Although it has some limited mobile presence, the Xbox brand is more often thought of as a box under our televisions, but Nadella believes that this will change.
A company memo from Nadella made it clear that he sees the Xbox brand as vital to a future where divisions between work and play become blurred.
"I also want to share some additional thoughts on Xbox and its importance to Microsoft," wrote Nadella in a public company memo.
"As a large company, I think it's critical to define the core, but it's important to make smart choices on other businesses in which we can have fundamental impact and success," he continued.
"The single biggest digital life category, measured in both time and money spent, in a mobile-first world is gaming.
"We are fortunate to have Xbox in our family to go after this opportunity with unique and bold innovation. Microsoft will continue to vigorously innovate and delight gamers with Xbox. Xbox is one of the most-revered consumer brands, with a growing online community and service, and a raving fan base.
"We also benefit from many technologies flowing from our gaming efforts into our productivity efforts - core graphics and NUI in Windows, speech recognition in Skype, camera technology in Kinect for Windows, Azure cloud enhancements for GPU simulation and many more.
"Bottom line, we will continue to innovate and grow our fan base with Xbox while also creating additive business value for Microsoft."
"While today many people define mobile by devices, Microsoft defines it by experiences. We're really in the infant stages of the mobile-first world," said Nadella
"In the next few years we will see many more new categories evolve and experiences emerge that span a variety of devices of all screen sizes.
"Microsoft will be on the forefront of this innovation with a particular focus on dual users and their needs across work and life. Microsoft will continue to vigorously innovate and delight gamers with Xbox."
PS and Xbox phoning it in
Nadella has rightfully identified the Xbox brand as a potential unique selling point for its devices - leveraging years of good will and an invested audience.
The strategy is already being pursued by rival Sony - whose PlayStation brand is being increasingly leveraged into its own mobile business.
So would you go for an Xbox gaming phone over an Apple device? Because Nadella is hoping that it would at least give you pause for thought.
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Patrick Goss is the ex-Editor in Chief of TechRadar. Patrick was a passionate and experienced journalist, and he has been lucky enough to work on some of the finest online properties on the planet, building audiences everywhere and establishing himself at the forefront of digital content. After a long stint as the boss at TechRadar, Patrick has now moved on to a role with Apple, where he is the Managing Editor for the App Store in the UK.