Armchair quarterbacking Microsoft layoffs: money, culture, and farewell to Nokia

This article may contain personal views and opinion from the author.

Now that all of us have had some time to digest Microsoft’s announcements to take the axe to a number of products, operations, and jobs, why not take a look at how it might impact mobile specifically, arguably the most important sector of industry and commerce today and in the foreseeable future.

Whenever two large companies merge, it is a virtual guarantee that there will be a trimming of the workforce. Right or wrong, like it or hate it, these cuts are part of the reason why such mergers take place: the company gets a bigger (and hopefully better) portfolio of products and services and thus it is able to provide more than if it had ventured to expand its offerings on its own.

The thing is, you do not need a human resources, or sales, or marketing department to be twice as big as it was to manage an employee base or portfolio of customers. The overlap of functions is a redundancy the company can pare down, and save some money in the process. This happened when Bell Atlantic and GTE merged to create Verizon. It also happened when SBC and BellSouth merged, reforming the current AT&T. It even happened when T-Mobile acquired MetroPCS (just think of what would happen if T-Mobile and Sprint tie the knot).  This is what will happen when Lenovo formally takes ownership of Motorola.

One culture over here, one culture over there

By outward appearances, the merger with Microsoft and Nokia Devices and Services was not really any different. Software, marketing, human resources, sales, research and development, ad infinitum, are all areas of that became overlapped and instantly redundant. The traditional model for such layoffs is that the acquired company generally bears most of the burden, but that is not an absolute. In the Microsoft-Nokia case, there was a lot of complementary talent too. However, anyone that thought there would not be layoffs following the merger were kidding themselves. These cuts are more than cost cutting, or even reorganization in the classic sense, it is clearly about culture too, and Nokia is being kept apart of, but from a distance.  Engineering gets a boost in Finland while stateside and elsewhere, the old Nokia is going to feel the pinch.

Good-bye Nokia (for real this time)

Microsoft did not get into much detail about where the cuts would be beyond the broad numbers, but of the 5,500 Microsoft employees being cut, about 1,400 will be in the Seattle area. Reports indicate that they will touch just about every department (though some more than others).

On the former Nokia side, it is going to hit manufacturing and professionals alike. The manufacturing facility in Komaron, Hungary will be hit the hardest, as that location will be shut down.

I will admit that I was surprised at how fast cuts would be implemented, and I was also surprised at how lopsided the layoffs would be. The biggest group out of the 18,000 announced cuts to feel the pinch, as we all know, are the 12,500 or so that came with Nokia Devices and Services, which accounts for half of the workforce that became Microsoft employees when the dust of the acquisition settled. My only hope is that they retain the talent that really delivered on the more recent devices Nokia had offered, especially in the camera department that brought us the stellar sensors found on the Lumia 925, 1020, 1520, Icon, and 930.

Even then, for all intents and purposes, this marks the end of an era, Nokia is no more.

Mobile loses

Other factors aside, the implications for mobile are significant, and I am not sure they are for the best. The survivors and casualties in the mobile segment are revealing to say the least. Seeing the Nokia X line of Android devices walk the plank does not surprise me, and their departure will not likely leave anyone in tears. While I was initially excited about the strategy the Nokia X might have pursued, as time went on, it became more apparent to me that they were a half-baked measures and it left Microsoft competing with itself.  Even from the “affordable” smartphone standpoint, they were redundant. The hot selling Lumia 520 and Lumia 620 series were better alternatives with Windows Phone, and the newer Lumia 530, Lumia 630, and Lumia 1320, provide even better coverage of the lower cost segment with better performance.

Cancelling the Asha and Series 40 feature phones did surprise me. These devices are a hit in developing markets, and while they do not necessarily fit the “Windows” motif, they were still a hook with which to build brand identity and loyalty. Some of these devices are a must in remote areas with unreliable (or non-existent) power grids (like Africa), like the Nokia 225. Yeah, I know it is not a sexy new Windows Phone with the latest Snap-this-HD-that-PureView-pizzazz, but it has a 36 day standby time, and you can talk continuously on it for almost 24 hours straight. Smartphones dream of battery life that can be measured beyond hours.

The focus on smartphones and abandoning lower-cost market-entry devices, indicates to me that Microsoft might even go a step further at some point, and not only shutter more manufacturing capacity, but trim the smartphone segment even further. That means possibly looking at the “high end” only.  Low-end units sell in greater numbers, but the profit margins are much thinner.  However, they are the key to developing markets like China, India, and Africa.  Competing on a low-cost basis is possible, even feasible.  In markets of such size, that is where you can increase the user base, and drive long-term growth.

“High-end” does not equal flagship

Currently, every major manufacturer has their absolute banner device. The HTC One (M8), Samsung Galaxy S5, LG G3, Sony Xperia Z2, and others, all represent that one device at the top of any given line-up. In the Windows Phone space, there are arguably three, the Lumia 1520, Lumia Icon, and Lumia 930 (okay, those two are ostensibly the same device).

These devices are meant to represent everything that can be accomplished within the bounds of technology and cost. We know that more is possible technologically, but not without introducing prohibitive cost. We also know that full featured, capable smartphones can be made and sold for under $100. While that latter formula will work in developing markets like India, Eastern Europe, parts of Asia, the Middle East, and Africa, it does not lend itself to the expectations of consumer-driven developed markets like North America, and the EU.

When reports started to circulate that the next generation Windows Phone flagship, codenamed “McLaren,” had been canceled, I was perplexed, especially since all other mobile device lines were on the chopping block, the landscape has room for a game changer.  McLaren was rumored to bring some very cool, new, edgy, and arguably gimmicky features with it.  That is what the flagships are though, they are what Lexus is to Toyota.

Word has it that while McLaren is off the docket, the technology is not.  That is good news from a cutting edge standpoint, but what does that mean for the next 12 months?  Jo Harlow, who heads up Microsoft’s phone business is reported as saying that there will be a new “high-end” Windows Phone announced “very soon.” Alas, if it is just a revised flavor of the excellent Lumia 1520, or Lumia 930, it is probably not going to wow very many people. Incremental upgrades are okay if you have dominating market-share (Apple, Samsung), but they can be brutal if you don't.  That is why LG and HTC are throwing the kitchen sink at their upgrades, resulting in stellar new designs for a single premium device.  Microsoft might want to consider adopting a similar idea.

It could be argued that it would be worse if Microsoft did not have something new announced and available by the holidays.  However, once the inevitable iPhone 6 fever catches on in the autumn, nothing short of bleeding edge gadgetry and hype is going to make people look, so that might be a hand well-played if we end up seeing the new standard bearer in the spring.

Same suspicions and criticism

The institutional critics of Microsoft’s acquisition of Nokia were not concerned about whether the companies could merge. The concerns were over how Nokia’s money losing business model with hardware was going to affect Microsoft’s bottom line (not that Microsoft’s hardware venture was making money either, see the Surface RT). Indeed, even if its best days were yet to come, Nokia was going to have some hard decisions to make.

As we saw from Microsoft’s recent financial statement, Nokia Devices and Services sapped $700 million, and $0.08 per share, on top of the $7+ billion spent to buy the company. There were no granular "forward looking" statements, but when you announce layoffs, a significant shutdown of manufacturing capacity and product lines before an earnings statement, and then that earnings statement shows a still hurting Nokia with no expectation to break even before 2016, I am thinking that Nokia was in far worse shape than any of us laymen-tech-media-types thought. In fact, I’ll argue that the surviving Nokia, the one still based in Finland, holds a bunch of patents, operates HERE Maps, and a profitable network switching and systems unit is in better shape without Devices and Services.

Now before you think I am about to get on the Stephen Elop-Trojan horse bandwagon, let me stop you. Everything, from the “Burning Platform” memo to his justifications to adopt Windows Phone were tough, distinct, and correct calls. There was no reversing the course before he took the CEO position. Nokia was on the way to becoming Finland’s BlackBerry. There is no disputing this. For all that though, Microsoft acquired an ailing partner, with some talent (those that aren't being dismissed), a few patents, some direct manufacturing capacity, and a brand name.

The brand is as important as the product

Even if Nokia is but a shell of what it once was, the name holds weight, as do the Nokia and Lumia brands. Compared to the Microsoft brand, whose last foray into mobile was the KIN, Nokia and Lumia are by far stronger brands in mobile.  By cutting out the Asha and Series 40 lines, Microsoft is also giving up on the delivery of hundreds of millions of units per year. That’s hundreds of millions, effectively ceding markets to the likes of Samsung.  Hundreds of millions of items that advertise an image, and a brand.

Nokia and Lumia are brands associated with cutting edge camera technology, placing massive sensors into packages beyond typical imagination. They are also brands that were first to market with ultrasensitive displays so they could be used while wearing gloves. These are the brands that delivered ClearBlack displays which, in my opinion, are unrivaled in outdoor visibility.  These can all be tied to Lumia, but that is tied to Nokia as well.

These are also brands associated with affordability, like the Asha 230, while still being packed with features. Yes, I know, it’s not sexy, but it’s compact, $60, dual SIM, touch-screen, and has a month’s worth of standby time

For the long run, I think the goal of uniting behind “Windows,” in whatever shape that takes, for mobile is the right idea. That said, I cannot help but think that the baby is getting thrown out with the bath water. The cloud is the future, and the future is mobile, and Microsoft has a robust and flourishing cloud offering, but the company is also passing out pink slips to half of a mobile centric business unit. Remember, Microsoft is now officially in the business of manufacturing its own stuff.  Like I wrote earlier, mergers create redundancies, thus layoffs are inevitable. I just cannot shake the feeling that Microsoft may have created a hindrance to the growth of the Windows Phone platform in the short term, and that does not bode well for the brand that literally gave it life.



1. XperiaFanZone

Posts: 2278; Member since: Sep 21, 2012

Nokia will very well stay alive. They aren't going anywhere.

12. WahyuWisnu

Posts: 1001; Member since: May 29, 2014

The real question is, when Microsoft gonna offload the nokia / microsoft mobile division, since it's competing with other WP manufacture. Or, when other manufacture gonna stop licensing WP because it can't compete with Microsoft/Nokia.

16. nokia12

Posts: 610; Member since: Nov 19, 2013

i think what microsoft is going to do is .. Offload the low end/mid range phones to their partners like htc, xolo , samsung , , micromax and only focus on high end they are forced to use this stratergy cause if they do anything else other than this they are doomed,,,

19. nokia12

Posts: 610; Member since: Nov 19, 2013

also this line " to his justifications to adopt Windows Phone were tough, distinct, and correct calls." i don't agree with it all and neither any rational, well informed tech person would even agree with .. there is more than enough reasons why was this was the worst decision and is evident in how the things have played out which was predicted by EVERY i Mean EVERY blog , pundit in 2011 itslef when the decision was taken ,,, and even after the results i don't understand how can anyone even for a second think it was the right decision from Nokia's perspective

20. WahyuWisnu

Posts: 1001; Member since: May 29, 2014

I agree with you. Nokia would be better if it wasn't lead by a clown. Nokia were about to introduce DUAL-CORE symbian phone, and Meego platorm, and it could choose Android instead of WP. And without the burning platform memo, nokia could milk the symbian on the transition to any platform (android or even WP). What elop did was to make sure symbian doesn't steal his WP spotlight.

21. WahyuWisnu

Posts: 1001; Member since: May 29, 2014

In a couple of months, micromax (along with spice and carbon) will be VERY HAPPY to sell US$100 android one device that gonna wipe the low end lumia series.

25. Finalflash

Posts: 4063; Member since: Jul 23, 2013

I don't think they are too excited about making the phones that won't make any real money while MS keeps the cash cows for themselves. Only an idiot would continue to compete against the makers of the OS themselves and likewise, we will probably see most of their partners distance themselves from the platform (if they haven't already).

