Microsoft smartphones are dead: company fires 1,850 employees, announces focus on software development
posted by Paul K. / May 25, 2016, 4:54 AM
Last week, we got the news that Nokia is staging a comeback to the smartphone business and will be licensing its name to newly formed company HMD Global, who will manufacture and sell Nokia-branded handsets. As you may know, this year, Nokia regains its rights to put its name on smartphones, while Microsoft still held on to the Nokia brand for feature phones. However, HMD went ahead and purchesed the rights to the Nokia name for feature phones, while Foxconn bought the facility where said phones were manufactured.
Microsoft, naturally, issued a press release, letting everyone know that it's selling its rights to the Nokia name as well as the factory in question, but the text contained a line that was a bit offbeat and its very existence in a press release that concerned feature phones raised some concerns. The line in question reads:
Microsoft will continue to develop Windows 10 Mobile and support Lumia phones such as the Lumia 650, Lumia 950 and Lumia 950 XL, and phones from OEM partners like Acer, Alcatel, HP, Trinity and VAIO
An odd choice of words there – it made it seem like Microsoft would be scaling down yet again, possibly focusing entirely on software development. Well, to the disappointment of many Lumia fans, it seems that is the case.
Executive VP of Windows and Devices Terry Myerson sent an internal letter to all Microsoft staff, letting them know of some impending changes within the company. Yes, you guessed it, Microsoft will be scaling back on smartphones again, which will, in Myerson's words, “impact up to 1,850 jobs worldwide, up to 1,350 of which are in Finland".
This could be the last high-end Lumia we get to see for a while
The VP then continues to explain how Windows 10 is currently installed on more than 300 million active devices, Surface and Xbox satisfaction is at a record high, and earlybird developers are loving the HoloLens (Microsoft's cool augmented reality, a direct answer to VR). However, the Microsoft smartphones continue to be preferred only by a small group of companies and individual consumers. For this reason, the company has made the decision to "focus" its phone hardware efforts.
Meanwhile, Redmond will continue its software development efforts for multiple platforms. The goal is to reach as many consumers as it can with its services, keeping its name on users' minds. It will also continue to work on the mobile version of Windows 10, looking to turn it into an appealing platform, which more 3rd party OEMs will want to build phones for.
So, in other words, Microsoft smartphones may not be entirely gone, but we can expect much less devices to come out of the company in the following years. The letter and press release shy away from talking about any work on hardware and instead insist that the company will focus on "security, manageability and Continuum". And what of the rumored Surface phone? Unfortunately, there is no way of knowing if it will ever exist.
You can find the official Press Release by CEO Satya Nadella, as well as the letter from the Executive VP below.
REDMOND, Wash., May 25, 2016 /PRNewswire/ -- Microsoft Corp. on Wednesday announced plans to streamline the company's smartphone hardware business, which will impact up to 1,850 jobs. As a result, the company will record an impairment and restructuring charge of approximately $950 million, of which approximately $200 million will relate to severance payments.
"We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability, and consumers who value the same," said Satya Nadella, chief executive officer of Microsoft. "We will continue to innovate across devices and on our cloud services across all mobile platforms."
Microsoft anticipates this will result in the reduction of up to 1,350 jobs at Microsoft Mobile Oy in Finland, as well as up to 500 additional jobs globally. Employees working for Microsoft Oy, a separate Microsoft sales subsidiary based in Espoo, are not in scope for the planned reductions.
As a result of the action, Microsoft will record a charge in the fourth quarter of fiscal 2016 for the impairment of assets in its More Personal Computing segment, related to these phone decisions.
The actions associated with today's announcement are expected to be substantially complete by the end of the calendar year and fully completed by July 2017, the end of the company's next fiscal year.
More information about these charges will be provided in Microsoft's fourth-quarter earnings announcement on July 19, 2016, and in the company's 2016 Annual Report on Form 10-K.
Microsoft (Nasdaq "MSFT" @microsoft) is the leading platform and productivity company for the mobile-first, cloud-first world, and its mission is to empower every person and every organization on the planet to achieve more.
To: Microsoft - All EmployeesFrom: Terry Myerson Date: Wednesday 5/25, 2AM Pacific Time Subject: Focusing our phone hardware efforts
Team, Last week we announced the sale of our feature phone business. Today I want to share that we are taking the additional step of streamlining our smartphone hardware business, and we anticipate this will impact up to 1,850 jobs worldwide, up to 1,350 of which are in Finland. These changes are incredibly difficult because of the impact on good people who have contributed greatly to Microsoft. Speaking on behalf of Satya and the entire Senior Leadership Team, we are committed to help each individual impacted with our support, resources, and respect.
