Win­dows Phone isn’t go­ing away

Tech Advisor - - NEWS -

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


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