Hosted by Kai Ryssdal

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Microsoft announced today a new version of Windows, with a suite of programs aimed at promoting coding and collaboration in classrooms.

The offerings include “Minecraft: Education Edition,” which will come with a new code builder feature and enable teachers to use programs such as Paint 3D in classroom. And just like grown-ups spend their days endlessly chatting with coworkers on Slack or Gchat, students will be able to chat with their classmates thanks to a Microsoft Teams app made for classrooms.

Microsoft’s selling point for the suite of tools is that it enables creative thinking, visual learning and passion for these new skills like coding and engineering, according to Microsoft CEO Satya Nadella. After all, if you cannot beat the robots, you should be making them.

“One of the things we talk a lot about…is the creator in us all,” Nadella told Marketplace’s Molly Wood in an interview. “It’s that moment when the students say, ‘wow, look what I did.’ And I see it with my own daughters when they come and show me something that they did. That’s the brand. I always feel that Microsoft is at best when we are right behind that moment of creation whether it’s a developer or a student. It’s their success with our technology that we should celebrate. That’s who we are.”

Sixty-five percent of today’s students will do jobs that don’t even exist yet, according to the company. Microsoft’s new software aims to get students interested in science, technology, engineering and math (or STEM, as the subjects are commonly referred to). Education is one area that allows the tech industry at large to foster the kind of talent it needs in its workforce, and reach young consumers.

“Minecraft: Education Edition” comes with a new code builder feature and enables teachers to use programs such as Paint 3D in classrooms.

Photo courtesy of Microsoft

In some ways, Microsoft is trying to firm up its hold in a market it’s on the verge of losing. Microsoft still dominates the education market, with 55 percent of sales between 2014 and 2015. But inexpensive PCs running Google’s Chrome OS — Chromebooks — have taken hold in schools in particular, sucking market share away from Windows.

Microsoft has pushed the Surface tablet hard as an alternative to Chromebooks, and it’s hoping its stripped-down Windows S will be as easy to install on inexpensive hardware as the Chrome OS.

And although it sounds a little crass, the best way to build a lifetime of customers is to expose them to your brand early and often. So Microsoft has lots of incentive to move aggressively to shore up the castle walls and make sure kids grow up learning on Microsoft instead of Chrome or Apple.

“It’s a more competitive market than it ever has been and the people who benefit from it should be the schools, the students, the teachers, the administrators,” Nadella said.

He spoke at length with Wood about why Microsoft is invested in tools for schools. Read a transcript of the full conversation below:

Satya Nadella: You know this entire announcement is all about education. You know we’ve been in the education market for — ever since the inception of Microsoft. If you think about Microsoft’s own origin, the first product was basically the development tool for hobbyists. And so to us when we think about our mission of empowering every person in every organization on the planet to achieve more, there is no better place to start that empowerment than enhancing the learning moments of students. And so that’s how we think about education and the second-order effects of education. In other words, any economy is only thriving if it is able to take the benefits of education and translate it into economic surplus and growth. So therefore to us, doing some of our best work not just for Microsoft but anyone in tech to do their best work in education is only going to grow the economy to a point where we can participate in that broader opportunity. So that’s how we look at it.

And what we’re specifically talking about at this event, which is pretty exciting, is the breadth of what we have to offer, all focused ultimately on those learning moments. It’s the teacher’s ability to get the computing and computers set up faster and in 30 seconds to be able to have a Windows laptop that they can give a student, to Minecraft being used by teachers to entice both girls and boys into STEM because what’s one of the fundamental challenges, but with Minecraft being an open world it attracts even girls equally like boys to be able to say, “Well let me go in and learn how to code, how to build my world.” Or what we’ve done with learning tools in Word and OneNote. For anyone with learning differences in dyslexia, in particular, being able to comprehend or to be able to read them because of the way these tools can enable them to do so is just fairly awesome to see. We also have a new product which is built around team learning because one of the things that we think a lot about, and mostly from learning from teachers, is that all of the work that we do today is in teams. How do you bring that collaboration or that ability to learn in teams right into your school curriculum? So we have a new tool for that as well. So those are the elements of what we’re trying to bring together and talk about.

Molly Wood: And there will be some hardware, right? Sort of a lower-cost Chromebook competitor for lack of a better way to put that, and then a higher-end Surface?

