Microsoft said it would also write down about $7.6 billion related to its Nokia business.
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After its ill-fated Nokia acquisition brings the company an unexpected ill luck which is causing to 7,800 layoffs, Microsoft’s success seems to hinge on the software maker’s ability and self-abnegation to convince developers to create apps for the phone version of Windows 10.
“I don’t take changes in plans like these lightly, given that they affect the lives of people who have made an impact at Microsoft“, Nadella said.
The company announced last month that Stephen Elop, the ex- top boss at Nokia, would leave. The further reduction of 7,800 employees significantly reduces number of employees transferred from Nokia to Microsoft.
Last month, Microsoft decided to shift the display advertising business over to AOL, and plans to transfer its imagery acquisition operations to Uber.
Wall Street seems to prefer Nadella’s strategy of focusing on software and Internet services.
The news came as little surprise to industry watchers. “They were heading in some directions that needed course correction, and he’s doing it”. Microsoft may have a chance to play here, too.
The move is a drastic reminder of the company’s struggles in the smartphone space. Plus, the handsets released until now don’t offer high-end features, and Microsoft definitely needs a flagship to be launched alongside Windows 10 Mobile.
Nadella said the changes in Microsoft’s phone business do not signal the company moving away from making first-party devices. His focus, however, is on driving mobile efforts in the near term while prioritizing reinvention. In short this is not even close to the end of Windows Phone, Microsoft is just taking a step back from the competition that is the smartphone market. Each announcement involved the transfer or layoff of Microsoft employees.
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In the longer term, he said, Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly and it will not only focus on mobile phones but on entire range of devices. This major charge comes on the heels of an addition restructuring charge between $750 million and $850 million that the company already has to deal with.
