Microsoft has revealed plans to cut 7,800 jobs from its phone division, as Redmond writes off US$7.6 billion from its ill-fated Nokia deal.
In announcing the company’s “tough choices” via a memo to all staff this week, CEO Satya Nadella says Microsoft will focus on areas “where we have differentiation and potential for growth”, a move which many believe is the final nail in the Windows Phone coffin.
Primarily, the cuts will hit employees in Microsoft's mobile division working on Windows Phone hardware.
As a result, the company will record an impairment charge of approximately US$7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services (NDS) business in addition to a restructuring charge of approximately US$750 million to US$850 million.
“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,” Nadella says.
“In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”
In the near term, Nadella says Microsoft will run a “more effective phone portfolio”, with “better products and speed to market” given the recently formed Windows and Devices Group.
“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,” he explains.
In the longer term, Nadella hopes the bold move across the Microsoft devices division will “spark innovation, create new categories and generate opportunity” for the Windows ecosystem more broadly.
“Our reinvention will be centred on creating mobility of experiences across the entire device family including phones,” he adds.
As reported by Computerworld New Zealand, this week’s changes follows the departure of former Nokia CEO Stephen Elop from Microsoft, following a senior leadership shake-up in Redmond.