Another big layoff at Microsoft, mostly associated with the Lumia phones

[EMitchell]

Saw this on LinkedIn this morning: Microsoft announces 7,800 layoffs and will write down $7.6 billion from Nokia - Quartz

 

[Lee B]

This may be the beginning of the end. Here's the word from Nadella according to today's New York Times:

"While Microsoft will not stop making smartphones, the company?s chief executive, Satya Nadella, said on Monday that Microsoft would no longer focus on the growth of its own smartphone business, instead emphasizing the expansion of the broad ?ecosystem? of products, including mobile phones, that ran its Windows software. ?I am committed to our first-party devices, including phones,? Mr. Nadella said in an email to Microsoft employees. ?However, we need to focus our phone efforts in the near term while driving reinvention."

"Microsoft said it would narrow its focus to three types of customers, including business users who wanted strong management, security and productivity apps, buyers at the low end of the market looking for inexpensive phones and Windows fans."
http://www.nytimes.com/2015/07/09/technology/microsoft-layoffs.html?_r=0

In short, I think Nadella is saying, "We give up -- we can't win this war." He's concluded that Windows phone will never be anything more than an also-ran, so MS just hopes to eke out some profits in niche markets. That means that just about all the investment and innovation in the phone business are going to be with Apple and Android.

I'm very happy with my Icon and expect to keep it for a while. But I'm getting less optimistic about the long-term future for Windows phone.

 

[HeyCori]

In short, I think Nadella is saying, "We give up -- we can't win this war."

I disagree. In fact, everything we know about Windows 10 and the leaked devices shows that Microsoft is very much committed to Windows Phone. You speak of war as if there's no place except first place. Even when the iPhone 4-5 was losing market share to Android, Apple was still making way more money than anyone else in the industry. So yes, Microsoft would love to make a profit off of selling Windows Phone. It means Microsoft would support Windows Phone more, not less. And things like Continuum, Windows Hello and Universal apps show that Microsoft is willing to invest and innovate with their new mobile devices.

 

[madura31]

Very bad news. This is not time Microsoft.

 

[Lee B]

It means Microsoft would support Windows Phone more, not less.

They're supporting WP more by firing thousands of the people who are working on it? Invest more when they've been losing share and Nadella says they won't try to grow their phone business?

Yes, they're going to invest in the Windows ecosystem, and there will be a Windows Phone 10. Partly, this looks to be MS acknowledging that hardware isn't their forte, and they'll hope someone else will build great Windows phones to carry the WP OS. Maybe MS is still optimistic about the tablet business, though the delay in Surface Pro 4 muddies the waters on that front.

I've parsed more than a few CEO messages, and this one looks to me like a familiar example of a CEO who's running up a white flag while trying to claim otherwise.

 

[HeyCori]

They're supporting WP more by firing thousands of the people who are working on it?

Or, in context.

HeyCori: So yes, Microsoft would love to make a profit off of selling Windows Phone. It means Microsoft would support Windows Phone more, not less.

Meaning that Microsoft wouldn't kill off a profitable business even if it was only in third place. Thousands of people got laid off because MS is currently not making a profit. That obviously would change if MS was ranking in the dough.

 

[Tsang Fai]

Another major layoff can be viewed more positively - it means Windows Phone will financially survive longer time.

3% of a huge market is still a very big market. Even 1% is big enough to stay in such a huge market. BMW shares less than 3% of global market share - should BMW give up?

We should not look at percentages. Windows Phone is not losing so much money for tech giant Microsoft. So there is no point to give up at this critical moment (Launch of Win 10, continuum, flagship phones, etc).

 

[fatclue_98]

This may be the beginning of the end. Here's the word from Nadella according to today's New York Times:

"While Microsoft will not stop making smartphones, the company’s chief executive, Satya Nadella, said on Monday that Microsoft would no longer focus on the growth of its own smartphone business, instead emphasizing the expansion of the broad “ecosystem” of products, including mobile phones, that ran its Windows software. “I am committed to our first-party devices, including phones,” Mr. Nadella said in an email to Microsoft employees. “However, we need to focus our phone efforts in the near term while driving reinvention."

"Microsoft said it would narrow its focus to three types of customers, including business users who wanted strong management, security and productivity apps, buyers at the low end of the market looking for inexpensive phones and Windows fans."
http://www.nytimes.com/2015/07/09/technology/microsoft-layoffs.html?_r=0

In short, I think Nadella is saying, "We give up -- we can't win this war." He's concluded that Windows phone will never be anything more than an also-ran, so MS just hopes to eke out some profits in niche markets. That means that just about all the investment and innovation in the phone business are going to be with Apple and Android.

I'm very happy with my Icon and expect to keep it for a while. But I'm getting less optimistic about the long-term future for Windows phone.

Too bad you didn't read or quote the rest of Nadella's statement.

"In the near-term, we'll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility. We plan to narrow our focus to three customer segments where we can make unique contributions and where we can differentiate through the combination of our hardware and software. We'll bring business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they'll love. In the longer term, Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly. Our reinvention will be centered on creating mobility of experiences across the entire device family including phones."

 

[Lee B]

Another major layoff can be viewed more positively - it means Windows Phone will financially survive longer time.

3% of a huge market is still a very big market. Even 1% is big enough to stay in such a huge market. BMW shares less than 3% of global market share - should BMW give up?

We should not look at percentages. Windows Phone is not losing so much money for tech giant Microsoft. So there is no point to give up at this critical moment (Launch of Win 10, continuum, flagship phones, etc).

I think your first point is correct -- MS is shrinking the business in hopes of making it profitable (they've mostly been losing money on WP). BMW succeeds with a high-margin, profitable niche. Does anyone refer to WP as the BMW of the smartphone business? No doubt MS would love to find a BMW niche in the phone business. Maybe they could do that selling secure, business-oriented phones to demoralized Blackberry fans. There's not much chance they could do it selling low-end phones in international markets.

