Microsoft CEO Satya Nadella revealed during an internal town hall that he’s “haunted” by Digital Equipment Corporation (DEC), a once-dominant computer company that disappeared after missing critical technology shifts. Speaking to employees last week, Nadella used DEC’s downfall as a cautionary tale about Microsoft’s own survival in the AI era, according to The Verge.DEC ruled the minicomputer world in the early 1970s with its PDP series but became irrelevant after making strategic errors, including betting on its proprietary VAX architecture instead of emerging RISC technology. The company faced fierce competition from IBM and others, ultimately leading to its demise. Nadella’s first computer was ironically a VAX machine, and he had once dreamed of working at DEC.“Our industry is full of case studies of companies that were great once, that just disappeared,” Nadella told employees, acknowledging that “some of the biggest businesses we’ve built might not be as relevant going forward.”
Microsoft’s cultural crisis amid AI transformation
The CEO’s comments came as employee morale hits “all-time lows,” with workers describing Microsoft as feeling “colder, more rigid, and lacking in empathy.” The company has conducted multiple rounds of layoffs, including 9,000 job cuts in July, as part of what Nadella calls “renewal” for the AI transition.Nadella admitted the leadership team “can do better” but provided few specifics on addressing cultural concerns. The Verge reports that dozens of employees have expressed similar sentiments about the company’s deteriorating workplace atmosphere.
Satya Nadella is worried of Microsoft missing another platform shift
Microsoft previously missed the mobile revolution, which Bill Gates called his “greatest mistake ever.” Now, with AI potentially threatening core products like Office suite—which generates one-fifth of annual revenue—Nadella warns that “some of the margin that we love today might not be there tomorrow.”“All the categories that we may have even loved for 40 years may not matter,” he cautioned, emphasising that companies must earn their right to exist daily by providing socially useful marketplace value. The specter of DEC serves as his constant reminder of what happens when tech giants fail to adapt.