Satya Nadella, Microsoft’s new CEO, is wasting no time making significant changes to the structure of the company. What was rumoured last week is now reality as Microsoft announced one if its largest employee reductions in its history. In total, a stunning 18,000, or 14% of its workforce, will be laid off or “moved on” over the next 12 months. The majority will be from its recent acquisition of Nokia Devices and Services division, representing 12,500 people, or 70%, of the cuts.
Microsoft noted in the press release that “the vast majority of employees whose jobs will be eliminated will be notified over the next six months.” Nadella also noted that “it’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible.”
“Having a clear focus is the start of the journey, not the end,” said Nadella. The new route for Microsoft will be to become “more agile and move faster.” Microsoft acquired Nokia’s devices and services business last September, and while the finer details as to how both will be integrated are still being sorted, Microsoft said that it will “shift select” Android-powered Nokia X products “to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows Universal Apps.”
What remains to be seen is whether Microsoft can turn the vestiges of Nokia into a truly competitive smartphone OEM, especially in the high-end where margins are larger and success harder to come by. Nadella noted that Microsoft will take advantage of many of Nokia’s innovations, especially those in the imaging field, to differentiate going forward.