By Jessi Hempel
On a campus notable for tight security and secret offices, Building 92 is a rare beacon of openness. Guests can enter without a Microsoft ID and browse corporate history in the visitor center or pop into the company store for branded water bottles, onesies, and my mom is a geek T-shirts. And yet, directly beneath them, tucked away in the basement, there is a lab so confidential that even most employees have never heard of it. Alex Kipman flashes his badge across the access pads to a set of double doors and goes bounding down the stairs.
Over the past five years, Kipman and a team of Microsoft engineers, designers, and researchers have toiled in this windowless space to create a top-secret product that might be the company’s most ambitious since the 2010 release of the motion-sensing gaming device Kinect: an augmented reality headset codenamed Project HoloLens. The device—a kind of face-computer that looks like a pair of space-age sunglasses—is a bit like the Oculus Rift virtual reality headset. But while the Rift immerses its wearers in a completely digital environment, Project HoloLens weaves digital elements into the real world—a magical merging of the virtual and physical.
Over the next couple of hours, I play a game where a character jumps around a real room, collecting coins sprinkled atop a sofa and bouncing off springs placed on the floor. I sculpt a virtual toy (a fluorescent-green snowman) that I can then produce with a 3-D printer. I collaborate with a motorcycle designer Skyping in from Spain to paint a three-dimensional fender atop a physical prototype. I traverse the surface of Mars with a NASA scientist.
Satya Nadella, December 2014. Platon
But it’s a much more mundane task that really gives me a sense of Project HoloLens’ potential: fixing a light switch. Kipman places the headset on me, and points me toward a 3-inch-wide hole in the wall with wires jutting out of it and a nearby sideboard topped with unfamiliar tools. (As is perhaps obvious, I’m no electrician.) An engineer pops up on my screen, Skyping in from another room, and introduces himself. He can see exactly what I’m seeing. He draws a holographic circle around a voltage tester atop the sideboard. Then he walks me through the process of installing the switch, coaching me and sketching quick holographic arrows and diagrams that glow on the wall in front of me. Five minutes later, I flip a switch and the living room light turns on.
Project HoloLens is extremely ambitious, and it’s the first major test of whether Microsoft’s new CEO, Satya Nadella, can restore the company’s long-dormant reputation for innovation and creativity. Nadella, 48, brings a fresh leadership style to the job, pairing the institutional knowledge he acquired over more than two decades at Microsoft with a collaborative, nice-guy approach to management. “He has allowed ideas to bloom and be considered,” says Terry Myerson, the executive in charge of Windows, who has been with the company since 1997. “That’s hard to do with big groups of people.”
Project HoloLens chief inventor Alex Kipman. Platon
When Microsoft was founded, its ambitious mission to power a personal computer on every desk in every home seemed as radical as Project HoloLens does today. But 40 years later, the going perception in Silicon Valley is that the company’s best days are behind it. In a public conversation with Marc Andreessen in October, investor Peter Thiel called Microsoft a bet “against technological innovation.” Though Microsoft makes a lot of money—sales revenue jumped almost 12 percent to $86 billion last year—its core business is declining, a dynamic that was set in motion more than a decade ago, when nearly every enterprise owned and ran Windows-powered PCs and servers.
Microsoft’s fall stems from its attempts to lock users into its products by refusing to work with competitors. Lost in the hubris that can come with market dominance, the company launched a series of me-too hardware products, figuring loyalists would embrace them. There was the Zune MP3 player that followed the iPod, the Surface tablet that replicated the iPad, and the Kin, a much-hyped 2010 phone designed for social networking that was on sale for just 48 days before Microsoft and Verizon killed it. Consumers turned to better-designed devices that were plugged into other software ecosystems where Microsoft had no stake, rendering the company irrelevant. Meanwhile, the computing industry was changing. Processing increasingly happened in the cloud, and businesses rented the software they used. Users began to shift more of their work to mobile devices, most of them powered by Apple’s iOS and Google’s Android. In 2014, Microsoft accounted for an estimated 4 percent of the global market share for smartphone operating systems. In the “mobile first, cloud first” world that Nadella is fond of referencing, Microsoft missed mobile and came late to the cloud.
