Satya Nadella Microsoft CEO

In a letter to employees, Microsoft CEO Satya Nadella hinted at big changes to come for the technology giant while reaffirming the company's core strengths. (Brendan McDermid/Reuters)

In a 3,000-word letter to employees, Microsoft CEO Satya Nadella says the company must "be bolder and more ambitious" as it tries to stay competitive in the always-shifting tech industry.

"Our industry does not respect tradition," Nadella wrote, "it only respects innovation."

In the letter, Nadella hinted at a big shift for the company, although it is unclear if that means cutting any of the company’s 99,000 employees.

Instead, Nadella emphasized a shift in focus at the Redmond, Washington-based company.

"In order to accelerate our innovation, we must rediscover our soul — our unique core."

Nadella became Microsoft’s third-ever CEO when he took over the company’s top job in February, following co-founder Bill Gates and Steve Ballmer.

Reclaiming top spot

After dominating the industry through the 90s and early 2000s, Microsoft has fallen behind the competition in some areas.

In the past few years, rapid adoption of mobile and cloud-based technology that put Microsoft, an industry leader in desktop operating systems and software, on its heels.

But the company has adapted, becoming what it calls a “devices and services” company.

It has launched cloud-based versions of its Office suite of programs in addition to the traditional desktop versions. It also offers a cloud-based platform for companies called Microsoft Azure.

It also has pushed its Windows tablets and smartphones, although sales of those still lag behind competitors like Samsung and Apple.

In the letter, Nadella also made specific mention of the Xbox team, which some analysts and investors have urged the company to sell, particularly after the rough launch of the new Xbox One console.

But Nadella heaped on the praise, writing that “Xbox is one of the most-revered consumer brands, with a growing online community and service, and a raving fan base”.

Since its launch, sales of the Xbox One have been surpassed by Sony’s rival PlayStation 4. In response, Microsoft cut the price of its console from $499 to $399 to match the PlayStation, and removed the previously-included Kinect motion camera.

Nadella will reveal the financial implications of Microsoft’s new plans when it releases its quarterly results later this month.