Microsoft has followed up their email on the new productivity focus of the company with a far more alarming set of messages from Satya Nadella and Stephen Elop. It looks like a lot of people will be losing their jobs.
Just a few months after taking up Nokia and beginning their own Android experiment, Microsoft is cutting back on funding for the project. That includes the slashing of 18,000 jobs, a massive cut that could begin as early as this week. A full 12,500 of those jobs are coming directly from the merged Nokia workforce.
This is sure to be a devastating blow from those who moved into Microsoft with hopes of maintaining a position post-buyout. Given the short duration of their experiment into Android phones, we can only expect that the coming earnings figures on Tuesday will be more than a little on the side of disappointing. At least when looking at their expectations for Nokia in the coming years.
Now that Android is out, the focus is probably going to be going back to Windows Phone. Nadella’s comments regarding the need to integrate all services would have been a death knell for Nokia on its own. Android wouldn’t fit into such a business model, which would isolate their products and encourage users to go full monty with Microsoft.
What do Nadella and Elop have to say about the workforce cuts? They are trying to downplay it, calling it a “reduction”, as though this happens every day. But it doesn’t change that fact that it is the most extreme layoff in the company’s history. Never before have they let so many go at once, much less so soon after an acquisition. Could this be buyer’s remorse?
Instead of giving much information about the layoffs, which is treated almost casually, they are focusing on the “future innovation” that they are seeking. For example, they are going to make driving Windows Phone not as part of the high end market (which has flopped numerous times in the past), but as the new affordable smartphone market. A move that was behind the acquisition of Nokia, in the first place.
Seeing them target that market exclusively, rather than take a two-tiered approach by releasing an Android X2 and similar lines, plus the Windows Phone at the higher end, definitely shows the way Nadella is tightening the belt and creating a cleaner business model than his successor. Since the retirement of Bill Gates, Microsoft’s focus has been all over the place.
Anyone in the company who has questions has been invited to take part in a Q&A with Nadella about the changes that are to come. It is going to be held tomorrow, and it should be interesting to see what is said and addressed. Plenty of people are sure to be angry; they are losing jobs that they were told would be secure following the merger. A lot of betrayed people from Nokia should definitely attend.
But now comes one of the other not-so-shocking revelations: Xbox Entertainment Studios is being axed. I don’t know if anyone really expects Microsoft to stick with anything but gaming as a focus for the console. Every email from the time Nadella was announced as CEO has been talking about a “return to core” for the company. Focusing on original digital content that isn’t a game is counter-intuitive to that process.
So, what happens now? Real details are supposed to be coming after the figures are released on Tuesday. But we can figure a few things from these revealed plans:
1) The Android device was nothing but a novelty while they made their plans for the Windows Phone, and decided what to do with popular lines like the Lumia.
2) Their dishonesty in the job cuts is going to be a slap in the face to those who might have just been starting to feel like they had a chance of sticking around.
3) They weren’t kidding when they said that mobile and cloud were now the primary focus of the company, meaning the era has completely shifted with Microsoft, and the company has become something very different.
4) Nancy Tellem, the former exec at CBS who was hired for Xbox Entertainment Studios, is going to be pissed.
In spite of my cynical tone, and the shame about the job cuts, it is understandable why all of this is happening. Microsoft is in a rather chaotic state, courtesy of Ballmer who appeared to lose his mind in his final year as CEO. The restructuring, lack of concentration on specific products, and overall ineptitude that had been going on behind the scenes gives Nadella a lot to fix.