Yesterday evening’s news about mass layoffs at Microsoft was expected but no one realized the extent of layoffs and change of plans. The biggest shock came from the 12,500 layoffs from Nokia’s Devices and Services business and the abandoning of Nokia’s feature phone and Android smartphone product lines to focus only on Lumia smartphones. This is in contrast to what Microsoft and Nokia had maintained during the initial stages of the acquisition when it was announced. Also Read - Nokia X20, X10 India launch hinted by local website, could break into 5G handset marketAlso Read - Windows 11 will improve multi-monitor workflow; here's how
At a time when most analysts were perplexed as to why Microsoft was buying the entire Devices and Services business, Stephen Elop had reiterated that Microsoft was serious about Nokia’s non-Lumia devices. Also Read - Jio 5G service: Reliance Jio, Intel partner to develop 5G network for India
“When Steve Ballmer is asked that question he says it is the most obvious proof of their interest in the business is that they bought it. The deal is not closed yet but that has been their intention from the beginning. The thing to realize is that we at Nokia have for many years talked of connecting the next billion people and give people their first connected experience with Facebook, with WhatsApp and whatever their social life may be,” Elop had said in an interview with BGR India last October.
“When you think about those next billion people, Microsoft has no way of reaching those billion people today because those people are not going to buy a PC generally because of their income levels. They are unlikely to buy a tablet again because of the price points. But with a device like Asha, in the future they will have an opportunity to introduce them to Microsoft services like SkyDrive. So what you should expect to see is that those Microsoft services, which benefit from larger groups of people, getting exposed to people that Microsoft has never experienced. And Microsoft finds that very exciting,” he had added.
But Ballmer is no longer at the helm and this is the beginning of Satya Nadella’s era at Microsoft.
The timing of Microsoft’s acquisition of Nokia couldn’t have come at a worse time with Ballmer on his way out and there was no clarity on who would lead the company. Nokia was the only hardware partner that was still contractually bound to make Windows Phone smartphones and that contract was coming to an end. There were clear indications of Nokia looking at Android as its next smartphone platform and that would have meant a death knell for Windows Phone.
Yet, the writing on the wall was clear. With Microsoft under transition, it needs to focus on its core cash cows Windows, Office, enterprise, cloud services, Windows Phone rather than stretch itself thin across all fronts. While feature phones accounted for most of the bulk of Nokia’s phone shipments, it doesn’t add any value to Microsoft.
Even Asha phones, which were supposed to introduce Microsoft services to first time users won’t be relevant for much longer as usable Android smartphones breach the $100 mark with efforts from Google like Android One. Nokia’s X-series of forked Android smartphones might be doing well in terms of shipment numbers but it requires a lot of effort on software development, wooing app developers and marketing. It would serve Microsoft better to focus those efforts on developing Windows Phone instead.
“It is an unfortunate side effect that those phones don t also run WP apps, but the fact that they run Android apps is a useful experiment in seeing how consumers react to a value proposition that has two things that are similar (UI and Microsoft services) and one that is different,” Joe Belfiore, who heads Microsoft’s Windows Phone team, said in an interview with BGR India earlier this June, referring to Nokia’s X-series of devices.
Layoffs are never pleasant but it is something Microsoft had to do and Satya Nadella has done what was required. Now the only question that remains is for how long he persists with Elop as the head of Microsoft’s hardware business. Before heading off to Nokia, Elop was heading the Office business at Microsoft – a monopoly that did not require him to do much. His short tenure at Nokia can be termed nothing remotely close to successful.
Something tells me this is not the last time that we are hearing about changes at Nokia under Microsoft. Things will get uglier.