This was the state of affairs that Nadella faced when he took the top job a year ago. In an early analyst call, he quoted philosopher Friedrich Nietzsche, saying Microsoft must have “courage in the face of reality.” Since then, he has been doing just that. His predecessor, Steve Ballmer, described Microsoft as a devices and services company. Nadella has scrapped that, casting it instead as a company capable of working across any platform—even those controlled by competitors—to help people be more productive. He has made Office software available on Apple- and Google-powered tablets and phones and made Windows free to manufacturers of devices smaller than 9 inches. He has forged new partnerships with companies Microsoft once considered enemies and spent time with startups to learn how innovative business models work. And he paid $2.5 billion for Minecraft maker Mojang, so that a new generation will grow up on Microsoft’s software.
But Project HoloLens is by far the boldest—and riskiest—move of the Nadella era. It’s not another me-too product but a truly unique experience. It’s also the kind of project that few besides Microsoft would undertake—a lavish, multiyear effort that builds on lots of in-house research, all in service of extending the reach of Windows. Nadella believes that Project HoloLens is nothing less than the emergence of the next computing interface, saying, “It’s like the first time you used Excel on a PC with a mouse and a keyboard” (a transformative experience that perhaps only a longtime Microsoft exec can cite). More significant for Nadella, even though Project HoloLens has been in the works since long before he ascended to CEO, it will define the first years of his tenure—heralding either a new era of innovation at Microsoft or another regrettable chapter in the story of a company in decline.
Satya Nadella is drawing me a picture of Microsoft. We’re in his office, the same simple square of Building 34 previously occupied by Ballmer, and before him Bill Gates, and the furniture doesn’t seem to have changed much—the same Ikea shelves line the walls. Still, there are some indications that signal the arrival of a new occupant. For one thing, there’s an empty iPad mini box lying open on his desk. A cricket bat rests right next to it.
Nadella squats in front of a dinged-up black laminate coffee table and sketches three concentric circles on a piece of scratch paper. A wiry man with a shaved head and black-framed eyeglasses, he has a voice with a range of octaves but only one moderate volume. The outer ring, he explains, is Concepts—the vision that allows the company to think up new things like Project HoloLens. Inside this, he labels the second circle Capabilities—the engineering and design skills necessary to make things. Nadella pauses on the smallest circle, the center of the bull’s-eye, which he labels Culture. “You need a culture that is fundamentally not opposed to new concepts and new capabilities,” he says.
Executive vice president Qi Lu. Andrew Hetherington
Microsoft has had no problem with the outer circles. It has combined vision with breathtaking engineering to create a whole bunch of amazing prototypes. But they rarely make it to market. That’s because, over the past two decades, its culture has grown competitive and insular, more consumed with getting and protecting an edge than pushing into riskier new businesses. People were motivated to produce things they knew their managers would like, rather than take risks on new ideas that might fail. The company’s money-minting core offerings, Windows and Office, sucked up talent and attention while newer ideas got overlooked. Under former CEO Ballmer, employees were expected to live the Microsoft lifestyle, using Windows-powered phones and Surface tablets even when the bulk of the innovation was happening on iOS and Android devices. Says one veteran, “I think there’s a lot of people that really felt, you know, maybe like Detroit does. You drive American.”
It has become accepted wisdom in Silicon Valley that large, successful tech companies can’t reinvent themselves. Many have attempted to engineer comebacks, and the industry is teeming with failed empires that have evolved into middling businesses on the decline: BlackBerry. Hewlett-Packard. Yahoo. But Nadella finds inspiration in an example closer to home: Microsoft itself. He remembers sitting in a waiting room at Goldman Sachs in 1992, trying to meet an underling of the CIO. He never did get in, because Goldman Sachs, like everyone else at the time, thought of Microsoft as a company that only sold software for your home PC. “They wouldn’t even bother to see Microsoft people, saying, ‘What the heck do PC people have to do with us?’” Nadella recalls. He lets a pause settle between us, prompting me to reflect on the rise of enterprise computing, which enabled Microsoft to embed its Office software in practically every business in the world. “And so things change,” he concludes.
The old Microsoft never gained turf in smartphone operating systems. As users migrated to mobile globally, the company was quickly overtaken by Google and Apple. —J.K.
