Last week in the comments to this post I wrote that Microsoft had “all-but-exited” the smartphone market.
Now the software giant has fully exited:
Microsoft is signalling the end of its Nokia experiment today. After acquiring Nokia’s phone business for $7.2 billion two years ago, Microsoft wrote off $7.6 billion last year and cut 7,800 jobs to refocus its phone efforts. Microsoft is now writing off an additional $950 million today as part of its failed Nokia acquisition, and the company plans to cut a further 1,850 jobs. Most of the layoffs will affect employees at Microsoft’s Mobile division in Finland, with 1,350 job losses there and 500 globally. Around $200 million of the $950 million impairment charge is being used for severance payments.
These latest job cuts mean that the majority of former Nokia employees are no longer working at Microsoft. Microsoft plans to complete most of its job cuts by the end of the year.
My heart goes out to everybody losing their jobs over this, but Microsoft really had no other choice. Former MS CEO Steve Ballmer made a $7 billion bet on a flailing phonemaker, but without any plan of his own to save it — or how to save Microsoft’s position in mobile. But Balmer is the man who once defended his company’s craptaculent mid-2000s mobile platform like so:
“Would I trade 96% of the market for 4% of the market? I want to have products that appeal to everybody,” he said. “We’ll get a chance to go through this [Apple versus Microsoft debate] again in phones and music players. There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get.”
When Microsoft should have been creating world-class apps for iOS (and later, Android), Ballmer was instead busy pissing away cash and talent trying to create an all-new ecosystem from scratch.
Ballmer’s replacement, Satya Nadella, has a much firmer grasp on the company’s proper role in mobile — but that doesn’t make Ballmer’s bad decisions any less painful for everybody getting laid off today.