How much can MS invest in R&D when they've been getting 0% and Apple has been pulling in around 90% of the profits in the smartphone business? MS has thrown a lot of money at Windows Phone, and I think Nadella is saying it hasn't worked (no growth and no profits) and we're not going to do it any more.

 

[Spectrum90]

It seems Microsoft is killing WP in the same way BlackBerry did with BB10. If Microsoft tries to stop the huge losses of the phone division increasing the price of the devices or reducing the marketing and distribution costs, the market share could collapse and the platform would be effectively dead.

 

[eds817]

When Microsoft announced their plans for Win10 I was very excited and deiced to give Windows phone a try. I went out and bought a Lumia 635 to use as a second device to my Galaxy Note 2. I then dropped my Note 2 twice and even though it works fine the screen is splintered and I don't want to take a chance of getting broken glass in my ear or finger. I am not using my 635 as my everyday phone. I've tried Win10 but each new build has its own issues so I am staying with 8.1 for now. I was hoping that after the desktop release or Win10 this month that we would see major new builds on mobile leading up to some nice new devices this fall. Even though this announcement says they still plan on releasing new flagship devices I just don't see programmers getting on board with new and improved apps.

I'm still not throwing in the towel but it doesn't look good moving forward. Time will tell.

 

[Laura Knotek]

I think your first point is correct -- MS is shrinking the business in hopes of making it profitable (they've mostly been losing money on WP). BMW succeeds with a high-margin, profitable niche. Does anyone refer to WP as the BMW of the smartphone business? No doubt MS would love to find a BMW niche in the phone business. Maybe they could do that selling secure, business-oriented phones to demoralized Blackberry fans. There's not much chance they could do it selling low-end phones in international markets.

How much can MS invest in R&D when they've been getting 0% and Apple has been pulling in around 90% of the profits in the smartphone business? MS has thrown a lot of money at Windows Phone, and I think Nadella is saying it hasn't worked (no growth and no profits) and we're not going to do it any more.

That could be the case if profits do not increase, but it would be something to revisit in a year or two from now.

We'll have to see if Windows 10 Mobile is successful or not once it's released. If it's profitable, then it will be continued. If it's a failure, then Microsoft might pull the plug.

Sent from my rooted Nexus 7 (2013) using Tapatalk

 

[fatclue_98]

It seems Microsoft is killing WP in the same way BlackBerry did with BB10. If Microsoft tries to stop the huge losses of the phone division increasing the price of the devices or reducing the marketing and distribution costs, the market share could collapse and the platform would be effectively dead.

BlackBerry has posted 2 consecutive quarters of positive earnings and they're adding money to the kitty. Add to that the fact there will be a stock buy-back sometime this year. I'm no financial expert, but that's not a dead or dying company. Layoffs do not indicate poor performance all the time. Strike that. It could easily be poor performance on the part of a manager who over-estimated production.

 

[Spectrum90]

BlackBerry has posted 2 consecutive quarters of positive earnings and they're adding money to the kitty. Add to that the fact there will be a stock buy-back sometime this year. I'm no financial expert, but that's not a dead or dying company. Layoffs do not indicate poor performance all the time. Strike that. It could easily be poor performance on the part of a manager who over-estimated production.

BlackBerry posted a big Non-GAAP loss. Software revenue (the supposed savior) disappointed and the guidance for the fiscal year is horrible, far from the growth that Chen was promising a few quarters ago. Hardware sales keep declining and SAF revenue is declining faster than expected. As a consequence the stock got crushed.
The stock buy-back is an insignificant amount, just a marketing move.

Anyways, I wasn't talking about the death of the company.

 

[EMINENT 1]

I think this is good for MS. Too many phone models available in different areas of the world just caused confusion.

I see it as trimming the excess redundant positions and models that weren't different enough. Hopefully this cleans up the mess.

 

[sweeperdk]

With all due respect, this does not mean that WP is dead. On the contrary. This means that WP will be more focused.

A (very) quick example of what this could mean. Reduce the hardware portfolio significantly. Lets say three phones. One low-end, one mid-end and one high-end. Not more, not less.

As is now, there's a plethora of windows phones out there. Reduce the amount, thus focusing the product line a lot more, will also have the benefit of improving quality and, possibly the biggest factor, will improve customer recognizability.

 

[fatclue_98]

It seems Microsoft is killing WP in the same way BlackBerry did with BB10.

Anyways, I wasn't talking about the death of the company.

It seems to me you implied BlackBerry killed the company with BB10. Be that as it may, BB just registered 2 new domains regarding secure Android operation. You keep listening to the "experts" and the "analysts" and I'll just sit back and watch the actual events as they unfold.

 

[Zakaria Desai]

I received this article on my email, and panicked. Ahh, just as I was beginning to enjoy the Windows phone experience, they want to pull the carpet from underneath us
But reading between the lines, it looks like we have a few more years. Be interesting to see how the windows phone story develops. Can't wait for WP10.

http://www.zdnet.com/article/microsoft-to-cut-7800-jobs-mostly-in-phone-business/

 

[HeyCori]

The irony is that we've been saying for years that Nokia/Microsoft needs to slim down their lineup and stop releasing so many devices. The second Nadella says they're doing exactly what we've been asking for...

The Community: "It's all over, boys. Windows Phone is done. Time to go home."

?_?

 

[VetDuarte]

Well, the whole N900 and Meego fiasco is a precedent.
I wouldn't go so far as to say WP is doomed, nor would I be so sure things are not turning sour.
Couple of years, you say? Maybe.
Or maybe 2 weeks from now, like it happened with the Symbian line.