Microsoft Continues to Gut Nokia Handset Division

July 9th, 2015

Before I discuss Microsoft, let’s look at Google. Once upon a time, Google tried to build smartphones, and failed. In 2011, the search giant announced it was buying Motorola Mobility, a maker of mobile handsets, set-top boxes and other gear, for $12.5 billion. The purchase was finalized in 2012.

But Motorola handsets had been on the decline for years, and the division was spilling red ink. Google bought a loser, and the search giant didn’t have a strategy to improve things. A little more than two years later, failing to stem the red ink and sliding sales, Google had a fire sale and handed over the losing division to Lenovo for $2.91 billion. It was a waste for all concerned.

In the waning days of Steve Ballmer’s reign as CEO of Microsoft, he approved the purchase of Nokia’s handset division for $7.6 billion. The plan was to give Microsoft a hardware division with which to enhance the Windows Phone mobile platform, which was going nowhere fast. Of course, it came from the same executive who believed that Windows 8 would succeed, even though its interface was based on mobile gear that failed.

Well, Steve Ballmer is gone, and Satya Nadella is here, and he has been busy reorganizing Microsoft to embrace cloud services and software. Windows 10 throws out the worst excesses of Windows 8 and restores a semblance of the tried and true capabilities of the operating system that dominates the planet. There is a real Start menu again, and other features that enhance app and window management. If there’s a downside, it’s Microsoft’s belief that Windows 10 can successfully span all devices with support for touch-based screens, including smartphones.

Meantime, sales of Microsoft’s Nokia handsets haven’t exactly caught fire, despite favorable reviews for design and performance. Last year, Nadella fired 18,000 employees, of which an estimated 12,500 consisted of professional and factory workers that reportedly came from Nokia. This week, the company announced another restructuring, involving yet another 7,800 layoffs, again heavily focused on Nokia workers.

Indeed, one report indicates that the layoffs heavily impact Finland, where a high percentage of the Nokia workers reside. One report has it that 66% of Microsoft’s staff in that country would soon be out of jobs. In addition, Microsoft is taking a $7.6 billion writedown, equivalent to the original acquisition. It doesn’t undo it completely, since mobile handsets will still supposedly be built, but it’s questionable how long that’ll continue.

Now I wouldn’t suggest that the combination of the Windows 8 debacle and the failed Nokia acquisition were among the reasons why Ballmer ultimately stepped down, but it makes sense. It does appear that Nadella is working hard to restore the company’s reputation, and embrace a mobile-oriented future where Microsoft software and services are readily available on other platforms. The best mobile version of Office is on the iPad, and there is also an iPhone version. Mac users can get access to an Office 2016 beta that brings the office suite more in line with the Windows version, and fixes many of the bugs that afflicted previous versions.

A version of Office is also available on the Android platform, and it’s reportedly pretty decent, so clearly Microsoft isn’t kidding about spreading the joy. So even if fewer people care about buying Windows PCs, having Microsoft products available on the most popular mobile platforms, plus a greatly improved Mac version, will surely help the company’s bottom line. Of course that assumes that a large number of people downloading the apps will pay for Office 365 subscriptions, and it’s actually quite a decent deal.

My personal experiences with the Windows 10 betas has been extremely positive. I could barely use Windows 8, and always rushed from the tiled interface to the desktop, such as it was. Even Windows 8.1, which attempted to fix some of the worst ills of its predecessor, wasn’t altogether better. It certainly showed in the slow adoption rate.

Windows 10 is what Windows 8 should have been, a more natural descendant of Windows 7. While I’m not at all interested in a personal computer with a touchscreen, at least the operating system works well on a traditional desktop computer. You can use a mouse and keyboard and not be confronted with ill-thought features, such as the Charms settings screens, which only worked efficiently on touch-based systems.

This doesn’t mean everything in Windows 10 is just great. While the Cortana digital assistant may make sense on a personal mobile device, a large portion of the Windows user base resides in the business world. I can hardly see people speaking commands in their individual booths to get their PCs to do something, although I can see it possibly working in a home environment. Maybe that explains why Apple continues to resist calls to bring Siri to OS X. