Next big thing,

This clearly rankles inside the company. Eric Horvitz, one of its top AI experts and head of the research lab at its Redmond headquarters in Seattle, says “there is definitely opportunity to communicate better”.

Mr. Nadella concedes that Microsoft has little presence in “AI that is there either in a speaker or on a phone.” But with 105 million people a day using Cortana, which is embedded in the latest version of Windows, he says the company does better when it comes to larger screens — what he calls “AI attached to glass.”

Microsoft is counting on its network of data centres — and its cloud computing platform, called Azure — to bring its AI technology to a broad corporate market. This includes a suite of services that companies can “plug” their own data into, such as an “emotion” interface that examines pictures of faces to automatically detect a person’s feelings.

Tools like these, made available through the cloud, are part of a new approach that is very different from Microsoft under Mr. Nadella’s predecessors, Mr. Gates and Steve Ballmer, says Mr. Sanfilippo, who is now an analyst at Directions on Microsoft, a research group that tracks the company. It is “an example of the Nadella era — more open and community-minded,” he says.

Microsoft’s old ways of working — building and shipping software products on predictable schedules, working in strongly independent divisions — are not suited to what lies ahead.

According to Mr. Nadella, the AI era is forcing Microsoft to think more deeply about the impact of their technologies on the world. AI, he says, will profoundly affect people’s lives. “It may define ‘How safe is my car? How healthy am I going to be?’ It’s just so much more mainstream,” he says. “The responsibility of our industry is no longer just, ‘Hey, here’s a new device, go enjoy it.’”

Besides involving tech companies in new ethical judgments, this will require breaking out of their old product- centric ways to develop what he says is a more “human-centric” approach.

This will make AI the biggest test for Mr. Nadella’s efforts to remake Microsoft’s culture. Under Mr. Ballmer, the company was often criticized for getting tangled in internal bureaucracy and battles between warring fiefdoms.

Often, it was the powerful Windows division that won the day, as leaders of other businesses were forced to adapt their plans to support the biggest moneyearner — a drag on innovation some former executives referred to as the “Windows tax.”

The current chief executive officer is careful not to refer directly to Microsoft’s internal struggles, but does say that the failure to bridge internal divisions is “the classic thing” that holds companies back.

The recent reshuffle to create a new AI and research group under Mr. Shum is a sign of this attempt to break down barriers inside the company.

But Mr. Nadella himself dismisses the idea that simply shaking up the organization will be enough.

“It’s not about: ‘Oh, let’s do a reorganisation,’” he says.

Instead, it will take a cultural change that requires looking past product and technology boundaries so that “respect for old category definitions” fades.

Mr. Nadella says he has been working to embed a new “cultural meme” in the company —something he calls a “growth mindset” — to make the company more flexible.

He credits Carol Dweck, a professor of psychology at Stanford University, for shaping his thinking. This cultural change, he adds, is “the existential thing” that will determine Microsoft’s fate.

The rise of AI will also be a test of the company’s ability to move faster. Under Mr. Nadella, it has moved to a new style of agile software development that involves making more continuous, incremental changes.

Microsoft executives certainly talk about AI as a work in progress, not a finished product. It is also likely to take years to realize the full potential of the technology. Mr. Shum predicts the AI wave will take two decades to play out, throwing up new products and services that haven’t been thought of yet.

“I don’t think it’s going to be just one problem, just one signature product. I think it will be many, many things,” he says.

Coming up with those breakthrough ideas will be a key test for the new, boundary-less Microsoft that Mr. Nadella has been trying to build.