Microsoft is rebooting its phone business, writing off $7.6 billion from last year’s acquisition of Nokia and laying off thousands of workers in USA and Finland. Instead, it’s a sign of Microsoft cutting the fat, and becoming a more reactive, focused organisation.
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A ex- CEO of Microsoft Steve Ballmer bought Finland’s Nokia, as the windows phone has battled to beat with competitors like, Apple’s iPhone, and Google’s Android smartphone. But Microsoft hasn’t given up on Windows Phone.
“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”, said Nadella, addressing the job losses.
According to The Telegraph, the recent job cut from Microsoft’s hardware division means that the company is gearing towards a future focused mainly on selling software.
“The new CEO has got to right the ship”, agreed David Mitchell Smith, an industry analyst with the Gartner research firm. Microsoft has launched seven low-end Lumia Windows Phones, none of which has gained any kind of widespread success.
“It’s a headache that Nadella inherited”, said Daniel Ives, an analyst at FBR Capital Markets.
Microsoft wants the windows phone to become part of Windows 10 ecosystem that include desktops, laptops, tablets and other devices that can run Windows. However, we need to focus our phone efforts in the near term while driving reinvention.
Another technology company AOL will be hiring 1,200 employees once it takes over the web advertising business, quite a striking contrast to what Microsoft is doing.
The move wipes out out almost the entire value of a business that failed to gain any market share whatsoever since it was acquired past year. The company owned more than 118,000 employees worldwide, at the end of March. The 7,800 cuts announced Wednesday, which mainly come from smartphones, are in addition to those 18,000.
Microsoft is also set to incur restructuring charges of about $750-$850 million, stating that it will provide more information about all charges in its July 21 announcement of fourth-quarter earnings.
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In a letter sent to all his employees in June, Nadella gave a vague warning of “tough choices in areas where things are not working”.