Nadella: That’s right. So basically, as part of any of our education initiative, devices are going to be very important. It’s not just the price, but it’s also the capabilities of those devices. So for example, ink or digital pens and the ability to write turns out to be very important for retaining the knowledge you have learned. And so to us, not only bringing the low-cost devices but these low-cost devices with capabilities such as ink is super critical. So we will have some on the lower end, we’ll have some on the high end, but more importantly than just the devices, it’s also the management aspects of those devices, because the issue that we have is how do you get  — especially in many cases the teacher is even the IT administrator. So you’ve got to bring the cost of management and security all down such that it’s sort of the teachers spending their time more on teaching versus IT.

Wood: I can tell you that I do a fair amount of volunteering and fundraising in my school, and it is often me or some other parent who’s the IT manager so, how big of a market is this for you?

Nadella: Education by itself in relative terms is a small market for us, but its second-order effects, as I said, are huge, because in some sense, all students graduate and eventually go to colleges and then get to the workforce. And so what you learn and what you’re familiar with in schools will have an ultimate impact in terms of what they will choose at their workplace. But beyond that though, we are a worldwide leader when it comes today. Educational infrastructure — Windows has got market share leadership there. And so it’s an important business. We don’t break it down by segment, but I don’t think of education just as a return on investment just on its own, but I think about the broader impact.

Wood: Who do you see as your primary competitor?

Nadella: I would say, you know, primarily in education, Google and Apple. Apple and Microsoft have competed, I would say, you know, since our inception on some of these markets. But I actually think that, you know, all three of us perhaps pushing each other to do our best work here is probably the best thing that’s happening in education. I don’t think that the competition by itself is the important story here. Of course, it’s the reality, and it’s more competitive market than it ever has been and the people who benefit from it should be the schools, the students, the teachers, the administrators.

Wood: How do you — as you design these products, you talk about them enhancing learning, How are you determining outcomes? You know, how are you looking at what students should learn and how?

Nadella: That’s a great question. First of all, one thing that I’m really grounded on is sometimes in technology and technology companies, we sort of think about our technology as the answer, and I am not a believer in that. Ultimately, technology can be a tool in the hands of dedicated teachers, motivated students, involved families and administrators. So that’s how we come at it. So how are we going to measure it? It’s going to be the measurements of the school systems. It’s really — like when someone says the educational outcome of digital ink, the ability for someone to retain their learning is 30 percent more. That’s not a study we do. It has to be a study that is, in fact, peer reviewed and published by people in the educational field. And so to me, that would be the way to think about learning and the learning outcomes thing. Some of the things that we’re trying to do, for example, taking even this new medium of mixed reality or augmented reality. It’s fascinating some of the demos we’ll show are around, let’s say, how you want to teach a set of students about the solar system, the phases of the moon. I always am an electrical engineer, and I always sort of felt that oh, if only I had these VR tools learning the Maxwell’s equations, I would have been an even better electrical engineer, and so to me that’s it. Like how can we use some of these new tools to change the curriculum and how it’s presented? Because all of us, we now know, learn differently. People visualize things sometimes better than read from textbooks, so if we can sort of put those tools in the hands of the teachers and students and then the measurements come from them.

Wood: Do you worry that these tools might get into those hands and then end up, you know, feeding test scores. I mean, do you think, “I’m designing these things so that kids can have this amazing augmented reality experience and individualized moment and be inspired.” How concerned are you with what happens when they get into the classroom and whether that occurs?

Nadella: I mean, it’s one thing that you’re bringing average is a very real key element is not to create a new digital divide because of technology being unevenly spread. And so that’s sort of, I think a huge element in the United States and world over, and that’s why we want to bring [down] the cost of these devices. In fact, one of the other things that we will showcase here is some of the kits we are putting together to introduce kids to STEM education. And by the way, when we think about STEM, I think about it broadly, it’s just not about coding, right? It’s about electrical engineering, mechanical engineering and software and design skills. So this is where even liberal arts and people with that background can contribute to in fact designing and building digital products. We want to build these kits where the parts in it are all less than a dollar, so that if you want to build something, you can in fact do it, or whether it’s in Kenya or in East Palo Alto, you can have access to these kits without having to spend a lot of money. That’s, I think, another huge responsibility all of us have in this industry so that you don’t create what you just said, which is I think you’re absolutely right. If all it turns out is the people who are already advantaged get more of an advantage because of digital technology, that will not be the outcome that any of us desire in any society.

