Ten months after Microsoft wrote-off its Nokia acquisition, the company has now announced that it is effectively out of the consumer phone business. It is cutting 1,850 jobs, and setting aside almost a billion dollars to cover the costs of exiting the business.
Microsoft on Wednesday announced plans to streamline the company’s smartphone hardware business, which will impact up to 1,850 jobs. As a result, the company will record an impairment and restructuring charge of approximately $950 million […]
“We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability, and consumers who value the same,” said Satya Nadella, chief executive officer of Microsoft.
The company recently saw its market share fall below 1%. While Microsoft is – for now – insistent that it has a future in the corporate smartphone business, the reality seems doubtful …
In a memo to all Microsoft employees (below), Windows and Devices unit head Terry Myerson gave no specifics about the company’s future plans for smartphones in the enterprise market, saying only that ‘we’re scaling back, but we’re not out.’ With no new products on the horizon, and a market share so small it’s barely measurable, it’s hard to see this move as anything other than one small step away from exiting the smartphone business altogether.
It’s worth recalling that Microsoft said last summer that it would be focusing on both entry-level smartphones and flagships, and it’s already abandoning half that plan. Microsoft last week sold the Nokia name to a company that will use Foxconn to build Nokia-branded Android smartphones.
While Microsoft may launch a Surface Phone to match the branding of its tablet and laptop range, the chances of that being the company’s saviour in the smartphone business seem slim.
In addition to competition from Android, an Apple partnership with enterprise software giant SAP, focused on boosting iPhone and iPad usage in the workplace is going to further reduce Microsoft’s chances of success in the enterprise sector.
You can read the full text of the memo to all employees below (via Re/code).
To: Microsoft – All Employees
From: Terry Myerson
Date: Wednesday 5/25, 2AM Pacific Time
Subject: Focusing our phone hardware efforts
Last week we announced the sale of our feature phone business. Today I want to share that we are taking the additional step of streamlining our smartphone hardware business, and we anticipate this will impact up to 1,850 jobs worldwide, up to 1,350 of which are in Finland. These changes are incredibly difficult because of the impact on good people who have contributed greatly to Microsoft. Speaking on behalf of Satya and the entire Senior Leadership Team, we are committed to help each individual impacted with our support, resources, and respect.
For context, Windows 10 recently crossed 300 million monthly active devices, our Surface and Xbox customer satisfaction is at record levels, and HoloLens enthusiasts are developing incredible new experiences. Yet our phone success has been limited to companies valuing our commitment to security, manageability, and Continuum, and with consumers who value the same. Thus, we need to be more focused in our phone hardware efforts.
With this focus, our Windows strategy remains unchanged:
1. Universal apps. We have built an amazing platform, with a rich innovation roadmap ahead. Expanding the devices we reach and the capabilities for developers is our top priority.
2. We always take care of our customers, Windows phones are no exception. We will continue to update and support our current Lumia and OEM partner phones, and develop great new devices.
3. We remain steadfast in our pursuit of innovation across our Windows devices and our services to create new and delightful experiences.Our best work for customers comes from our device, platform, and service combination.
At the same time, our company will be pragmatic and embrace other mobile platforms with our productivity services, device management services, and development tools — regardless of a person’s phone choice, we want everyone to be able to experience what Microsoft has to offer them.
With that all said… I used the words “be more focused” above. This in fact describes what we are doing (we’re scaling back, but we’re not out!), but at the same time I don’t love it because it lacks the emotional impact of this decision. When I look back on our journey in mobility, we’ve done hard work and had great ideas, but have not always had the alignment needed across the company to make an impact. At the same time, Ars Technica recently published a long story documenting our journey to create the universal platform for our developers. The story shows the real challenges we faced, and the grit required to get it done. The story closes with this:
And as long as it has taken the company, Microsoft has still arguably achieved something that its competitors have not… It took more than two decades to get there, but Microsoft still somehow got there first.
For me, that’s what focus can deliver for us, and now we get to build on that foundation to build amazing products.