Plans are beginning to take shape now however, as today’s report outlines: “Nadella’s restructuring plan includes sharply reducing the number of models the company will release, now about one a week when counting variations for geographical markets”. He further added, “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”
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Microsoft now has about 118,000 employees worldwide.
The company paid $7.3 billion for Nokia’s phone business in April 2014, seeking to push rapidly into the smartphone sphere as its traditional software business slowed.
This is the e second-biggest layoff in Microsoft history after it previous year announced 18,000 layoffs, a lot of them also related to the Nokia acquisition. 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 is evident that Microsoft needs to revamp their business strategy, however only time will tell what their next step will be. Microsoft said last July it would slash up to 18,000 jobs.
Wednesday’s announcement has caused much speculation about what else Nadella may decide to throw overboard, from Microsoft’s customer relationship management division Dynamics (6 percent market share) to retail stores, Surface tablets, Bing search engine and the still-popular Xbox gaming console.
Nadella said that Microsoft transferred some of its imagery acquisition operations to Uber and it will continue to source base mapping data and imagery from partners.
Despite its appearance, Microsoft’s move to cut 7,800 jobs isn’t bad news for the company.
Nadella wrote in an email to employees that he is committed to Microsoft’s first-party devices, including phones. Additional associated restructuring expenses are expected to cost between $750 million and $850 million. It announced yesterday that it will lay off 7,800 employees, majority in its smartphone unit.
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“In the longer term, Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly”, wrote Nadella.
