Microsoft CEO Nadella makes it official: Cortana is an app, not a standalone assistant

Microsoft officials have spent the past year working on the public repositioning of Cortana from standalone digital assistant to more of an assistance aide. But it wasn't until this week that Microsoft CEO Satya Nadella officially confirmed what we've already seen happening: Cortana is going to be an app, or skill, not a standalone assistant like Amazon's Alexa, Google Assistant or Apple's Siri.

Nadella spoke to a select group of journalists on the Microsoft campus earlier this week. Thanks to a transcript from one of those invited (which will cost you $10 if you aren't already a subscriber to the daily Stratechery newsletter), we know that Nadella was asked about Microsoft's aspirations in the consumer space.

"One thing that I feel like at Microsoft we made a bunch of mistakes by just saying let's just enter every category, just because we're a software company," he told attendees. "Sometimes, it's sensible to do so because there are big TAMs [total addressable markets], but at the same time, if you don't have some unique thing to contribute, you usually fail."

He went on to say that speakers are an example where Microsoft needs to stand back and ask "exactly what is it that we can do in that category that's going to be unique?" (There have been some rumors that Microsoft might field some kind of Echo-like speaker of its own, but I've felt if they do this, a business-focused device, like this conical one which Microsoft showed off at Build 2018, would make more sense.)

Instead of doing a consumer speaker, Nadella continued, "would we be better off for example to make Cortana a valuable skill that somebody who is using Alexa can call? Or should we try and compete with Alexa? And we decided we would do the former which is because Cortana needs to be that skill for anybody who's a Microsoft 365 subscriber. You should be able to use it on Google Assistant, you should be able to use it on Alexa, just like how you use our apps on Android and iOS so that's at least how we want to think about where it'll go."

So far, Microsoft has not announced any kind of partnership with Google like it has with Amazon to get Cortana to interoperate with Google Assistant. I wonder if such an announcement will happen, or if Microsoft will just develop this as a skill.

Also: Right now, Cortana doesn't require users to be Microsoft 365 subscribers. But given the way Microsoft has been integrating Cortana with Outlook, To-Do and other of its productivity-focused properties, maybe this is the goal. If it is, Microsoft 365 Consumer -- another service that Microsoft has yet to announce officially -- may be one way Microsoft ties Cortana to subscriptions. 

On the business front, Microsoft has been pitching its Virtual Assistant Accelerator, not Cortana, to companies like BMW and LG Electronics, to enable them to build their own, custom-branded assistants, into their apps and services. Microsoft also took the wraps off a Cortana Enterprise Skills Kit at its Ignite show last fall.