While Nadella developed much of his management approach on the job, his clarity of vision and empathetic listening style trace their roots to a formative personal event. He’d arrived at Microsoft in 1992 with a master’s degree in computer science from the University of Wisconsin-Milwaukee (he’d later earn an MBA from the University of Chicago). He was newly married to a woman he’d met in high school back in Hyderabad, India, where they grew up. For the first few years at Microsoft, Nadella was on the fast track, progressing quickly through the ranks. Then Zain, the first of his three children, was born profoundly disabled. The reality that Zain would be confined to a wheelchair set in. Initially Nadella asked himself, “Why us? Why did this happen to us?” But after a couple of years, his perspective shifted. “We realized this has nothing to do about us and everything to do about him,” he says. His son’s condition helped him see beyond himself and compelled him to force-rank his daily priorities so that he could meet his son’s needs and still perform his job—the same skill so necessary to effective management. The experience held other lessons too. “I think back to how I thought about work before and after, and this notion of the words you say and what they can do to the other person,” he says, referring to his interactions with his wife and son. “How can you really change the energy around you? It’s a thing that started building in me, and I started exercising it in my day job. It made a lot of difference to how I felt when I went back home. So much of it is mental attitude.” He keeps a black-and-white headshot of Zain beneath his monitor, his son’s head thrown back, laughing.
Long before he was CEO, this approach helped Nadella start to build a new culture amid seemingly immutable circumstances without making enemies. For example, when he wanted to start a cloud-computing business—which would mean borrowing technology from the search engine Bing—he ran up against Microsoft’s powerful SQL server business. Normally the SQL team would have instantly squashed Nadella’s initiative. But Nadella persisted, eventually convincing the server group that the rise of cloud computing was inevitable. “He won that battle,” says James Staten, an analyst with Forrester who has covered Microsoft for more than a decade. “It was a huge political shift.”
NASA JPL scientist Jeff Norris. Andrew Hetherington
As CEO, Nadella has restructured Microsoft to function more like the Silicon Valley companies that have eclipsed it. To be fair, it’s a process Ballmer put in motion in the summer of 2013 when he reorganized the company into cross-functional teams, abolishing the powerful product divisions for a flatter, more integrated approach he called One Microsoft. Nadella has streamlined these teams, cutting 14 percent of the staff. He has eschewed Microsoft’s traditional R&D cycle, in which products went through a testing phase after development, in favor of a fast-moving process in which these steps happen in tandem. To foster experimentation, the company opened Garage—a 32-chapter group of in-house tinkerers—to the public so outsiders could test Microsoft’s ideas.
Nadella’s new philosophy extends to the org chart, where he’s empowering his executives to work across once-siloed divisions. He has named Julie Larson-Green, formerly the executive vice president in charge of devices like Xbox and Surface, to a new role: chief experience officer. Judging narrowly by the org chart, it was a demotion, since she now reports to Qi Lu, one of Nadella’s deputies and head of the Applications and Services Group, instead of directly to Nadella. But in many ways, it’s a bold experiment that puts Larson-Green at the forefront of Nadella’s new approach to development. Larson-Green now determines how Microsoft’s products, from Xbox to Office, can better support one another and also perhaps work with other companies’ popular apps and services. This shift, which sets an important precedent for other Microsoft employees, seems to have worked because Nadella, Lu, and Larson-Green share common goals and, they say, a trust that runs deep enough to allow for a flatter hierarchy. (Indeed, earlier in his career, Nadella actually reported to Lu.)
To motivate people, Nadella asked Bill Gates to spend 30 percent of his time as technical adviser to the company. Nadella sees the moral authority of the founder as a critical management tool. “When I say, ‘Hey, I want you to go run this by Bill,’ I know they’re going to do their best job prepping for it,” he says. Gates is not a regular at management meetings, however. He interacts primarily with senior staff, including Qi Lu, offering feedback on Microsoft’s technical work.
Nadella also revised Microsoft’s approach to research and development. The company has long spent upwards of 11 percent of revenue on this area, and it has had a reputation for investing in the type of blue-sky undertakings that may not see a commercial outlet. Take Microsoft Courier, a 2008 booklet PC with touchscreens that faced each other; the ill-fated device never made it out of the lab. (Its team left afterward and later founded FiftyThree, the design startup behind the iPad app Paper and digital stylus Pencil.) Nadella has pushed researchers to collaborate much more closely with engineers in other departments to help them get products out faster. The release of Microsoft’s Skype Translator, which translates multilingual conversations in real time, is an early success. Nadella calls Skype Translator “a moment of truth” because it required groups of people to work across divisions, combining features from the Skype folks, the Azure cloud-computing team, and the Office teams. That’s the kind of cooperation that never happened in the old Microsoft.
