortana users will have "productivity experiences that will go beyond individual applications to deliver ambient intelligence that spans applications." For example, with the new Lumia 635 smartphone, a phone user can use Cortana to leave a voice message, such as, "Pick up milk when I get to the next store" and then use Bing search and Here maps to locate the nearest store. When the user later gets to the store, located with GPS, the phone reminds the user to pick up milk with an audible alert and text message.

Regarding Universal Apps, Nadella described the concept as a way to attract developers to Windows Phones under the "mobile-first, cloud-first" mantra he has laid out. If an app runs on a desktop and can also run on a tablet or smartphone, it gives the developer access to more than 300 million devices, including desktops and laptops, worldwide.

"That's really the reason why we are actively making sure that universal Windows apps is available and developers are taking advantage of it," Nadella said.

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