Wood: So I arguably have a fairly advantaged public school, but it’s still a public school in Oakland. And when I when hear about these tools, I think that would be amazing. I have no idea how those would get into, like, what are the mechanics of this stuff actually arriving in, you know, an Oakland public school, because it is easy to imagine a universe where they just show up in charter schools or they just show up in private schools or my school just doesn’t have its act together because our parent volunteers work a lot. Is that something that you worry about when you roll out a product like this?

Nadella: We do worry about that, but we do spend a lot of time and energy in making sure, for example, with the large public school systems, that we work with them and their procurement and to make sure that they’re, we’re able to take all of this technology at the right price points with the right programs with the right training. So if you look at our overall approach, whether it’s about the teacher community and teaching them about what is available to them, the administrators in the procurement department, and being able to get to them better. You know, they issue RFPs, which we have to compete to win those. That’s how the products get in. The other places we have to remove friction. Something like Office 365, for example, which is the core of how students learn, is all free. So we’ve also made it approachable, accessible to a public school system so that we do not have economic barriers that get in the way of adoption. So we come at it on all sides of it.

Wood: In preparing for this, I was surprised at the lack of definitive research about how technology works in schools. There are studies on, you know, on both sides. There are some that say a one-to-one laptop scenario improves student learning, and then there was a big MIT study at West Point that said classrooms that had no technology, where technology was banned, had 18 points higher test scores. Are you looking at any of that?

Nadella: Absolutely. In fact, that’s why I sort of said even what I said about ultimately technology can be a tool but it cannot be the sole determinant of learning outcomes. Because I think that’s the mistake, which is if you sort of take technology on its own and think that that’s going to lead to the outcome and ignore the dedication of a teacher or the motivation of the student or the involvement of the family or even the enlightened administrator, because that magic happens when all of those constituents come together, and then there is technology that they can use. Getting that right is the art form. And at least that’s what we’ve learned. And you know, in fact, there was a Microsoft researcher who spent a bunch of time in India chasing after, saying here is technology, and it’s in schools. Is it making a difference? And the conclusion he came to was that that technology can at best be a tool. It really comes down to the people involved.

Woods: You have kids, right?

Nadella: Yeah, in fact, I would say education for me, both because of my own story and then now with my kids here, has significantly influenced how I think about it. You know, one of the things that I think about is my entire life is being shaped perhaps because of the educational outcomes and decisions that my great-grandmother made. My great-grandmother was growing up in a village, and she was widowed young. And this is in a southern part of India. And she moved to the nearest town and made one crucial decision that has pretty much shaped the family history. So she had two sons. One of them was the more sort of trustworthy, and the other one was more getting into trouble. And so she decided to send the one who was more getting into trouble to school and the trustworthy to day labor. And the kid obviously who went to school went on to get into the Indian police service and his son, my father, went on to college, and then rest is history. And then the family that was the more trustworthy son who went on to do day labor, ultimately his grandchildren have gotten to college. But that economic distinction and difference has shaped our personal histories, and that sort of speaks to me. I mean, that’s why I think education can really make a massive difference. And it’s a modern world in the last 200 years or 150 years has mostly been because of the educational opportunities that have been led to economic opportunities for all of us.

Wood: What would you do if you could design a great — obviously I have a vested interest in this, because we’re also about to go to junior high — like, what would you do if you could design the perfect sort of educational road for your kids?

Nadella: I would sort of really — I think about my own children’s case, the difference teachers make. If there was one thing that I think we can all do collectively is make teaching and teachers and everything that we do to facilitate their jobs and what they do a more rewarding thing in society, more fulfilling thing, and also giving them all of the boost, whether it’s technology or others. That, I think, is the single biggest determinant. When I think back about my own learning moments, I can trace it back to, you know, these teachers who had this magical gift. And for all of the online tools or the technology we may have, still teachers can make a huge difference.

Wood: One of the things that comes up with technology in schools is privacy and data mining. How will these tools, and how will you, you know, are you committed to protecting kids’ privacy as this technology comes into the classroom?