1. CAMERA The Project HoloLens depth camera has a field of vision that spans 120 by 120 degrees, far more than the original Kinect, while drawing only a fraction of the power.
2. COMPUTER As many as 18 sensors flood the brain of the device with terabytes of data every second. It handles the onslaught with an onboard CPU, GPU, and first-of-its-kind HPU (holographic processing unit).
3. LENSES To trick your brain into perceiving holographic images at certain make- believe distances, light particles bounce around millions of times in the so-called light engine. Then the photons enter the two lenses (one for each eye), where theyricochetsome more between layers of blue, green, and red glass before finally hitting the back of your eye.
4. VENT The device is more powerful than a laptop but won’t overheat—warm air flows to the sides, where it vents up and out.
GESTURES Engineers are fine-tuning a feature called “hold- ing” that would allow you to grasp and manipulate holographic objects. Opening your hand would take you back to a home screen.
VOICE Microphones in the device capture voice commands.
GAZE Sensors track where the wearer is looking and adjust the display.
HOLOGRAMS The device can project a hologram into a room and keep it locked in position—an essential feature its engineers call “pinning.” Instead of the object moving relative to you, you can move around the object and view it from any angle. In the case of this holographic raptor, that means it’s easy to stay just beyond its scary reach.
VIRTUAL ENVIRONMENTS Project HoloLens can simulate a physical spacelike the surface of Mars, complete with the Curiosity rover. Once inside the environment, scientists can interact with objects and overlay the space with virtual flags. For example: Placing a flag in the distance could, theoretically, tell the real rover to go there and collect a soil sample.
AUGMENTED REALITY The device scans your environment and builds a digital model in real time. Then, if you’re playing a game, a character from the game can frolic as a hologram around your living room. Project HoloLens not only knows the couch is there, it also sees that it’s made of leather—and is much cushier than, say, your wood floor.
Project Hololens' chief inventor, Alex Kipman, is representative of the Microsoft that Nadella is trying to build. While his official title is technical fellow with the Operating Systems Group, he works collaboratively across disciplines. Nadella appreciates his versatility. “Alex is pretty crazy in the sense that he's not like your classic engineering guy,” he says, drawing a distinction between the predictability of typical engineers and the imaginative quality of their researcher counterparts. “He sort of thinks of engineering as a research project.”
Kipman, who was born in Brazil, started young. His parents had to replace his Atari 2600 twice because he kept breaking it to figure out how it worked. He landed at Microsoft after graduating from Rochester Institute of Technology, and by the end of 2007 he'd dreamed up Kinect, the motion-sensing accessory for the Xbox. “When I pitched Kinect to the company, it wasn't Kinect. It was this vision,” he told me, holding up an early prototype for Project HoloLens. “Kinect was the first step.”
Kipman believes Project HoloLens will be to this phase of computing what the PC was to the last: the latchkey to a completely transformed world. In this new reality, sensors will be everywhere, producing copious amounts of data, a layer of ambient intelligence coating every physical object. Project HoloLens and its counterparts will offer a visual computing platform controlled by speech and gesture that is so intuitive it fades into the background. “So you and I can do what we're put on earth to do: interact with other humans, environments, or objects,” Kipman says. “With technology helping us do that more, better, faster, and cheaper.”
Project HoloLens is built, fittingly enough, around a set of holographic lenses. Each lens has three layers of glass—in blue, green, and red—full of microthin corrugated grooves that diffract light. There are multiple cameras at the front and sides of the device that do everything from head tracking to video capture. And it can see far and wide: The field of view spans 120 degrees by 120 degrees, significantly bigger than that of the Kinect camera. A “light engine” above the lenses projects light into the glasses, where it hits the grating and then volleys between the layers of glass millions of times. That process, along with input from the device's myriad sensors, tricks the eye into perceiving the image as existing in the world beyond the lenses.