For context, Windows 10 recently crossed 300 million monthly active devices, our Surface and Xbox customer satisfaction is at record levels, and HoloLens enthusiasts are developing incredible new experiences. Yet our phone success has been limited to companies valuing our commitment to security, manageability, and Continuum, and with consumers who value the same. Thus, we need to be more focused in our phone hardware efforts.
With this focus, our Windows strategy remains unchanged: 1. Universal apps. We have built an amazing platform, with a rich innovation roadmap ahead. Expanding the devices we reach and the capabilities for developers is our top priority. 2. We always take care of our customers, Windows phones are no exception. We will continue to update and support our current Lumia and OEM partner phones, and develop great new devices. 3. We remain steadfast in our pursuit of innovation across our Windows devices and our services to create new and delightful experiences. Our best work for customers comes from our device, platform, and service combination.
At the same time, our company will be pragmatic and embrace other mobile platforms with our productivity services, device management services, and development tools -- regardless of a person’s phone choice, we want everyone to be able to experience what Microsoft has to offer them.
With that all said… I used the words "be more focused" above. This in fact describes what we are doing (we're scaling back, but we're not out!), but at the same time I don't love it because it lacks the emotional impact of this decision. When I look back on our journey in mobility, we’ve done hard work and had great ideas, but have not always had the alignment needed across the company to make an impact. At the same time, Ars Technica recently published a long story documenting our journey to create the universal platform for our developers. The story shows the real challenges we faced, and the grit required to get it done. The story closes with this:
And as long as it has taken the company, Microsoft has still arguably achieved something that its competitors have not... It took more than two decades to get there, but Microsoft still somehow got there first. For me, that’s what focus can deliver for us, and now we get to build on that foundation to build amazing products.
"Microsfot and Nokia board" was the ONLY factor that killed the Mobile division and dragged Nokia to the hell.
1- Nokia didn't move fast when they saw a substantial decline in high end Symbian market share after the release of iPhone.
2- Nokia appointed the very wrong CEO after Olli-Pekka.
3- The new CEO called the "Burning Platform Memo".
4- Elop Killed Symbian at the time Symbian's market share was 32% (over double iOS market share now).
5- Elop killed the new OS MeeGo even before the release of its first phone N9.
6- Elop put all Nokia's eggs in the very immature WP 7 basket.
7- Nokia's market share dramatically fell after that and the only viable money source was feature phones.
You are totally wrong because Nokia's stock was $40 at the time Elop took the helm, and it went to only $2 two years later.
How Microsoft helped them, really?
BB10 market share is going under 0.2%, but BlackBerry still refuses to announce its demise, because they still see some interest in it despite that small fraction.
Imagine a company declare the death of a Mobile OS when it has 32% market share, or killing the new OS that they never tried!
Nokia should've easily adopted Android since 2010 and made the transition and kept its position as the world largest phone manufacturer.
1. Symbian declined because it was not suited for smartphone use
2. Nokia's issue not MS, blaming this on anyone else other than Nokia is called blindefanboy
3. It was a burning platform. No body wanted Symbian, the market share you talk about is because of feature phones not smartphones, period. There was more to the burning platform than what you see.
4. Market share meant nothing in the smartphone race. How many feature phones are sold yearly?
5. Killed it because it was burdened with delay after delay after glitch. When Elop got there, he did a simple thing, bring me a phone that is ready to market with LTE under the Meego project (a 6yr project at that). There wasn't a single phone they could hand Elop, this is fact. So yes they killed it. LTE wasn't going to be implemented for another few years, well beyond the LTE phones hitting the market that year. Meego was DOA
6. WP7 was choosen because Nokia didn't have the cash nor ability to compete with Samsung at the time. They simply couldn't, you can lie to yourself all you want, but they were bleeding bad. Google was not going to pay them to build an android device. They looked to android FIRST. But screw facts. MS paid them, got their debt in order, unfortunately people simply didn't flock to it in droves like they wanted.
How did MS help them? By sticking around, then paying off Nokias debt. Without MS, nokia would have been sold sooner and stripped sooner. MS let them keep their patents and the ability to make phones after the purchase. Ask moto how those patents went after google bought them out. This 'easy' adoption of android is nothing short of stupidity. There is nothing 'easy' about it. It takes money and time....Nokia had neither.
"WP7 was choosen because Nokia didn't have the cash nor ability to compete with Samsung at the time"
A complete false statement.
By the end of 2010 (days before Elop came), Nokia had $22 billion cash reserve and it was number one in SMARTPHONE market share table. They were able to wipe the ground with Samsung if they had joined Android. Stop fooling yourself. Microsoft thought that with Nokia name, WP would kill iOS. They finally killed Nokia and happy to see them how they totally fail in mobile business now!.
You might want to do more looking into actual financials, you cannot claim inventories as cash on hand.
FYI cash/bank holding of 1.7billion in 2008, as of 2009 it was 1.1billion. in 2010 and 2011 it was 1.9billion in 2012 3.9bil
as for you last statement, In many markets they had, WP had taken over iOS in many markets, except overall global because of the USA market
1. Symbian creates first smartphones. Not iOS, not Android.
2. Yes, Nokia was blind too long to see the big picture of future comunication, but definately Elop bring them in totally wrong direction.
Symbian was lighter then any OS on the market at that time - on my Nokia N8 I had perfect 12MP camera, that was monster at the time. I had FM transmitter, working in real multitasking - listen music on my car radio, sended via FM transmitter, sing MAPS in the same time, lowing down the music when there was mark or note by navigation and taking phone calls. That was impossible for iOS or Android at that time.
The Symbian needed refined UI. The functionality was better than other platforms. Also Elop intendenly killed it to direct Nokia to Windows 7 - the biggest mistake.
Nokia had the money and all Nokia users wanted after Symbian to switch to Android, but Elop was troyan horse and bound them to Microsoft.
After that alo know the facts, but Microsoft is the only guilty that burned Windows phone. They delay every single time - even now there are people waiting for Denim update on their ICONS etc.
Microsoft eating now it's own fruits.
P.S. Sorry for my English.
I doubt symbian should be called a smartphone os, even though it technically was, but it was not suitable for it. I still remember only a hand full of symbian devices had multitasking while most was a headache to even install so called apps
Ok 10 years was an overstatement but they fell below $10 a share from nearly $40 per share around 2010 and gradually fell below $5 a share and never recovered. Look at the stock prices just before MS acquired them hovering around $3 a share
Nokia was dying. It was bad news for MS to even purchase them. A really bad decision. But either way MS will continue making devices, but not mere phones, more business oriented devices like their surface book/surface pro and likely a pocket sized folding tablet/phone
So nobody going to mention that they said new great devices? I believe Microsoft is cutting so many people so they can have the a small team like the surface team develop everything which the team will have a shared vision. Panos must be cooking something great in the basement with Walter. Surface phone will rule them all.
"New devices?" "They'll be cooking something great?" At the current state and priorities of Microsoft, I'd have a higher chance of seeing a Unicorn, but whatever. They've GIVEN UP IN ALL BUT NAME. End of story...
exactly what i was thinking !!
panos panay will lead both surafce tabs & surface phone teams !! & the new phones will come under suraface branding !!
& it will just be what MS does with surface !!
launch an awesome phone with the latest OS & then let OEM'S make other phones with similar functions. (just like OEM'S are launching competitiors to surface 4)
People here (and everywhere, for that matter) love sensationalism. They only see "Microsoft smartphones are dead" and run with it. Most will not pay attention to the part where he said "we're sacaling back, but not out!" concerning smartphones, or the fact that he said they were going to make great new devices. Most don't want to see the bigger picture: Microsoft is playing the "long game", and they want to start fresh with a new smartphone line under the name "Surface".
well, all is well, though. Just as we thought, Nokia phones are returning again under HMD global, and manufacturing is handled by Foxconn with proven track record on producing great hardware. All in all Nokia is like winning a lottery of $7 billion, money it can use to boost their return quickly, without having to bear the penalty of slimming down their facilities or number of employees. Look, in that 1,850 employees, some could be the guys who was responsible for PureView and if Nokia wanted to have any competitive advantage at all would be happy to take them back. I expect great insurgence from Nokia as a well funded smartphone maker startup.
Meanwhile Satya had a headache of offloading an incompetent executive in the name of Eflop, and he wished he could find a way to fire him without rewarding him with any golden parachute whatsoever.
A discussion is a place, where people can voice their opinion, no matter if it is positive, neutral or negative. However, when posting, one must stay true to the topic, and not just share some random thoughts, which are not directly related to the matter.
Things that are NOT allowed:
Off-topic talk - you must stick to the subject of discussion
This copy is for your personal, non-commercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers at https://www.parsintl.com/phonearena or use the Reprints & Permissions tool that appears at the bottom of each web page. Visit https://www.parsintl.com/ for samples and additional information.