Driven in part by its Nokia hardware acquisition and a recognition of the need to restructure for “post-PC” competitiveness, Microsoft CEO Satya Nadella
announced widely anticipated layoffs this morning. A total of 18,000 jobs will be eliminated by June 30, 2015, most by the end of the year.
The bulk of the layoffs (“12,500 factory direct and professional employees”) will impact former Nokia personnel. The company said it will take a charge of up to $1.6 billion related to employee severance and other associated expenses.
In a letter to employees, Nadella said the cuts were intended to accomplish the following streamlining and simplification:
[W]e will simplify the way we work to drive greater accountability, become more agile and move faster. As part of modernizing our engineering processes the expectations we have from each of our disciplines will change. In addition, we plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers. In addition, our business processes and support models will be more lean and efficient with greater trust between teams. The overall result of these changes will be more productive, impactful teams across Microsoft. These changes will affect both the Microsoft workforce and our vendor staff. Each organization is starting at different points and moving at different paces.
Unlike his predecessor Steve Ballmer, Nadella is less focused on the PC as the center of the universe and more focused on mobile and cloud-based services. “We live in a mobile-first and cloud-first world,” Nadella opined in an all-company email last week.
The changes and effort to improve efficiency and time to market acknowledge that Microsoft is now an underdog, engaged in a battle for mind share and market share. Seen in a cross-platform context the Microsoft/Windows operating system is well behind Android while Mac/iOS is nearly at parity.
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