Microsoft is fundamentally restructuring its phone business, according to a new email from CEO Satya Nadella.
As part of that restructuring, Microsoft will take an “impairment charge” of $7.6 billion related to its previous acquisition of Nokia Devices and Services. The company will also cut nearly 8,000 employees, racking up additional “restructuring charges” that could total as much as $850 million.
Those layoffs come in addition to the 18,000 job cuts previously announced by Nadella. In making these moves, Microsoft has pretty much rolled back the entirety of its Nokia acquisition, made under previous CEO Steve Ballmer.
“I am committed to our first-party devices including phones,” Nadella wrote in his email to employees. “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.”
What does that actually mean? In the short term, Microsoft will still produce Windows Phones, aimed at both the consumer and business markets. Beyond that, Nadella’s email is unclear, aside from vague references to sparking “innovation” and generating “opportunity for the Windows ecosystem more broadly.”
The cuts and restructuring probably won’t do much to convince mobile developers that Windows Phone is a viable platform in the long run. Then again, developers never really gravitated to the platform in mass numbers; that’s one of the key reasons why its market-share never rose beyond the single digits in the majority of markets, and its app store remains paltry compared to what’s available for iOS and Android.
Given the imminent arrival of Windows 10, which is supposed to operate on a wide range of devices, and Windows Phone’s continued flailing, it’s likely that any developers who do work with Microsoft’s mobile platform will adopt a “wait and see” attitude going forward.