It appears that Microsoft is finally ready to admit that it has failed in the smartphone market. This Wednesday the company’s chief executive, Satya Nadella, announced major changes including the loss of up to 7,800 jobs and the writing off of $7.6 billion accounting charge, almost all of the money they paid for Nokia.
Nadella, since taking over from Steve Balmer last year has sought to distance himself and his company from many of the mistakes Balmer made. Last month he announced that Microsoft was selling the remains of it’s online display advertising business to AOL having already written off $6.2 billion against that. He also sent out an email to all employees saying that Microsoft would need to “make some tough choices in areas where things are not working and solve hard problems in ways that drive customer value.”
While they say they intend to continue making smartphones and that the Windows 10 rollout will go ahead on all devices including phones it’s hard to see how they will do so in house, with these layoffs on top of 18,000 last year again largely from the 25,000 people who joined from Nokia it’s hard to find anyone at the company who actually makes smartphones.
If they are staying in the smartphone market, they are going to face an even tougher fight, with fellow struggler Blackberry allegedly switching to Android and the bits of Nokia that they didn’t buy signalling an intent to return to phones when the “no compete” clause that was part of the sale expires. In fact it’s beginning to look as if Nokia may have had something like this in mind all along.
At the time of the sale Nokia, once the premier manufacturer of phones before they went smart, was doing increasingly badly, having switched from the outdated Symbian to Windows Phone under the guidance of former Microsoft man Stephen Elop, they found themselves the only producer of original, quality phones on the OS, while the other OEMs simply recycling last years Android phones with new software. This gave them tremendous influence over Microsoft and when the rumours started flying that Nokia was thinking of switching to Android, Microsoft did the only thing it could do to protect it’s already feeble market share, It bought out Nokia’s entire phone division along with access to (but not ownership of) Nokia’s large collection of related patents. This has allowed Nokia to restructure itself without having to layoff staff an close facilities itself and since many of the Microsoft layoff are in their home country of Finland they can have their pick of the people who will be looking for jobs in the area.
So, Microsoft is still in the mobile game and maybe Windows 10 will be the game changer they desperately hope it will be, with apps being able to run on pc, tablet and phone. If not then expect them to get out of phones for good by this time next year.