Microsoft to axe 7,800 jobs from struggling mobile phone unit in new restructuring plan

Posted:
in iPhone edited July 2015
A strategic shift at Microsoft could see as many as 7,800 former Nokia employees lose their jobs this year while the software behemoth absorbs a $7.6 billion write-down on its troubled handset business, the company announced on Wednesday.

ElopFormer Nokia CEO Stephen Elop left Microsoft in June.


"We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family," Microsoft chief Satya Nadella said in a release. "In the near-term, we'll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility."

In addition to the write-down, Microsoft said that it forecasts a restructuring charge of $750 million to $850 million.

Microsoft spent just over $9 billion to acquire Nokia in 2013, with the intention of creating a standout first-party device business on top of its Windows Phone platform. The move didn't work out as planned, and Microsoft is preparing to move on with an expanded "Windows Everywhere" strategy that more closely mimics Google's approach with its Nexus brand.

In June, former Nokia CEO Stephen Elop left Microsoft as the company combined its OS and device divisions under Terry Myerson.

The latest round of job cuts comes almost exactly one year after Microsoft announced the largest layoffs in its history, shedding 18,000 jobs that represented more than 14 percent of its workforce at the time. The bulk of those cuts also came from Nokia, primarily factory positions.
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Comments

  • Reply 1 of 52
    thewhitefalconthewhitefalcon Posts: 4,453member
    And this is how a duopoly solidifies. :\
  • Reply 2 of 52
    dasanman69dasanman69 Posts: 13,001member
    And this is how a duopoly solidifies. :\

    MS has nobody to blame but themselves. They squandered a huge lead in the smartphone market, and continued to make mistakes after the obvious paradigm shift Apple created.
  • Reply 3 of 52
    adrayvenadrayven Posts: 460member
    You can bet Stephen Elop walked away with a Gold, Dimond lined, parachute.
  • Reply 4 of 52
    zroger73zroger73 Posts: 778member

    iOS > Android >>>>>>>>>>>>>>>>>>>> Windows Phone.

  • Reply 5 of 52
    rogifanrogifan Posts: 10,669member
    And this is how a duopoly solidifies. :\

    Consumers spoke. They're not interested in Windows phone. And what OEM was going to jump on the bandwagon once Microsoft purchased Nokia's phone business? Microsoft should just focus on making great apps for iPhone and Android.
  • Reply 6 of 52
    freerangefreerange Posts: 1,594member
    rogifan wrote: »
    Consumers spoke. They're not interested in Windows phone. And what OEM was going to jump on the bandwagon once Microsoft purchased Nokia's phone business? Microsoft should just focus on making great apps for iPhone and Android.

    ...and the Mac. (Let's not forget the enterprise market, their last stronghold that has Macs being more widely adopted, and which need to operate within legacy systems. No matter how awful those systems are!)
  • Reply 7 of 52
    rogifanrogifan Posts: 10,669member
    Wow Microsoft has had some pretty big write offs in recent years. $6.2B for aQuantive, almost $1B for Surface and now $7.6B for Nokia. The stock is up today as I'm sure investors are happy about the layoffs but when does Microsoft get punished for making boneheaded decisions in the first place?
  • Reply 8 of 52
    rogifanrogifan Posts: 10,669member
    freerange wrote: »
    ...and the Mac. (Let's not forget the enterprise market, their last stronghold that has Macs being more widely adopted, and which need to operate within legacy systems. No matter how awful those systems are!)

    Yep. I left that off as these cuts are all centered around the mobile space. I don't expect Microsoft to give up on Surface (especially when iPad sales growth seems to have stagnated) but I don't see what the point is sticking it out with phones. The only traction they had was in the low end but that seems like more trouble than it's worth.
  • Reply 9 of 52
    markbyrnmarkbyrn Posts: 646member

    Amazing to read the Windows centric sites as they bend over backwards to find the goodness in this axe cutting but how exactly will these drastic cuts suddenly help them make a compelling phone and app eco system that's going to drive the masses to switch over from Apple or Google? Sorry Windows fan boys, but it's clear they're throwing in the towel and making sure the fiscal footprint for this dying end of their business is as tiny as possible.  

  • Reply 10 of 52
    bigpicsbigpics Posts: 1,397member
    Quote:
    Originally Posted by Rogifan View Post



    Yep. I left that off as these cuts are all centered around the mobile space. I don't expect Microsoft to give up on Surface (especially when iPad sales growth seems to have stagnated) but I don't see what the point is sticking it out with phones. The only traction they had was in the low end but that seems like more trouble than it's worth.

    The point is that mobile devices as primary computing devices are eclipsing (or have already eclipsed) personal computers for many to most uses, and as tech advances, whatever mobile form factors evolve to be, the trend will only continue for a good while. 

     

    Which could leave MS - except for apps (and for now as apps evolve as well and there are evermore "office a-likes" and other apps in the categories they play in) - totally out of the mainstream user action and the company (other than XBox) in a role more like IBM found itself not that long ago when it exited the PC business, i.e., totally tied to the enterprise market. (Plus, for any who don't know, the once synonymous with "computing" Big Blue has not been - and is not - doing well at all - with some of its hopes clinging to an Apple-supplied lifeline).

