In an email to employees Wednesday morning, Microsoft CEO Satya Nadella dropped the sobering news hinted at by his “tough choices” memo of several weeks ago: the company is “fundamentally restructuring” its phone business.
Phrasing the changes as part of Microsoft’s ongoing “reinvention,” Nadella said Microsoft would cut up to 7,800 jobs globally over the next several months. The cuts will take place primarily in the company’s mobile-phone business, which grew from the acquisition of Nokia’s Devices and Services business in April of last year. Nadella also announced that Microsoft would be taking an impairment charge of $7.6 billion related to that acquisition –more than the $7.2 billion Microsoft paid for Nokia in the first place– as well as a restructuring charge of $750 million to $850 million. This follows recent sell-offs by Microsoft in its mapping and advertising business.
Nadella’s email seeks to paint these developments in a positive light, but it’s vague on specifics when it comes to the company’s handset efforts going forward. The CEO says he is “committed to our first-party devices including phones,” promising “Windows fans the flagship devices they’ll love” – but also says that “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.”
What that means for the future of Windows 10 as a smartphone platform is anybody’s guess at this point, but it hardly needs to be said that impairment charges and layoffs aren’t the most promising signs for the world’s third-place smartphone platform.