Friday, 18 July 2014 04:53

Microsoft slashes jobs, mostly from Nokia Featured


Now we know what the Microsoft Nokia deal really means – some of the biggest job cuts in IT history. Microsoft CEO Satya Nadella has announced cuts of up to 18,000 staff over the next 12 months, most of them from the recently acquired Nokia phone division.

Nearly half the 25,000 employees who joined Microsoft as a result of that acquisition will lose their jobs, many more than anybody predicted. The cuts represent 14% of Microsoft’s total workforce, by far the largest cuts it has ever announced.

The cuts follow Nadella’s long memo outlining the company’s ‘cloud first, mobile first’ strategy earlier in the week. Mobile may be first, but it will have to do so with vastly depleted manpower.

The Nokia name will disappear from the company’s phones, though ‘Lumia’ will remain. Microsoft shares rose nearly 2% on the news to US$44.88, a figure not reached since the height of the tech boom in early 2000. Wall Street loves job cuts.

Nadella will hold a ‘town meeting’ later today at Microsoft’s sprawling campus in Redmond, outside Seattle, to explain the changes and answer what will no doubt be pointed questions from employees. He has already defended the cuts in an internal memo which has been widely leaked:

“Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment.

“First, we will simplify the way we work to drive greater accountability, become more agile and move faster. As part of modernising 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 organisations 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 organisation is starting at different points and moving at different paces.

“Second, we are working to integrate the Nokia Devices and Services teams into Microsoft. We will realise the synergies to which we committed when we announced the acquisition last September. The first-party phone portfolio will align to Microsoft’s strategic direction.

“To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsoft’s digital work and digital life experiences. In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows universal apps.”

My name is Satya Nadella. I’m from India and I’m here to sack you.


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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire. He is one of Australia’s longest serving and most experienced IT journalists. He is author of the only definitive history of the Australian IT industry, ‘A Vision Splendid: The History of Australian Computing.’

He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time weekly IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.



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