By James Moar
Satya Nadella has announced that Microsoft will be laying off 7,800 workers in a reshuffle, accompanied by a $7.6 billion write-off related to the acquisition of Nokia. This is despite Lumia sales that have been showing steady increases throughout 2014, although they do not come close to the likes of Samsung, Apple or even LG.
A Nexus-like Future for Microsoft Devices?
The formation of the Windows and Devices Group earlier this month was an early acknowledgement that something needed to be done about this – Microsoft is looking to integrate its software and hardware more tightly than it has previously. Nadella talks of ‘moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family.’
While Microsoft is not going to give up on hardware altogether, the business may follow Google’s approach for Nexus devices – using Microsoft’s hardware capabilities to create best-in-class examples of how to execute for its software, while licensing others to produce most of the devices.
Integrating Hardware into the Software Division
Given the headline Continuum feature of Windows 10, this makes sense but may prove a headache.
To truly enable a flexible ecosystem for Windows that is platform-centric, rather than device-centric, it needs to run its software on third-party OEM devices.
However, the roll-out of Continuum to mobiles has been delayed due to hardware considerations. Allowing others to build Windows 10 phones is only likely to fragment these capabilities further.
The involvement of others in this process may take time to materialise, given that Nadella outlines broadening the ecosystem as a longer-term aim for the company.
To paraphrase part of Nadella’s original memo, Microsoft’s own devices are now going to be focused on providing productivity, value and good flagship devices. Not that this breaks with any value expressed in its previous devices; the ‘affordable flagship’ Lumia 830 and the business-oriented success of the Surface Pro 3 both come to mind.
A partnership-based approach will be a requirement for the new division; without as many dedicated hardware staff, the company will have to rely on the expertise of others to ensure that its software is properly integrated with the devices Microsoft wants to leverage.
This will bring in new licensing opportunities to bring Microsoft back to its software-centric roots. If this is a success, then Microsoft is unlikely to need a fully-fledged device team to manage its smartphone offerings, allowing it to focus on the software platform and entirely new devices, like the Hololens.