2. cse.vicky unregistered

It is always remain to wonder what if Nokia went with Android ? [Given that Windows Phone was also not their own product, adopting Android is similar to adopting Windows Phone minus the huge money, but they got the Nokia brand and kicked the employees]

13. WahyuWisnu

Posts: 1001; Member since: May 29, 2014

Judging from Nokia X sales cannibalizing the Lumia 5xx & 6xx series. I think Nokia would be in better position.

3. 0xFFFF

Posts: 3806; Member since: Apr 16, 2014

Microsoft is what you get when a company has a monopoly for a long time. There's no smart people there, no passionate innovators, just greedy hipsters playing game of thrones for executive positions. For example, after spending years to establish a high standard of interaction quality -- hardware buttons, hardware camera shutter -- Microsoft is dumping this all into the ocean and making new WP models generic slabs. The government really needs to step in and break this modern day ATT up into a lot of little companies. It ultimately will be good for Microsoft, their shareholders, their customers, and the global tech market. The only people who would not benefit from a breakup are the stupid and lazy executives that currently run Microsoft.

5. Liveitup

Posts: 1798; Member since: Jan 07, 2014

Quit your trolling. The company that brought us Kinect, Flat UI, superb Surface 3 etc, have over 15 multi billion dollars businesses have no passion no innovation, you must have swallowed a crazy pill. Microsoft is leading, shares are growing faster than Google or Apple's at the moment. Go away troll, Microsoft changed the world of design language, the entire planet has adopted what MS first did, Metro aka Modern UI caught fire, MS is getting all its ducks in a row for an even better one experience, something that Google is playing catch up with its imitation One Android and Material design and iOS with its Innsbruck UI, both which by the way are clearly WP UI inspired.

23. 0xFFFF

Posts: 3806; Member since: Apr 16, 2014

"The company that brought us Kinect, Flat UI, superb Surface 3 etc," -- PrimeSense, an Israeli company, did the hard parts of making Kinect work. -- Flat UI was stolen from an outside company. -- Surface 3 is slower than Surface 2, often overheats, and is a jack of two trades master of none tweener device. And at the high-end, costs as much as a good notebook and a good tablet combined. You remind me of the former Iraqi Minister of Information. Perhaps you are some disciple of his? "On this occasion, I am not going to mention the number of the infidels who were killed and the number of destroyed vehicles. The operation continues" "We're giving them a real lesson today. Heavy doesn't accurately describe the level of casualties we have inflicted." "I can say, and I am responsible for what I am saying, that they have started to commit suicide under the walls of Baghdad. We will encourage them to commit more suicides quickly." "Their infidels are committing suicide by the hundreds on the gates of Baghdad. Be assured, Baghdad is safe, protected." "NO", snapped Mr al-Sahaf, "We have retaken the airport. There are NO Americans there. I will take you there and show you. IN ONE HOUR!"

27. Finalflash

Posts: 4063; Member since: Jul 23, 2013

I get the feeling that most MS fans are just Xbox fans who grew up within the last 10-15 years. It is as if they really don't know that MS existed before that time and literally has done nothing substantial for the last 25 years. They have stagnated HARD and only did well in the 90s because they adopted the bully everyone out of their market approach. That same approach is now failing hard and will now lead to the company's eventual downfall because they literally have lost all ability and passion to make a compelling product in any category.

31. ihavenoname

Posts: 1693; Member since: Aug 18, 2013

Also @Liveitupunderarock Android One is a program of low-end handsets, not design.

39. Liveitup

Posts: 1798; Member since: Jan 07, 2014

You just fail to see the future and what is happening. Android is supposed to be free and open when it keeps butting heads with its OEM's you read about it quite often. Last one was with Samsung and Google butting heads over Android wear. I know what Android one is about kid. You just fail to see what is happening.