The device has just three controls, one to adjust volume, another to adjust the contrast of the hologram, and a power switch. Its speakers rest just above your ears. Project HoloLens can determine the direction from which a sound originates, so that when you hear something, it'll appear to be coming from where it would be in real life. If a truck is meant to be speeding by your left side, for example, that's where you'll hear the sound of its engine. By the time Project HoloLens comes to market toward the end of this year, it'll weigh about 400 grams, or about the same as a high-end bike helmet. Microsoft's new operating system, Windows 10, powers it, so any developer can program for it.
NASA has already gotten an early crack at it. As the mission operations innovation lead at the agency's Jet Propulsion Laboratory, Jeff Norris is charged with rethinking how we explore space, with a focus on the interface between humans and technology. He met Kipman nearly five years ago when he was creating Kinect. In Project HoloLens, Norris saw the potential for technology to help space explorers collaborate more closely and to provide them a quality known as presence. (“People make better decisions when they feel like they're in the environment,” he says.) Last March, Norris and several members of his team relocated from Southern California to Redmond for a few months to build a Mars simulation.
Kipman lets me test-drive it. I slip on the headset and find myself on the parched, dusty surface of the Red Planet. Behind me, the Curiosity rover towers 7 feet tall, its cameras recording the terrain. The illusion is so real my legs begin to quiver, unsure what to make of the disparate information I'm sensing. Norris appears beside me in the Mars-scape, represented as a 3-D golden human-shaped blob. A dotted line extends from his eyes toward what he's looking at. “Check that out,” he says, and I squat down to see a rock shard up close. Project HoloLens allows me to work on a desktop computer while in the demo, something you can't do in the Rift's virtual world. It also makes it possible for me to pin holographic flags on the virtual scenario, and someday this will be able to set in motion real-world actions. With an upward right-hand gesture, I bring up a series of controls. I choose the middle of three options, which drops a flag. When scientists do this, the command could theoretically be transmitted to the actual rover so that the task can be accomplished in real life, on Mars.
The simulation is so effective that NASA plans to deploy it on a mission by this summer. But this is just one example of Project HoloLens' capabilities. The real opportunity for the platform will come from developers committing resources and imagination to it. NASA has already signed on as a launch partner; others will likely follow. But for Project HoloLens to succeed—and for Microsoft to succeed—it has to build platforms that developers want to build software for, as it did with Windows for PCs in the '90s, and as it failed to do with Windows for phones earlier in this decade.
Venture firms have bet more than $1 billion that the next big computing platform will emerge from virtual- and augmented-reality projects. —J.K.
Two and a half months before Microsoft announced Project HoloLens, I went to London to watch Nadella address European customers and developers at an event called Future Decoded. This is the type of audience he'll have to win over if Project HoloLens and future innovations are to succeed. A swing band performed outside an exhibit hall full of Microsoft demos. More than a thousand people crowded into the nearby auditorium for Nadella's appearance, which was advertised as an “intimate, interactive conversation” with a Microsoft UK executive whose title was “chief envisioning officer.” The duo promised to cover “how Microsoft is creating the next generation of technology innovation.” For all of its promise, the conversation underwhelmed. Nadella kept it to just 15 minutes. His interview was long on catchphrases (“reinventing productivity” and “mobile first, cloud first”) and short on the how. As he exited the stage, a local reporter remarked on his brevity in a tweet: “Whoa! He's gone!” Of course, the point wasn't to say anything new; it was to show face, reinforce Microsoft's message, and rebrand the company and its culture as approachable and forward-thinking.
The rebranding challenge, in particular, requires consistent reinforcement, and Nadella has been networking at a feverish pace since he started the job. In London he'd started taking customer meetings shortly after 5 am that day, and his calendar was packed until well after sundown. (As for the reason his remarks were so short, I was told the conference started later than planned.) Since being named CEO, he's kept up a hefty speaking schedule and met with small groups of journalists over dinner to amplify his efforts. He has relied on board chair John Thompson, who ran securities company Symantec for years and is now CEO of the software company Virtual Instruments, to make introductions for him up and down Highway 101. He has spent time meeting with startup founders like Ryan Smith, who runs Utah-based survey software company Qualtrics and who presented to Nadella at the invitation of venture firm Accel. Nadella asked Smith a half-dozen questions, quickly picking up on where Smith placed his strongest engineering talent. Smith was impressed. It was his first time meeting with anyone in Redmond. “Historically, companies have struggled a little bit on how to work with Microsoft,” Smith says. “I mean, where do you start?” The meeting shifted his impression of the company. “This guy's different,” he says of Nadella. “He's humble.”
