Microsoft slashes 7800 jobs across phone business

The impairment charge will roughly be $7.6 billion in relation to the assets that are associated with all the acquisitions done with Nokia Devices and Service (NDS).

Microsoft is not killing off its phone business like many publications have hinted in the last few days.

Microsoft is scaling back.

Post its acquisition of Nokia previous year in a $7.2 billion deal, Microsoft had aimed to become a dominant player in the smartphone market. And that’s finally a reality check to its ambitions. “Stay tuned. As for this Nokia deal, I believe it was a big waste of time and money for Microsoft”.

The cuts may well mark a death knell for the company’s Windows Phone business, as it increasingly shifts from hardware to software and cloud computing.

It’s part of Nadella’s push to streamline the company’s efforts and move away from working on things that aren’t core to Microsoft’s business.

It’s evident that the Nokia gamble hasn’t worked out for Microsoft. While that doesn’t mean there won’t be any new Windows phone, it certainly doesn’t look good moving forward.

“Our reinvention will be centered on creating mobility of experiences across the entire device family including phones”, Nadella wrote in an email to employees that sought to explain the latest cuts. Nadella explained in an email to employees that Microsoft is planning to move phones into the devices business, and by doing that, would create a more effective phone portfolio. For some reason, taking over Nokia and rebranding the stores and products happened at such a quick pace thus leaving many questions unanswered. Nokia CEO Stephen Elop and Nokia head of phones Jo Harlow both left Microsoft in June. Such ambitions haven’t worked so far, with Windows Phone unable to gain meaningful traction against iOS and Android. Microsoft is betting on reducing the number of devices, hence the operating cost, investment, and, eventually, loss. We don’t have any specifics on an exact date, or even the name for the device, though some are speculating Lumia 940 given the numeric progression of previous flagships. Success of this OS is now critical for the company.

Microsoft did what it eventually had to do in order to make its executives in the corporate world richer. But will it be able to pull that off?

It remains to be seen what that will do to the overall Windows Phone market. It’s an interesting business strategy.