Nadella: I mean, as a parent, I know I care deeply about this. I think that keeping our children safe and students and their data safe is a huge priority. And so first and foremost, all of the controls on what is being collected and what’s being used is all being determined by the student, their family and the administrators and the teachers. So that is at the core of how we approach privacy. And second is we’ve made the principle decision that there is no data that we collect and use for advertising or other means. And so therefore, being principled in what we do, and more importantly, providing all of the controls to the student family and the teachers and administrators, is how we’re approaching it.

Wood: Do you think it’s somewhat inevitable though, as tech comes into the classroom in all its different forms, as, you know, kids are online, as those those behaviors are inevitably tracked, that we’re still opening a little bit of a Pandora’s box?

Nadella: I mean, I think overall privacy and security is sort of going to be core to how computing, I think, gets used going forward. I think that if we do not build trust in technology, whether it be in education or elsewhere, I think it will impede the speed with which technology will get adopted, because I think fundamentally, the trust is broken around how users perceive they get value for what they are doing. And then I think that they will not use it. But I think you’re absolutely right in saying in education, especially where in the case of education where you’re giving away a free service like Office 365, you cannot have any two sides to it. It has to be clear that the data there is the student’s data, it’s the school’s data. And then you have to have very principled stands around how you use that data.

Wood: Because it feels like that could even be a barrier to selling into schools. I mean, I can imagine if parents get really worried about it, if educators, they worry, they say, “No, thank you. We don’t want any new technology.” And then what?

Nadella: And rightfully so. And so that’s one of the reasons why I think it’s so important for us to make sure that we have in the product the controls that then get the parents, the teachers, all comfortable knowing that this is for their benefit or that, you know, for them to be able to do their job better versus any vested interest we may have.

Wood: How big of a move is this for you in terms of your expansion? Is it a significant expansion into the education market? Because you mentioned you’ve been there all along. I believe it is a significant, if minority share, how it was put in one article I read—

Nadella: That’s a U.S. statement.

Wood: Yeah, it is kind of, isn’t it? How how big of an expansion is this for you?

Nadella: You know, we’ve obviously, with Office and Windows, you know, had a significant business and presence worldwide. The reason why this is a pretty big move for us is we never brought the comprehensiveness of what Microsoft can and should offer from Minecraft to even the work we’re doing in virtual reality, to Windows devices in Office. So that ability for us now to bring all of these things together not just as technology, but with clear evidence of how they can, in the hands of these teachers and students, learn better or lead to better learning outcomes. That’s, I think, what makes it. When you can show that, wow, here is how Minecraft can introduce boys and girls to STEM, or here is how writing on OneNote can enhance learning. Those are the things, the comprehensiveness perhaps, is what’s very new and very needed.

Wood: Well, that’s kind of your thing isn’t it? Is bringing all of  the — my sense is that your thing here at Microsoft is bringing all of the disparate chunks of this company together to operate holistically. Is that a fair statement?

Nadella: It is a fair statement, because at some level, I’ve always felt that, you know, no customer or no competition respects our own internal org boundaries, because those are the least important and interesting things for them. And so the ability to be able to relate things together as it makes sense, not just because they’re interesting for us to do, but in the education, I really, truly feel that this is where we can bring the best of Microsoft. It’s also a little bit of a labor of love for a lot of people inside, because every one of us who works on this can, I think, find that passion and empathy for what happens in education, because we are all parents or we’ve been students, and we know what it is, and so therefore some of the best work that’s happening in the company is getting channeled into education, and that’s fantastic to see.

Wood: And then how much is the brand in front of kids? I mean, you know, if the really long-term goal is to, say, you build this brand awareness, does that sense of holisticness, I guess, approach, extend to what kids see when they fire up these products?

Nadella: Oh, for sure. You know, the way I think about brands and the way brands get built is it’s got to be more than just the person knowing about the brand. It has to be their experience with the brand. What is the brand value? Like, for example, one of the things we talk a lot about with this event is the creator in us all. I like to sort of think about whether it’s using this new 3-D paint tool, or you’re painting with paint, or you’re painting with Excel, if you’re creating with Word, or you’re creating with Minecraft. It’s that moment when the students say, “Wow, look what I did.” And I see it with my own daughters when they come and show me something that they did. That’s the brand. I always feel that Microsoft is at best when we are right behind that moment of creation, whether it’s a developer or a student. It’s their success with our technology that we should celebrate. That’s who we are. We are not about our logo and our brand in your face. We are about, sort of, you and your creation and if we played a part in that, and that’s the brand we want.

