Microsoft CEO Nadella Rebukes Ballmer With Nokia Write-Down

current Microsoft CEO Satya Nadella is very pragmatic. He’s looking to center of attention the corporate on clear increase opportunities and areas where there’s present momentum. therefore (July 10, 2015)’s memo and press free up, writing down the value of the Nokia cell units acquisition and asserting significant layoffs:

Microsoft Corp. today announced plans to restructure the corporate’s telephone hardware industry to better center of attention and align resources. Microsoft additionally announced the reduction of up to 7,800 positions, primarily in the telephone business. in consequence, the corporate will report an impairment cost of approximately $7.6 billion associated to assets related to the acquisition of the Nokia units and services (NDS) industry in addition to a restructuring cost of approximately $750 million to $850 million.

This followed an earlier Nadella “tough picks” memo a few weeks in the past that warned, “we can want to innovate in new areas, execute in opposition to our plans, make some tough choices in areas where issues should not working . . .”

tough choices part one was once Microsoft’s transfer the corporate’s map-imaging operations to Uber and the outsourcing of its show promotion trade to AOL. The Nokia write-down and layoffs are phase two. It’s not clear if there shall be an element three.

It has then again been clear for some time that, in contrast to floor which has ultimately grew to become a corner, Microsoft’s home windows cellphone technique was no longer working — if market-share is the measure of “working.” It has had some success in Europe and with decrease-cost devices but failed to maneuver the needle in markets like the united states and China.

Nadella alternatively isn’t quitting the cellular hardware trade. the company is going to slender and simplify its handset lineup. Nadella additionally says the company will shift focus faraway from a “stand-alone” mobile option to a focal point on the totality of the home windows ecosystem. He additionally needs to colonize Android and iOS with a whole lot of Microsoft apps.

right here’s the key passage from the release:

“we’re transferring from a approach to develop a standalone cellphone business to a technique to develop and create a vibrant home windows ecosystem including our first-birthday celebration device family,” Nadella mentioned. “within the near-time period, we’ll run a simpler and targeted phone portfolio whereas preserving capability for long-time period reinvention in mobility.”

past making fewer devices it’s no longer fully clear what this means on a practical stage. Microsoft up to now said it desires to make it easier for iOS and Android developers to port their apps to home windows broadly. it is a continuation of its lengthy-present “universal” windows apps method. regarding its quick-term cell focus, Microsoft says it will target “trade customers who need sturdy management, safety and productiveness apps; buyers in search of inexpensive telephones; and windows fanatics.”

the primary category, trade users, will probably show an ongoing challenge. while IT managers could choose to regulate home windows across units, workers at the moment are firmly residing in a BYOD world.

beyond the huge write-down, in one experience there’s little new in Nadella’s memo. He’s said prior to that Microsoft is attempting to higher align instruments and revenues. Most interesting in all probability is that the write-down quantities to a rebuke or repudiation of the strategy in the back of the Nokia acquisition and Steve Ballmer’s decision to purchase the Finnish-firm’s units unit for in far more than $7 billion before leaving the job.

Nadella is to be recommended for being frank and taking decisive action. on the other hand the restructuring doesn’t essentially directly address or strengthen the corporate’s place in cellular.

in regards to the creator

Greg Sterling

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a non-public blog, Screenwerk, about connecting the dots between digital media and actual-world consumer habits. he is additionally VP of technique and Insights for the native Search association. practice him on Twitter or find him at Google+.

(Some pictures used beneath license from Shutterstock.com.)