Windows Phone isn’t going away
You might think that Windows Phone was doomed, following Microsoft’s recent reorganisation of its phone business, especially after Microsoft wrote down the value of the business. Microsoft CEO Satya Nadella put those fears to rest, however, in an interview with ZDNet’s Mary Jo Foley.
He has emphasised, time and again, that his goal is for Microsoft to establish new product categories that partners can build upon. In the phone business, however, partners haven’t followed Microsoft’s lead.
The CEO seems to be fine with that. “If there are a lot of OEMs, we’ll have one strategy. If there are no OEMs, we’ll have one strategy,” Nadella said of Windows Phone’s future. Microsoft seems content to go it alone, or if a hardware partner such as HTC or Samsung commits to the platform, that’s fine too.
Sticking up for Windows Phone shows how committed Microsoft is to supporting new categories of devices. This is something Nadella started talking about as early as the Surface Pro 3 launch, when Nadella said that Microsoft would set an example for the hardware industry to follow. As he told Foley, that strategy has carried over to app development like Sway or Gigjam, where Microsoft is breaking out of the traditional Office hierarchy to create cross-disciplinary apps. He also more plainly explained how Microsoft’s vision will affect developers and consumers, especially in the mobile space.
Nadella has previously characterised Windows 10 as an operating system that straddles multiple hardware platforms: the desktop PC, the notebook, the tablet, the phone, the Surface Hub, HoloLens, and the Xbox. The market hasn’t really bought this story so far, at least where Windows phones are concerned.
In the Foley interview, however, he made clear that he sees Windows 10 Mobile as part of the billions of Windows 10 devices, not as a standalone operating system, as it was with Windows Phone 8.1. “You start the journey there and take them to multiple places. Their app can go to the phone. They can go to HoloLens. They can go to Xbox,” Nadella said.
That’s the key to luring new developers, Nadella said: getting them on Windows, even if Windows is the PC or the Xbox or the HoloLens. “You talk to somebody like Airbnb. It might be more attractive, given our three percent share on phone, for them to actually build something for the desktop and for the Xbox. And by the way, when we hook them on that, we have a phone app.”
A key focus of those apps – phone or desktop – will be the business market. At the time of the restructuring, Nadella said Microsoft’s phone business will focus on three things: low-end communications devices, flagship Windows phones, and business devices.
This restructuring has seen Microsoft announce that it will cut up to 7,800 jobs and take a $7.6bn impairment charge in a “restructuring” of its phone business, which it largely acquired through Nokia just over a year ago.
The write-down is in essence an admission that Nokia’s phone business is worth practically nothing to Microsoft, despite a $7.2bn acquisition in April 2014. That deal was initiated by former Microsoft CEO Steve Ballmer, and became final after Nadella took over in February of 2014.
In addition to the impairment charge, Microsoft will pay $750m to $850m for the next round of layoffs. Microsoft already laid off roughly half of Nokia’s 25,000 employees in July 2014.
In a memo to employees, Nadella said the company would stop trying to grow a standalone phone business and concentrate on expanding the Windows ecosystem. That means a smaller portfolio of Microsoft phones aimed at specific goals: “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,” he wrote.
This memo shows that the smartphone version of Windows isn’t going away, as Nadella says he is “committed to our firstparty devices including phones.” But it sounds as though Microsoft is giving up its chase for market share – and by extension, a vast array of phones for every market – and instead focusing on a handful of cases where Windows might be useful.
Satya Nadella says Microsoft isn’t killing Windows Phone and will go it alone if it has to
MICROSOFT LUMIA 435