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Microsoft is to cut 7,800 jobs from its global workforce over the next several months, as part of a wider restructure of the software giant’s phone business.
CEO Satya Nadella confirmed the moves in an email to employees, which he claims will result in the development of a “more effective” portfolio of Windows-running mobile devices.
“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,” Nadella wrote.
“We’ll bring business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they’ll love.”
This change in strategy means the company will be forced to stomach a $7.6bn impairment charge in relation to the assets it acquired through its April 2014 purchase of Nokia’s devices and services business, along with a further restructuring charge of between $750m and $850m.
“We anticipate these changes, in addition to other headcount alignment changes, will result in the reduction of up to 7,800 positions globally, primarily in our phone business. We expect these reductions will take place over the next several months,” Nadella continued.
“I don’t take changes in plans like this lightly, given that they affect the lives of people who have made an impact at Microsoft. We are deeply committed to helping our team members through these transitions.”
Another round of job cuts
This isn’t the first time its mobile business has borne the brunt of the Microsoft’s moves to downsize, after it set out plans in 2014 to cut 18,000 jobs – including 12,500 as a direct result of its merger with Nokia.
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The prospect of a fresh round of job cuts at Microsoft was hinted at by Nadella in a company memo seen by GeekWire at the end of June 2015, where he set out the company’s mission statement. This, he said, would centre on empowering “every person and every organisation on the planet to achieve more”.
Nadella then went on to say that to achieve this “tough choices” will have to be made, as the company moves to tap into new business growth opportunities.
Mobile market forces
The restructure may not come as a surprise to many, given that Microsoft has seen its market position rocked in recent years by competitors – such as Apple and Samsung – bringing to market smartphones and tablets that have left its offerings for dust in sales terms.
This was something it moved to address with the Nokia acquisition, and its move into the tablet space with the release of the Surface.
“We need to focus our phone efforts in the near-term while driving reinvention,” Nadella continued, in his latest missive.
“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 centred on creating mobility of experiences across the entire device family, including phones.”