     

    So mobile is still strategic for MS.  As without a presence in mobile computing, however good (or bad) Windows 10 is, it's otherwise only on a platform going forward into a box canyon.  And the "semi-universal binaries" promised by Win 10 could be useful in bringing about a long-term future where there's still a healthy share of devices running Windows, even after all the missteps and well-entrenched competition, as is the fact that Android is generally regarded as not ready for Enterprise prime time yet. 

     

    And the gist of the article implies that as Win 10 rolls out, MS seems likely to concentrate on returning to a smaller lineup of higher-end ("Nexus-like") devices while encouraging OEMs to fill out the lower tier.

     

    Could be their last whistle past the consumer and end-user computing graveyard, but if Nadella's made the call without a gun right to his head, I'm impressed by his acumen so far, and have to weigh that in considering in considering it their likely best of a menu of bad choices....

  • Reply 11 of 52
    karmadavekarmadave Posts: 368member

    Translation. Our mobile strategy has failed and we are going back to being a software company and selling subscriptions of Office Suite on other mobile platforms (iOS and Android). My prediction is they find a buyer for the Nokia handset division similar to what Google did with Motorola. At least their new CEO had the foresight to stop the bleeding...

  • Reply 12 of 52
    anantksundaramanantksundaram Posts: 20,225member
    rogifan wrote: »
    Wow Microsoft has had some pretty big write offs in recent years. $6.2B for aQuantive, almost $1B for Surface and now $7.6B for Nokia. The stock is up today as I'm sure investors are happy about the layoffs but when does Microsoft get punished for making boneheaded decisions in the first place?

    Markets also like it when you let go. Similar thing happened with Google and GE. It signals that this management is willing to make some hard decisions that Ballmer and his group were not.
  • Reply 13 of 52
    They took advantage of Nokia's management's ineptitude to buy their patent's portfolio. The only reason they didn't immediately sack everyone is more likely related to labor laws than anything else.
  • Reply 14 of 52
    anantksundaramanantksundaram Posts: 20,225member
    karmadave wrote: »
    Translation. Our mobile strategy has failed and we are going back to being a software company and selling subscriptions of Office Suite on other mobile platforms (iOS and Android). My prediction is they find a buyer for the Nokia handset division similar to what Google did with Motorola. At least their new CEO had the foresight to stop the bleeding...

    Out of nowhere, Microsoft has also suddenly become a huge player in the cloud. They're giving companies like Amazon a real run for the money. This is certainly one area in which Apple has not excelled thus far, despite the fact that it's been dealing only with the consumer, as opposed to enterprise, data and media thus far.

    From what I hear -- I am no expert -- Nadella has been been purposeful and aggressive on the cloud front.
  • Reply 15 of 52
    rogifanrogifan Posts: 10,669member
    They took advantage of Nokia's management's ineptitude to buy their patent's portfolio. The only reason they didn't immediately sack everyone is more likely related to labor laws than anything else.

    Considering the amount of the write down clearly the patent portfolio wasn't worth much.
  • Reply 16 of 52
    karmadavekarmadave Posts: 368member
    Quote:

    Originally Posted by anantksundaram View Post





    Out of nowhere, Microsoft has also suddenly become a huge player in the cloud. They're giving companies like Amazon a real run for the money. This is certainly one area in which Apple has not excelled thus far, despite the fact that it's been dealing only with the consumer, as opposed to enterprise, data and media thus far.



    From what I hear -- I am no expert -- Nadella has been been purposeful and aggressive on the cloud front.



    The emergence of 'The Cloud' is THE most disruptive trend in the last 10 years. Microsoft has been very aggressive in moving their business customers to a cloud-centric model before Amazon and Salesforce do. 

     

    Apple uses their Cloud-based offerings to add value to their (consumer) ecosystem with limited success. I personally think Apple has finally got it mostly right, but their focus will always be on adding value to their consumer ecosystem... 

  • Reply 17 of 52
    karmadave wrote: »
    Translation. Our mobile strategy has failed and we are going back to being a software company and selling subscriptions of Office Suite on other mobile platforms (iOS and Android). My prediction is they find a buyer for the Nokia handset division similar to what Google did with Motorola. At least their new CEO had the foresight to stop the bleeding...

    Who's left that might want what's left of Nokia? Google sold Motorola but had to leave a lot of blood on the floor... If MS finds a fool to buy what's left of Nokia, they are gonna have to bleed a few billion more... If MS is smart they will just get out of the phone business. They have no traction and I don't see any thing in the immediate future that could add traction... MS is on a slopped greased surface and not a rope in sight...
  • Reply 18 of 52

    People all over are taking this wrong. Nokia made a ton of different handsets with one thing changed between them. Microsoft is doing this to make their phone lineup simpler/. instead of 10 different models of phones they will make 2 or three. If your cutting down the phone models to just 2 or 3 you can let go a ton of staff. 

  • Reply 19 of 52
    dasanman69dasanman69 Posts: 13,001member
    adrayven wrote: »
    You can bet Stephen Elop walked away with a Gold, Dimond lined, parachute.

    As big as your 'do :lol:
  • Reply 20 of 52



    Anyone remember this IDC prediction?

     

    http://www.techhive.com/article/230151/idc_windows_phones_to_overtake_iphone_ios_by_2015.html

     

    (Thanks to someone on another site for the link...)

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