Microsoft’s $7.2 billion acquisition of Nokia’s Devices and Services division has been a disaster of epic proportions. Microsoft brought over most of Nokia’s employees into the Microsoft fold, only to jettison many of them over the past year. The culmination of this Nokia culling occurred this morning with the announcement that Microsoft is axing 7,800 employees, primarily from its smartphone division.
To add insult to injury, Microsoft is taking a $7.6 billion impairment charge on its $7.2 billion Nokia purchase. Youch! There’s just no way to sugarcoat this unfortunate turn of events, but Microsoft CEO Satya Nadella is at least trying to give the employees still standing in the smartphone division, its OEM partners, and Windows Phone fans some insight as to where the company goes from here.
“I am committed to our first-party devices including phones,” said Nadella. “However, we need to focus our phone efforts in the near term while driving reinvention. In the near term, we will run a more effective phone portfolio, with better products and speed to market given the recently formed Windows and Devices Group.”
Instead of the steady stream of budget-minded smartphones that have been released over the past year, Microsoft is taking a more balanced approach by targeting three distinct sectors. Microsoft of course isn’t abandoning the low-end market, and indicates that it will continue to provide “Value” phones to price conscious customers. However, it will also look to embrace new markets with phones targeted specifically at business customers with security enhancements and robust management tools (perhaps we’ll see a Surface Phone come to the market). As for the third category, Microsoft says that it will return to producing top-notch flagship phones for devoted Windows Phone fans (or at least those that haven’t already defected to Android).
“In the longer term, Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly,” added. “Our reinvention will be centered on creating mobility of experiences across the entire device family including phones.”
What do you guys think; can Microsoft right the ship and make its upcoming Windows 10 Mobile platform and its future smartphone hardware appealing enough to take on the likes of Apple, Samsung, and Google?