37. Liveitup

Posts: 1798; Member since: Jan 07, 2014

let me correct you on your inaccuracies. 1. Kinect builds on software technology developed internally by Rare, a subsidiary of Microsoft Game Studios owned by Microsoft, and on range camera technology by Israeli developer PrimeSense, which developed a system that can interpret specific gestures, making completely hands-free control of electronic devices possible by using an infrared projector and camera and a special microchip to track the movement of objects and individuals in three dimensions, it wasn't done entirely by primesense, you just lack sense by the way Google don't buy companies right?. 2. Flat UI was done by an outside comapny - please tell us the name of the outside company you silly Troll. Metro is the codename of a typography-based design language by Microsoft.[1] A key design principle is better focus on the content of applications, relying more on typography and less on graphics ("content before chrome"). Early examples of Metro principles can be found in Encarta 95 and MSN 2.0.The design language evolved in Windows Media Center and Zune and was formally introduced as "Metro" during the unveiling of Windows Phone 7. Under the name Microsoft design language, it has since been incorporated into several of the company's other products, including the Xbox 360 system software, Xbox One, Windows 8, Windows Phone, and as well as imitated by other like Google for their Material design. Surface pro 3 is seen as a ground breaking tablet leagues ahead of what is offered out their. Writing nonsense at the end of your comment does not change the fact that you are incorrect in what you say overwhelmingly. 3.

40. 0xFFFF

Posts: 3806; Member since: Apr 16, 2014

"On this occasion, I am not going to mention the number of the Android users who were killed and the number of destroyed devices. The operation continues" "We're giving them a real lesson today. Heavy doesn't accurately describe the level of casualties we have inflicted." "I can say, and I am responsible for what I am saying, that they have started to commit suicide under the walls of Redmond. We will encourage them to commit more suicides quickly." "Their infidels are committing suicide by the hundreds on the gates of Redmond. Be assured, Redmond is safe, protected." "NO", snapped Mr al-Liveitupah, "We have retaken the mobile device market. There are NO Androids there. I will take you there and show you. IN ONE HOUR!" "We made them drink poison last night and Satya's soldiers and his great forces gave the Androids a lesson which will not be forgotten by history. Truly."

41. NokiaFTW

Posts: 2072; Member since: Oct 24, 2012

Yes, Microsoft has no innovative products. I mean look at Google, they created Android, the greatest OS on the planet. And their non gimmicky Glass, awesome product. And they also created Nest and other home automation products. Google also were the first to come up with a mail client for the masses and their very own office suite first. Google also created the best and most popular desktop OS first. They also came up with the modern/metro UI first on their mobile OS, and hence others are copying them. Google also created their very own video gaming console that is the best selling console in North America. Microsoft has bought all the products they currently offer, as opposed to Google, who have created all in house. Google > Microsoft.

43. Finalflash

Posts: 4063; Member since: Jul 23, 2013

Well, they did make Android the greatest OS on the planet, now the most popular OS by device in the world. MS made windows, which after 1992 has continued to be the worst OS on the market, but due to MS and their patents/muscle power has been the only choice (monopolists gonna monopolize). Their console is okay, the playstation consoles have largely been better, even in north america. MS still hasn't recovered their initial investment in consoles since the day they joined the race, Nintendo and Sony have fared far better in almost every regard. Trust me when I say this, the metro UI, isn't anything revolutionary so stop mentioning it like anyone actually cares. Flat UI design has been in web design for decades and it is largely used to make scaling easier. Metro is by far one of the ugliest flat UIs in history but the MS fanboys have made it some sort of last frontier of triumph for their platform of choice (what Apple fans have made Apple's profits for themselves). Email? They bought hotmail and before then a handful of people used outlook but got off that with web based email clients. MS changed hotmail to outlook like a year yea they bought that. Also, MS may not have bought everything they currently sell, but whatever they didn't buy, largely sucks. Please name one thing MS has actually done right in the last 2 decades (comparing to competitors) and I will believe that MS is Jesus reincarnate.

6. Liveitup

Posts: 1798; Member since: Jan 07, 2014

If anybody is a greedy monopoly is Google, please explain to us how after spending years to establish a high standard of interaction quality -- hardware buttons, hardware camera shutter -- Microsoft is dumping this all into the ocean and making new WP models generic slabs, give us the details and ill show you who is truly a greedy monopoly.

