Microsoft writes off Nokia deal; 7,800 mobile division jobs cut

Back in late June, Microsoft CEO Satya Nadella stated in a memo that the company was going through an indecisive period and some ‘tough choices’ were needed to be made in areas that were not working.

Now the company has announced 7,800 job cuts from the mobile division working on the Windows Phone hardware. In an email sent to the staff, Nadella said – “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,” Nadella said. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”

The company has also planned to write off $7.6 billion from the acquisition of Nokia, despite it only paying $7.2 billion for the company in 2014.

The company has also said that the future for Windows Phone remains unclear.

Nadella said that in the near term the company will run a “more effective” phone portfolio” but that doesn’t exactly throw the company’s weight behind the platform.

The move won’t give partners reassurance that the platform is a good choice to build new hardware or apps for in the future. Nadella does hint that the company will take a “long-term” approach with phones, however.

An interesting perspective has been laid down by Warwick Business School faculty Professor Mark Skilton.

“The mobile phone market has gone. Nadella realises this and is focusing on building integrated cloud platforms of services to ‘join up the dots’ of carriers, content and mobile devices. This is major surgery that is long overdue. Without diagnosing the failing of the Nokia technology platform investment, it’s clear Microsoft don’t have the scaling and user community to support it in a highly competitive market.

“The realignment of the Microsoft strategy is symptomatic of many large and smaller companies in 2015 looking to reposition themselves in the true digital economy. We have moved past the cloud computing, big data and social eras into a new ‘digital business’ landscape that is fully omni-channel – that is a seamless experience for the user on any device.

“This market is an estimated of $8 trillion opportunity as companies use mobiles, the internet of things and cloud networks to create a new customer experience.

“It looks like Nadella will bring a stronger focus on what Microsoft does well in its own backyard of cloud ecosystems. Many companies have similar issues and want to consolidate their IT services into a strong customer experience delivery, building ‘connected customer journeys’. What happens next for Microsoft will be critical in providing joined-up cloud and service delivery now that the ‘shop window’ – the mobile – has been tossed away.”