Microsoft has finally decided to put the unprofitable Nokia deal behind in a bid to (again) start fresh in the smartphone industry, as it prepares for the new Windows 10 era.
Today, the company announced that it will write down $7.6 billion in assets acquired from the Nokia buyout deal and slash its workforce, mostly from the phone division, by 7,800 employees. Furthermore, it will spend between $750 and $850 million on restructuring efforts.
The changes were announced in by the CEO Satya Nadella in a memo to his employees. The gargantuan losses are incurred mainly because Microsoft failed to gain any substantial market share after completing the Nokia deal, and is now opting rather to accept a one-time charge.
Following today’s announcement, Microsoft will be focusing primarily on finding partners to make Windows ecosystem larger. It will continue to make phones itself too, but we’ve already seen how that turned out.
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.
Furthermore, all the company’s efforts will now be directing towards three types of users: business users who want management, security and productivity services; value phone buyers who need communications services and Windows fans who want flagship phones.
Redmond will be assisting its employees in finding new employment opportunities. With Bing maps, it will continue its partnership with the transportation network company Uber, while in advertising, it will continue to collaborate with AOL.
There will be drumrolls over this news as things haven’t turned out of the blue. Windows Phone, for one, hasn’t really made money in its lifetime for Microsoft. The arrival of Windows 10 Mobile further makes it realize that a radical change is required for things to work well.
In the end, it is a brave and courageous move on Microsoft’s part to not prolong an atrophying component and move on. Satya Nadella has made sure that the rather direction-less company he got finally gets a target and wants to focus his “phone efforts in the near term while driving innovation”.
Not a bad way to start a new era.