This attitude has helped Nadella forge new partnerships with outfits like Dropbox and Salesforce. The Salesforce partnership is particularly surprising. For a long time, Microsoft had considered the cloud-computing company an enemy, even launching Dynamics CRM, a direct Salesforce competitor. But Nadella realized that many of Salesforce's customers also used Office 365, and he began wondering if the two products might be combined. So last spring he called up CEO Marc Benioff to propose a partnership. In the first half of 2015, Salesforce will be integrated with Office, SharePoint, and OneDrive for Business on Android and iOS. A Salesforce app for Outlook will also become available, and Salesforce apps for Windows phones and Excel will follow. Says Benioff: “Before, we just were not able to partner with Microsoft. Satya has opened a door that was closed. And locked. And barricaded.”
The new, warm and fuzzy, more collaborative Microsoft has even embraced open source software, the collective multiauthored approach to writing code that Ballmer once referred to as a cancer. In November, Microsoft opened up its entire .NET framework, its programming infrastructure for building and running applications and services.
This new attitude won't necessarily make developers excited about Project HoloLens. But there is optimism in the air. Soon after Microsoft announced that .NET would be open source, Box CEO Aaron Levie summed up the response in a pithy tweet: “Sometimes it feels like Satya is in one of those '80s teen movies when the parents go out of town. And it's great.”
As mind-blowing as a holographic tutorial is, or even the virtual surface of Mars, Project HoloLens' first killer app is likely to be the popular videogame Minecraft, which Microsoft acquired in September. For a generation of children, Minecraft has become the digital equivalent of Lego blocks, a highly collaborative form of play. Soon imaginative kids might be able to play in 3-D, working alongside holograms of their real-life friends to build things together. The promise of a product like this is central to helping Project HoloLens take off. As Terry Myerson, who runs Windows, told me, “If you want to play holographic Minecraft, the only place to do it is going to be on this.” And you don't have to be an early-adopting Glasshole to want in on holographic Minecraft.
But you will probably have to wait a little while. Microsoft is being very deliberate in how it rolls out Project HoloLens. First, Nadella plans to spark the public imagination by introducing the device to folks it calls “makers”—the people who attend TED conferences and lined up to buy Google Glass—and the oh-so-critical developers. Microsoft plans to distribute lots of development kits this year. Next up will be the commercial partners. Finally, once the platform has critical mass, Microsoft will make it available to everyone, including the Minecraft-obsessed.
The slow rollout is because—in another sign of an attitude shift—Nadella says he wants to see how people react to Project HoloLens, and adjust the product accordingly. In 2007, when Steve Jobs introduced the iPhone, he resisted apps, preferring his customers to access the web through their Safari browsers. But after that approach tanked, in 2008 he released a software development kit for app makers and launched the App Store. In similar fashion, Nadella has defined a strategy for Project HoloLens but says its path will ultimately be determined by the behaviors and preferences of its developers and users.
Chief experience officer Julie Larson-Green. Platon
Companies large and small are pushing to invent the next computing interface—a canvas so critical it will be to smartphones what smartphones were to desktop computers. Facebook has Oculus. Google has Glass. And in Dania Beach, Florida, a stealth startup called Magic Leap has banked $542 million in its latest round of funding to develop something allegedly smarter than all of them. The ones that prevail will do so because developers and customers buy into the dream, sinking time and money into their platforms and causing innovation to flourish.
It will take a while for any of these competitors to succeed, and Kipman suggests that if users and developers take Project HoloLens in another direction, or don't take to it at all, Microsoft will be OK. The real beneficiaries of Project HoloLens will be the company's operating system, Windows 10; its cloud-computing product, Azure; and its suite of software products, Office 365. They'll continue to improve even if Project HoloLens doesn't. What's important is that more people find more ways to use them. What's important is that, as the next new technology platform emerges, whether it's Project HoloLens or not, Microsoft gets there early.
Just when will the next computing interface take hold? I press Nadella on this, but he's not one to predict the future. “What is that quote? I forget now who said this,” he says. “You always overestimate what you can get done in a year and underestimate what you can get done in 10 years.”
Later, I look up the quote. He got the gist of it right. And the person who said it was Bill Gates.
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