A couple of weeks ago Satya Nadella, the current CEO of Microsoft, sent an email to the entire Microsoft team which contained Satya’s visions for the company, along with a new mission statement:
To empower every person and every organization on the planet to achieve more.
The email was not all all sunshine and roses though. Satya made clear that there were going to be some major changes to the company and “tough choices” were going to be made. Today we found out what one of those tough choices Nadella wrote about is.
Microsoft is going to cut about 6 percent of its workforce, almost 8000 jobs, mainly in its mobile phone department.
Today, we announced a fundamental restructuring of our phone business. As a result, the company will take an impairment charge of approximately $7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services business in addition to a restructuring charge of approximately $750 million to $850 million.
I am committed to our first-party devices including phones. However, we need to focus our phone efforts in the near term while driving reinvention. 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.
By the sound of things, Microsoft does not want to push itself into the mobile phone market, but to create an ecosystem that will be complemented by a Windows Phone. In short this is not even close to the end of Windows Phone, Microsoft is just taking a step back from the competition that is the smartphone market. Parallels between the Microsoft-Nokia acquisition and the Google-Motorola relationship are actually fairly profound and questions of what is to come of the once Nokia, now Lumia, brand are certainly starting to emerge.
Microsoft also wants to emphasize advertising using Bing! as a catalyst.
Bing will now power search and search advertising across the AOL portfolio of sites, in addition to the partnerships we already have with Yahoo!, Amazon and Apple. Concentrating on search will help us further accelerate the progress we’ve been making over the past six years. Last year Bing grew to 20 percent query share in the U.S. while growing our search advertising revenue 28 percent over the past 12 months.
What are your thoughts on Microsoft’s refocus away from the smartphone market to advertising? Do you feel it is a long time coming or that Windows phone has a defined place in the smartphone market?