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Nadella's Microsoft: Headed in the Right Direction?

NEW YORK ( TheStreet) -- New CEO Satya Nadella took to the stage at  Microsoft's (MSFT - Get Report) "Build" Developer Conference on Wednesday in San Francisco for the first time, and asked the crowd to stick with his company. He told them good things were on the way. Judging by what was announced, it looks like Microsoft could be headed in the right direction.

Microsoft shares were losing nearly 1% to $40.95 in early New York trading on Thursday.

Beginning on April 8, Microsoft will begin rolling out a free refresh for its desktop/laptop/tablet operating system software called Windows 8.1 Update (it had been codenamed Windows Blue). In reaction to millions of complaints, the company is adding a number of new features to make Windows easier for fans of keyboards and mice. At the same time it will also maintain what Microsoft believes are the benefits of the Windows 8 touchscreen interface.

The biggest news is the return of the old Windows "Start" menu. Based on the demonstration, the new Start button will provide users with a pop-up version of the popular menu as it looked in Windows 7 but now also featuring miniature "live tiles" along the side. Similar start buttons will soon be found on Microsoft device screens of all sizes.

The new version of Windows 8.1 will also allow applications to once again run inside separate windows, the reason Microsoft called its OS Windows nearly 20 years ago. Both of these additions will be added in yet another update promised for later this year.

All Windows products -- from PCs to tablets to smartphones -- will take advantage of an improved Internet Explorer 11. The upgrade for the Web browser was announced but few details were shared.

As had been rumored for months, Windows smartphone will also be getting a major update in the next few weeks. Joe Belfiore, Microsoft vice president, announced Windows Phone 8.1 will bring a number of new features to the platform -- the flashiest of which will be "Cortana" Microsoft's version of a voice-activated personal digital assistant. Think of it as the company's answer to Apple's (AAPL - Get Report) "Siri" and Google (GOOG) "Now."

Under development for more than two years, Cortana (the name is based on a character from the "Halo" video game) will assist you with information searches as well as parse all your personal information to help deal with your everyday life, all accomplished via voice commands. The demonstrations showed Cortana to be a slick contender.

Windows Phones will also have updated calendars, enterprise user support for VPN, an improved Skype interface, a more application-centric Windows Phone store as well as a new predictive keyboard feature very reminiscent of the "Swype" system popular with Android users.

Three new Nokia Windows 8.1 phones were also announced at the gathering -- the inexpensive Lumia 630 (one SIM) and 635 (dual SIM cards) coming to T-Mobile (TMUS) and the Lumia 930 -- a worldwide version of Verizon's (VZ) new Lumia Icon flagship phone.

The most interesting announcement concerned what the company charges for its Windows software. Microsoft said it will stop charging for Windows OS on devices with screens smaller than 9 inches. That means there's a real possibility that future Windows-powered tablet and smartphones could be coming down in price, allowing Windows products to better compete with other free OS devices, namely those running on Android.

-- Written by Gary Krakow in New York.

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Gary Krakow is TheStreet's Senior Technology Correspondent.

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