Microsoft has just recently announced that it plans to cut as much as 7,800 jobs as its phone hardware business undergoes massive restructuring “to better focus and align resources.” The said changes are expected to take place in the coming months. Meanwhile, the announcement of the job cuts was made to the company’s employees by Microsoft Corporation Chief Executive Officer Satya Nadella through an email.
In the email, Nadella begins, “Today, I want to discuss our plans to focus our talent and investments in areas where we have differentiation and potential for growth, as well as how we’ll partner to drive better scale and results. In all we do, we will take a long-term view and build deep technical capability that allows us to innovate in the future.”
The future is what has lead Microsoft to make a significant reduction in its job positions globally and mainly throughout its phone business. With regard to the job cuts, the company will also accrue a restructuring charge that can be anywhere between $750 million to $850 million. In addition to this, Microsoft Corporation has also admitted that it will be taking on an impairment charge that is worth approximately $7.6 billion. This is in relations to the company’s earlier acquisition of the Nokia Device and Services business. This seems to be a clear acknowledgement that the said acquisition – engineered by Nadella’s predecessor, Steve Ballmer- was a very expensive mistake.
Today, Nadella is focused on a new vision for Microsoft’s future. For starters, what he wants to make clear is that the company no longer just wants to build a successful phone brand. He wrote, “I am committed to our first-party devices including phones. However, we need to focus our phone efforts in the near term while driving reinvention. We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family.”
The Windows ecosystem is expected to be the focus of Microsoft’s relatively new Windows and Devices Group. And in fact, to sharpen this focus, Nadella has already identified three customer segments where they can “make unique contributions and where we can differentiate through the combination of our hardware and software.” These are the business customers, value phone buyers and loyal Windows fans. As Nadella believes, doing so will allow them to “centered on creating mobility of experiences across the entire device family including phones.”
Meanwhile, New York Times reports that the recent layoffs will also affect jobs in Nokia’s birthplace, Finland. Following the Nokia acquisition, Microsoft gained as much as 25,000 employees. Moreover, the Business Insider reports that the said job cuts will be done in addition to the 18,000 job cuts that Microsoft has announced last year. Majority of the said job cuts were to come from the Nokia business as well.