Microsoft CEO Satya Nadella. (photo: DC/file)
Los Angeles: Microsoft announced the biggest layoffs in its history on Thursday, saying it will cut 18,000 jobs or 14 per cent of its workforce as it streamlines its Nokia mobile device business to focus on using the Windows Phone operating system.
Although the job cuts had been expected, the extent of them was a surprise. It’s the boldest move by CEO Satya Nadella since he took the reins from Steve Ballmer in February. In a public email to employees, he said the changes were needed for the company to "become more agile and move faster."
Mr Nadella indicated that Microsoft will largely abandon low-price Nokia Asha phones, and reverse a strategically questionable move by Nokia in February to launch a line of phones called "X’’ that supported rival Google Inc.’s Android platform.
"The first-party phone portfolio will align to Microsoft’s strategic direction," Mr Nadella said in the memo.
As part of the shift, Microsoft will make a new push on smartphones, where it has managed to win only a modest market share for its Windows Phone platform.
"We will be particularly focused on making the market for Windows Phone," said an email to employees from Stephen Elop, the former Nokia chief who now heads the Microsoft Devices unit.
"In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest growing segments of the market, with Lumia," he said, referring to the Nokia-branded device.
Mr Elop said that Microsoft will shift some of its Nokia X phones, which use the Google Android platform to Windows Phone. Analyst Jack Gold at J. Gold Associates said the changes are "the first major salvo in the Nadella era" and appear positive.
"I believe that Nadella gets the fact that Microsoft can’t be Apple, a totally vertically integrated environment, and will refocus on cloud, services and software assets that are growing and profitable," he said in an email.