…but at this point, I don’t thing Ballmer cares
I’ve been a huge Windows Mobile guy most of my writing career. I was an enthusiast when Windows 10 Mobile was WindowsCE back in 1990-blah-blah-blah. I’ve written for the WindowsCE Lair, and helped both pocketnow and Gear Diary get off the ground. If you remember, I was nominated for Microsoft Mobile Devices MVP at least twice (that I know of) between 2003 and 2007 (when the program was officially terminated). So when I see information regarding the dubious future of Windows Phone and Windows Mobile, it always hurts a bit. Today, that development was made public; and it’s devastating for Windows Phone and Windows Mobile.
If you remember, a couple weeks ago, Microsoft CEO Satya Nadella informed the Microsoft crew and the rest of the world of upcoming changes to the organization. A massive restructuring like that and a message of “[having to make] tough decisions” about the business going forward is upper management speak for, “layoffs are coming.” It’s never good for current staff that find themselves in vulnerable areas, and unfortunately, given their current market share and position, Windows Phone was an obvious target.
Today, Microsoft announced a number of changes to the division that contains Windows Phone. The organization is making a downsizing that will reduce up to 7,800 positions globally in the phone business; with the reductions taking place “over the next several months.”
These changes are huge, and unfortunately, very expensive. Per Nadella’s email to all MS employees:
“Today, we announced a fundamental restructuring of our phone business. As a result, the company will take an impairment charge of approximately $7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services business in addition to a restructuring charge of approximately $750 million to $850 million.”
According to my good friend, MaryJo Foley,
“Microsoft will focus its phone efforts on three segments: Businesses, value-phone buyers and flagship phone customers, moving forward.”
Further, Mary Jo isn’t surprised that MS is making this change. Nadella made more than one statement in a recent earning’s call that indicated that, “further action [was needed] to reduce [Microsoft’s] costs across devices as [they] execute on our Windows 10 first-party hardware plans.”
It’s all very interesting if you think about it.
Further, it’s completely killing the legacy that former Microsoft CEO Steve Ballmer left when he exited the organization; but I’m not certain that current CEO Satya Nadella is too concerned about that.
Nadella was never really supportive of the Nokia acquisition. In fact, he originally came out against it. Microsoft acquired the phone manufacturer’s business in 2014 for $7.2B. With this current write down – or COMPLETE devaluing – of the original acquisition (based on the original purchase price vs. the write down), Microsoft is willing to take up to a $8.45B hit – or a 10% hit over and above the original purchase price of the purchase of Nokia – just to jettison (what he obviously feel is) the dead weight.
Microsoft has stopped just short of killing Windows Phone, however. With Windows 10 still in beta, and with Windows 10 Mobile still in testing, Microsoft has a great deal of current activity and resources actively engaged in upgrading and improving their mobile experience. However, this new action may make a number of people – including me – actively question that commitment.
While Nadella has said,
” In the near term, we 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. 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.”
Its changes like this that clearly show the breadth and depth of an organization’s commitment to a platform that just hasn’t been able to effectively compete in the mobile segment.
This, again, points the limelight and the fickle finger of fate back on Ballmer. He is the one that never understood Mobile and completely caused Microsoft to lose its competitive edge near and around (before and/or just after) the time that the original iPhone was released back in 2007. Prior to that, despite Microsoft’s lack of full support for PocketPC and Windows Mobile, they had quite a large share of the mobile market. (Their big competitors at the time were RIM/Blackberry and Palm.) While Microsoft is still in the game, the other two aren’t, and the share that Microsoft has is really a fraction of what it once was. While Nadella isn’t killing the platform, this could really be the beginning of the end.
I mean, after a buying a business for $7.2B, you write it down for as much as $8.45B (or again, a 10% bump over and above the original purchase price), for a total cost of $15.65B doesn’t bode well for a platform and a market that just don’t know what they want to be when they grows up… if they ever get the chance to. All of this really makes Ballmer look bad, and cements what I’m certain (but speculating) everyone at Microsoft already thinks they know – Windows Phone’s life expectancy is very short.
It’s also clear to me that Steve Ballmer probably doesn’t care how his legacy, if he even really left any lasting legacy at Microsoft, is perceived at this point. It’s clear that both Microsoft and he have moved on. Ballmer now owns the LA Clippers; and Nadella (and the rest of Microsoft) seem to be firmly on course to remaking Microsoft into an organization that can survive the Post PC and Post tablet computing eras, which if you REALLY think about it is not only cool, but is the way it really should be.
What do you think? Is the huge write down good for Microsoft? Will Windows Phone survive? Will Microsoft simply exit the hardware business..? The mobile business..?? Or will they reinvent mobile computing with ultrabook convertibles like the Surface Pro 3? Why don’t you join me in the discussion area, below, and give me your thoughts on all of this?