Wood: Does that also give you an opportunity to engender love early on? I mean, I think you know one of the things that people say about Microsoft is it seems like it’s running better than it’s ever run, but there’s less awareness maybe than ever, weirdly. Does it give you a chance to sort of make a kid love you in kindergarten? You know, because Minecraft, I mean it’s the holy grail, let’s be honest.

Nadella: I mean, that is right. I mean, but even in Minecraft, if you look at it, that subtlety about that brand is most people loved Minecraft because what they did in Minecraft. That, to me, is what I want. I mean, I actually don’t obsess about Microsoft being known as long as what people are doing with Microsoft technologies is known. That’s sort of at least how I think about our identity, because we’ll never be the company that is just about our brand. We build tools, we build platforms. It has to be about what have others done on top of our products that I think are truly going to be reflective of our brand.

Wood: Well, let’s talk broadly about Microsoft for a second. Obviously, a significant change in the administration. Anytime there’s a major turnover like this it’s a big a big deal. How do you see your ability to accomplish your goals as a company evolving under this administration?

Nadella: You know, we are obviously in touch with the administration on a variety of different fronts, and we welcome their initiatives around infrastructure and modernizing the government. And we definitely have a point of view on how we can help, and we look forward to engaging in it. And as you said, that with any change in administration, there is a set of new opportunities for us to be able to look at how can what we do as a technology developer and a provider especially around the services the government offers, because I think that’s significant. It’s not just about infrastructure in the physical sense. The digital infrastructure, I think, can be a significant part. Recently I was talking to the secretary of Veterans Affairs, and he just launched a new website in which we played a role, which you know is tremendous. It’s one of the challenging places where I think digital technology can make a real difference, and we’re looking forward to more of those opportunities.

Wood: There’s been a little bit of a lack of conversation about digital infrastructure, actually. Is that something that you hope to champion as those conversations move forward?

Nadella: It’s natural for us, obviously, to do, because that’s what we do. I think that the overall infrastructure discussion in the United States is broader, and we get that, and digital is a significant element of it. And interestingly enough, if you want to even improve the physical, you actually need to improve digital, because nowadays there’s no such thing as digital as its own realm. It’s actually intertwined. Whether it’s the transportation system or the health care system, and so to us being able to take what in the United States leads in it, and most of the top tech companies are American companies, and so to be able to take that innovation that we lead in the world and then apply it to our own government, our own services, not just in the federal but even every state, I think, is a huge opportunity for the United States to create a local leapfrog of our own set of government services.

Wood: And then how about work force? I saw that there was a job posting, there was ever so briefly a job posting for a director of immigration policy. How are you looking at hiring, the H-1B visa program is under review?

Nadella: Yeah I mean overall, um, first of all, we will – I mean, I’m a product of two things that I think are great about the United States. One is American technology reaching me when I was growing up and to be able to dream the American dream and then the enlightened American immigration policy letting me live that dream. And I think the H-1B review is something that I think is a good thing because every country should look at their immigration policy and especially in this case it’s about American competitiveness. Ultimately it’s about high skilled labor. And a review that says there is the right use of it and those misuses of it and we you know promote more the right uses of it, all the better for and for American competitiveness and at least at Microsoft. When we think about H-1B, it’s mostly about high skilled labor that allows us as an American company to be globally competitive.

Wood: Do you think you’re going to make any more phones? Total right turn there, I know.

Nadella: We make our phones today. We have OEMs like HP making phones and others. And we picked a very specific area to focus on which is management security. And this one particular feature that we have called continue which is it’s a phone that can even be a desktop. And at this point we’re making sure that all of our software is available on iOS and Android. And it’s first class and we’re looking for what’s the next change in form and function. What we have done with Surface is a good example. No one before us thought or thought of two-in-ones and we created that category and made it a successful category to a point where there are more two-in-ones coming and that’s what we want to do. So in some sense when you say, “will we make more phones,” I’m sure we’ll make more phones but they may not look like phones that are there today.

Wood: Right. Maybe you’ll make that thing — I just read this sci-fi book actually that talked about a technology that was, it was light field technology like narrowband light field that would just target your iris and it, you know, talked about how the entire consumer electronics industry fell apart as a result. So you’re totally working on that.

Nadella: And Holo-lens is the closest thing that we have to that.