Microsoft said it would also write down about $7.6 billion related to its Nokia business.
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HYDERABAD:As part of a restructuring exercise, Redmond-based Microsoft Corp said it will layoff 7,800 employees globally, primarily in the phone hardware business.
Rather than catering to all smartphone shoppers, Microsoft said it would narrow its focus to three types of customers: business users who want strong management, security and productivity apps; buyers at the low end of the market looking for inexpensive phones; and Windows fans.
Microsoft is backing down from its attempt to become a major smartphone maker, saying today that it is moving away from efforts to build “a standalone phone business”.
In a memo distributed to Microsoft employees, Nadella remarks that he is “committed to our first-party devices including phones“, but consider the wider implications of the announcement.
However, Bloomberg’s sources claim that Microsoft expects to manufacture its own smartphones for at least another two years. It failed to attract users with its new invention, and its phone still covers less than 5 per cent of the market for mobile operating system. Now it is clear that the deal was a multibillion-dollar strategic blunder by Ballmer, who had envisioned it as a way to make Microsoft more competitive in the mobile market dominated by Apple, Google and Samsung. It will also need to fork out up to $850 million on restructuring. Last July, the Nokia acquisition led to 18,000 job cuts.
“This is a similar approach to the one we have taken with Surface, which has been very successful”.
In a press release, Microsoft said, “The new agreement enables the companies to use a broader range of each other’s technologies in their respective products through a patent cross license.” This is exactly what Microsoft needs to do to challenge the likes of Android and Apple.
Microsoft now has more than 118,000 employees.
“In the longer term, Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly”, wrote Nadella.
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We learned Wednesday that current CEO Satya Nadella is writing off that purchase to the tune of $7.6 billion.
