Microsoft takes a hard look at its mobile biz
Painful as it is, the company appears to have a viable strategy moving forward
Microsoft was already playing catch-up to Google and Apple by the time it spent $7.2 billion on Nokia’s smartphone business. It has only gotten worse in the two years since. A lot worse, given Wednesday’s announcement that Microsoft was essentially removing the last of the shrapnel from the ill-fated acquisition.
These are brutal ( but only the latest) wounds: an impairment and restructuring charge amounting to some $950 million, of which approximately $200 million will relate to severance payments. Up to 1,850 jobs lost, nearly three of four in Nokia’s Finnish backyard.
And this comes a week after Microsoft discarded what remained of its budget “feature phone” business.
Painful as it is, Microsoft appears to have a viable strategy moving forward, mostly built around Windows 10 and existing strongholds in the enterprise. Microsoft is not giving up on the mobile phone business entirely, but rather pretty much waving bye-bye to consumer buyers and focusing almost exclusively on commercial customers.
“We’re scaling back, but we’re not out,” Microsoft’s Terry Myerson, executive vice president for the Windows and Devices group, wrote in a memo sent to Microsoft employees.
The strategy attempts to make its popular business productivity tools the go-to service on any mobile device. Microsoft also faces a stiff challenge here. Its consumer-focused rivals, such as Apple, have also set their sights on the business customer.
“I wish the Microsoft that bought Nokia devices group two years ago were the Microsoft of today; things could have been very different,” tweeted Creative Strategies analyst Carolina Milanesi. Indeed, when Microsoft pulled the trigger on the deal, it hoped that Nokia, once a mobile high-flier in its own right, could recapture its past glory and help Windows become a viable mobile alternative to iOS and Android.
As it turned out, “that battle was too big for them,” Milanesi said in an interview. “And I think that where (Microsoft is) now, they are much more conscious of their limitations and also more conscious of the power that they have.”
That power resides in the largely well-received Windows 10, which did not yet exist at the time of the Nokia acquisition, but which today is embedded in some 300 million monthly active devices. (Windows 10 is a free upgrade for some users, a promotion that ends July 29.)
Microsoft’s ultimate success will be defined by just how many of you, as consumers or as employees in a commercial enterprise, choose to embrace the Windows ecosystem.