The company also followed up with a statement that the restructuring process will result in job losses for 7,800 employees, especially from the mobile device business. “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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The latest employment cull comes on top of 18,000 job cuts globally announced earlier this year by Microsoft.
The isn’t the first time Nadella has planned massive reforms at Microsoft; over a year ago, the CEO announced the company was cutting just under 20,000 jobs – the largest axing in Microsoft’s history.
AOL previously used Google to power its search engine.
But the question remains, where does Microsoft’s phone business go from here? The company said it will also write down almost $7.6B related to the company’s Nokia business. “Microsoft needed to update its operating system and get into mobile”.
In Ireland, Microsoft smartphones have around 10pc market share, thanks mostly to entry-level Nokia Lumia devices that cost under €150 on prepay plans.
The layoffs will primarily come in the troubled phone hardware unit but won’t be limited to that business. As of March 2015, Microsoft had 1, 18,000 employees worldwide.
The announcement of the job cuts is an acknowledgment that the software maker’s $7.2B acquisition of Nokia in 2013 was never helpful in its Windows Phone sales; hence, a new approach was necessary. The entire lay-off operations are expected to be completed by the end of the company’s fiscal year and with it, Microsoft hopes to shake off the doldrums and become a majority player in the smartphone market competing against the likes of Apple and Samsung.
Nadella in his email also added that the company has written down the value of the phone business acquired from Nokia, “We announced a fundamental restructuring of our phone business”.
Narrowing its focus in mobile will allow Microsoft to devote resources to the areas where it is strongest, such as software and cloud development, said Ben Bajarin, an analyst at research firm Creative Strategies, noting that its mobile phones served customers “from the low end to the premium tier”.
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Its hopes lie in the idea that a good Windows release would encourage people to use it more, which would in turn lead to more apps for the mobile version. Microsoft ultimately wanted to build an ecosystem that created customers that were loyal to a slew of its products, much as Apple and Google have done so successfully.
