Microsoft on Wednesday announced its plans to cut around 7800 jobs as a part of its reorganization strategy of the phone-hardware business it acquired last year from Nokia. In addition, the Windows maker also said it would write down $7.6 billion on its Nokia-handset unit, eradicating nearly all of its business value.
The company has also allocated a restructuring charge of approximately $750 million to $850 million as it reshuffles its phone-hardware business under CEO Satya Nadella.
“In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility,” Nadella said in the statement.
The move underscores the company’s shift in focus towards software and cloud services from hardware. The Windows maker has failed to get the desired traction for its Windows Phone platform, despite the acquisition of Nokia. Microsoft’s acquisition of Nokia’s handset business in 2014 was apparently the company’s ‘last ditch’ effort to gain users for its mobile platform, under Nadella’s predecessor Steve Ballmer.
Under the former CEO, Microsoft tried to move beyond its strength which eventually lead the company to suffer losses as it overpaid for the intellectual property it acquired. The overall market share of its phone business has been languishing at less than 5 percent since then, as Android and iOS still rule the roost.
“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,” adds Nadella.
Most of the lay-offs will be in Finland with 2300 job cuts, making it the second round of lay-offs since Nadella took over as CEO in February 2014. Back in July 2014, the Redmond giant said that it would slash around 18,000 jobs.
Since taking over as CEO last year, Nadella has been eying mobile and cloud services, while reorganizing his team to focus primarily on three areas – personal computing, cloud platforms and productivity and business processes. This also led Stephen Elop – former top boss at Nokia to eventually step down.
The Redmond giant plans to start rolling out its forthcoming Windows 10 OS on July 29, which for the first time will be offered as a free upgrade for the first year only (till July 29, 2016). The company this week rolled out three back-to-back builds of its Windows 10 for desktops and laptops, while it is also expected to roll out RTM build which will reportedly be heading to manufacturers on July 29th.