18,000 employees (12,000 Nokia) will find out their fate in the coming weeks, as Redmond lays off a little over 10% of its workforce.
Satya Nadella said recently that Microsoft’s changing its vision. The company intends to become a “cloud-first and mobile first” company, said Nadella some days ago. It is this vision that, unfortunately, will bring layoffs for the company that intends to rebrand itself in days to come.
Microsoft, as you know, just purchased Nokia’s mobile division, and the sale has been made official.
Unfortunately, with acquisitions come layoffs – and Nokia is the unfortunate victim in this. Microsoft intends to lay off 18,000 employees, but 12,000 of them (two-thirds) are Nokia employee layoffs. This seems to make little sense to those who’ve been keeping up with Microsoft’s actions as of late. It’s been assumed that the Nokia mobile division acquisition was done to keep Nokia from being a lethal competitor to Microsoft’s mobile ambitions. And, since Nadella has said that Microsoft will become a “mobile-first” company along with its new commitment to the cloud, it seems as though Nadella would try to maintain Nokia’s mobile division.
According to some tech analysts, the layoffs have to do with “redundancies” in the factory and office, but this seems to be too broad of a claim. After all, it doesn’t seem likely that “redundancies” are the only factor affecting the layoffs. And, while Microsoft acquired Nokia’s mobile division to unify Windows Phone and place itself at the helm of anything involving Windows mobile, this doesn’t justify the unemployment of a division that was attractive to Microsoft to acquire in the first place.
Could a recession be at play here? Yes, it’s highly likely that a large part of the unemployment decisions Microsoft will make over the next few weeks relate to the company’s economic succession. It’s no secret that Microsoft hasn’t received the warm reception in the US as it’d hoped, and layoffs are part and parcel of what happens during an economic recession. It is also the case that CEO Satya Nadella looks to take some financial resources away from some projects under Microsoft that haven’t been lucrative and allocate those resources toward projects that will be, such as its cloud software and mobile hardware.
Nadella’s mobile and cloud commitments show that the times have indeed changed. Microsoft was once the PC powerhouse, and Windows desktop computers running Windows 95/98 software were the norm. Today, things have drastically changed: as the world turns mobile with each passing day, Microsoft’s been struggling to find its relevance in the post-PC era (to use a phrase from former Apple CEO Steve Jobs), and the need to stay relevant is at the center of the economic changes coming from inside the Redmond company.
As if these changes are bad enough, Microsoft also looks to axe its Xbox Entertainment Studio, created last May to bring Xbox games to television as live shows. The idea is creative and quite original, but Microsoft’s financial troubles indicate that the company must consolidate its resources at this time. Unfortunately, this means that the Xbox Entertainment Studio must go, but President and Vice President Nancy Tellem and Jordan Levin will remain with Microsoft. The fate of the other Xbox Entertainment Studios employees isn’t as certain. Microsoft’s staying committed to its Halo TV show series as well as Signal to Noise, an Atari history show, but some other shows won’t be so fortunate as to remain.
Entertainment and sports apps on Xbox and Microsoft looks to continue innovating for its Xbox entertainment, the company stated.
Economic recession is at play here, and Microsoft’s feeling the effects of it – particularly in light of its $7.2 billion acquisition of Nokia’s mobile division. That, coupled with slow sales of Windows Phone and Surface tablets, made these financial layoffs inevitable. Nadella’s embrace of mobile and cloud shows Microsoft’s commitment to relevance, but taking Windows Phone and Windows OS back to the top won’t happen overnight. Growth can’t come apart from the change, and Microsoft’s changes are admirable – at least for some. Unfortunately, change must bring joy as well as pain, and 18,000 employees will, over the next few weeks, find the pain of knowing that their long stints at Microsoft have come to an end.