Microsoft today announced plans to cut 7,800 jobs and streamline its mobile phone business. Despite the big changes, the company remains committed to its smartphone platform. With Windows 10 due to arrive this month and Windows 10 Mobile due in the fall, now would be a terrible time for long-time developers to give up on Microsoft.
There's no doubt things look pretty ugly at the moment.
Microsoft has more or less admitted defeat in the smartphone space. The company said the bulk of the headcount reduction will be focused on its smartphone hardware business, though other business units will feel the pain, too.
Microsoft acquired Nokia's handset division in 2014 for $7.2 billion. It hoped combining the OS and hardware units under one roof would lead to tighter integration of the two and stronger products. That didn't happen. Rather than improve its standing in the smartphone market, Microsoft's share has dropped against Apple's iOS and Google's Android platforms.
In addition to the employee cuts, Microsoft is taking a massive write down of $7.6 billion -- more than the purchase price of Nokia's assets. As such, Microsoft is also revamping the phone business moving forward.
The plan is to drop the wide-ranging product portfolio it offers today. For example, Microsoft makes Windows handsets that range from entry-level Lumia 500 series to the flagship Lumia 1500 series with prices swinging from $100 to $500 or more. Microsoft CEO Satya Nadella laid plans for three device categories moving forward: business-class smartphones, mass-market smartphones, and high-end flagships for Windows Phone fans.
"I am committed to our first-party devices including phones," said Nadella in an email to employees. "However, we need to focus our phone efforts in the near term while driving reinvention. We are 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. Our reinvention will be centered on creating mobility of experiences across the entire device family including phones."
Microsoft's efforts in the smartphone space have been uneven, prone to fits and starts in sometimes opposing directions. Developers might be tempted to give up. After all, what has Microsoft done to warrant loyalty over the years? Windows Phone 7, 7.1, and 7.5 were all compatible, but then Microsoft changed everything -- requiring complete app rewrites -- with Windows Phone 8. It's doing practically the same thing again with Windows 10 Mobile, which breaks some backward compatibility.
Windows 10 may not be the perfect, but it is the future for Microsoft. The company has about 1 billion active devices worldwide and plans to expand that to 2 or 3 billion within a few years. With more than 1 billion potential customers on the line, developers would be making a mistake to think Microsoft is no longer in the game.
Universal apps are the key, here. Microsoft may have just made it far less attractive to write apps for Windows smartphones, but universal apps will work across Windows 10 PCs, tablets, and smartphones. The company's developer teams haven't commented on today's news yet, but you can be sure they'll talk up the importance of universal apps in the weeks and months ahead.
Let's not forget that Microsoft has other businesses. The company divested some of its imaging assets last week so it can focus efforts on delivering better mapping products, such as Bing Maps, Maps app for Windows, andi its Bing Maps for Enterprise APIs. It's still running Bing Search, too. It recently struck partnership with AOL and Yahoo for advertising purposes. It will rely on them to deliver ads along with Bing Search results. This will let it concentrate on its search business. Microsoft said it views its search technology as core to its efforts, spanning Bing.com, Cortana, Office 365, Windows 10 and Azure services.
Microsoft still represents a good opportunity for developers. It will be interesting to watch how it evolves its hardware business in the months ahead to match its Windows 10 strategy -- which is one thing that didn't change today. Windows 10 arrives in a few week. Hopefully your apps will, too.