Like a bad connection that keeps getting worse the longer you stay with it, Microsoft yesterday announced that it would be laying off up to 7,800 more people and would be taking a $7.6 billion “impairment charge,” mostly stemming from its ill-advised acquisition of Nokia’s device and service business under former CEO Steve Ballmer in 2013.
“The twin blows are an embarrassing reminder of Microsoft’s inability to find a foothold in the smartphone industry after more than a decade of strategy zigzags and billions of dollars of investment,” writes Shira Ovide in the Wall Street Journal. “The trends that put a personal computer in nearly every pocket or purse, more than any other technological shift in the past decade, have eroded Microsoft’s former position at the center of computing.”
MediaPost’s Gavin O’Malley covered the breaking story here. The news, which follows a sweeping reorganization the company announced last month, drew lots of additional “whither Microsoft” speculation and analysis from around the punditocracy. But first, here’s the official pronouncement:
“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,” CEO Satya Nadella wrote in an e-mail to employees. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”
The New York Times’ Nick Winfield points out that Microsoft “has failed to turn the Windows Phone operating system, which runs on its handsets, into a vibrant alternative to the two leading mobile platforms, iOS from Apple and Android from Google,” and its market share has continued to decline since the Nokia acquisition.
Wired’s David Pierce writes: “What Nadella’s memo implies is that the smartphone war may be over, but Microsoft sees many more, equally disruptive revolutions upon us” — including IoT, the cloud and augmented reality— and the company is “positioning itself well” in these areas.
“Unless, of course, your phone isn’t about to go away, but is instead about to become the centerpiece of everything — the remote for your lights and coffeepot, the engine for your virtual reality experiences, and the microphone in your pocket you use to talk to your assistant,” Pierce points out.
Here’s Darren Orf’s interpretation of Nadella’s battle cry in Gizmodo: “Does that mean there won’t be any more Windows Phones? No, there almost certainly will. In fact, Microsoft is still working on two new flagship Lumia devices, if you believe the rumors.
“But the honest truth: this is probably the final nail in the coffin for Microsoft the phone company. The final nail, because Ballmer’s replacement—Satya Nadella—has been hammering them into that casket like mad.”
Forbes’ Aaron Tilley offers a contrarian approach. “What if the opposite is true, and Microsoft has never been better positioned to succeed in mobile?” he asks, pointing out that with Windows 10 arriving soon, it “will likely solve one of its key problems: getting developers to build apps for Windows Phone” because it’s easy to create software that runs across various devices. Plus, “… iOS and Android developers will be able to largely reuse their code to create Windows versions of their apps.”
Forrester VP and principal analyst J.P. Gownder tells Tilley, “This is best strategy they’ve had yet to create developer support for the Windows mobile platform.” Then again, Tilley concludes, it’s all “likely too little, too late for Microsoft.”
Observes Tom Warren on The Verge, after pointing out that Microsoft’s Lumia phones account for more than 90% of Windows Phone marketshare and that “it’s hard to imagine” it would kill off the line: “Microsoft is increasingly focused on keeping its enterprise base of loyal PC users happy for Windows 10, and not on mobile or the touch interfaces that Windows 8 users disliked. It feels like Microsoft is admitting defeat and readying itself for a different kind of mobile future instead of worrying about the smartphone war it will never win.”
Should you need a reminder about how quickly things change out there, as recently as 2008 Nokia had 40% of the global smartphone market, as this WSJ graph dramatically illustrates. That was the year after Steve Jobs introduced the first iPhone — a device Ballmer “famously dismissed,” Ovide reminds us, “for its high cost and lack of a keyboard.”