28. Finalflash

Posts: 4063; Member since: Jul 23, 2013

Right, Google, that one greedy monopoly that is giving away all their services for free while trying to upset the established douche bags in the telecoms, automobile and mobile industries (1 of which is done now, 2 to go). Don't point at MS, they literally have not been fighting monopoly/anti-trust legislation for decades now. No no, lets talk about that other company that started like 14 years ago and is now punching MS in their face.

38. Liveitup

Posts: 1798; Member since: Jan 07, 2014

You speak of MS in the 90's and early 2000;s everyone knows what you are saying if you look at Technology today Google is seen is being the evil monopoly.Google faces lawsuit over email scanning and student data. Sued for being anti competitive with Android etc Google Sued in Europe-Privacy Test Case It goes on and on.

42. Finalflash

Posts: 4063; Member since: Jul 23, 2013

The first one is irrelevant because there is no company that does not do that. Indexing is important when you have 10k+ emails per person these days and they have no evidence of Google using it for "evil" reasons other than conjecture. The second lawsuit is a joke because it was started by MS and oracle and such. It is primarily there because MS and oracle have a problem with Android, that being that it displaces their products in the market. Finally, the last article has always been a problem and Google has tried to comply with what it can but search is always going to involve privacy concerns and there is little they can do other than shut down shop to stop it (at which point MS would love to fill their shoes).

14. WahyuWisnu

Posts: 1001; Member since: May 29, 2014

When Microsoft did the monopoly and almost got split, I think that the worse decision that the US. Govt ever did. They should split it!!! But right now, I don't think it's necessary to split microsoft anymore. Microsoft is not a monopoly anymore. microsoft has become a niche in computing device market. Their latest product is full of failure (WP, Windows 8). They already loosing the server market, and mobile market, and their dominance in PC/Notebook were challenged by Chromebook. Right now is very critical moment for Microsoft. If they don't act right, they might became the Blackberry of Seattle.

4. Settings

Posts: 2943; Member since: Jul 02, 2014

They are to begin a clean start. Fire those not talented and greedy basterds and hire someone new with excellent experience. This has got to be part of a big plan. The big UNIFICATION plan. It all comes down to execution, which I got big hopes for Satya Nadela. With his lead WP skyrocketed its development while keeping it balanced with its big desktop and laptop counterparts. The thing is I am most sad is the ditching of Series 40. Nokia is known for having superb quality phones into entry level market. I mean they can drop the Asha platform but not the basic phone which had made history in making excellent battery life.

15. WahyuWisnu

Posts: 1001; Member since: May 29, 2014

Microsoft really need to fired the baldy monkey (Balmer) a decade ago. I was surprised that Microsoft still keep Joe Belfiore & Steven Elop. This 2 clown should also be shown the door along with the baldy monkey.

29. Finalflash

Posts: 4063; Member since: Jul 23, 2013

Yea no, MS is doomed to fail and this move proves they have no real idea what the hell they are doing. Last I checked, people weren't buying Nokia phones because of their top of the line hardware and cameras, but because it was running WP OS. Then MS has the amazing idea of firing most of the engineers that made those products even partially worth buying and probably having their own local stooges take their place. So now we have MS idiots in charge of the not just the OS but the hardware as well (the same people that gave us the Surface tablets, those products with no real use because you know, everyone wants to do excel sheets on tablets).

44. Settings

Posts: 2943; Member since: Jul 02, 2014

What?! Lol'ed at Surface tabs being unusable. Ever held one dude?

46. 0xFFFF

Posts: 3806; Member since: Apr 16, 2014

We have the Surface tabs at work. They are essentially useless mostly because Windows apps either don't exist (for RT) or don't work well with touch (8.1). Now I'm not counting all the "Modern" apps. They work with touch, but are designed to be useless crap-apps for the most part.

7. WahyuWisnu

Posts: 1001; Member since: May 29, 2014

"Nokia was on the way to becoming Finland’s BlackBerry." - Maxwell R. - Phone Areana 2014

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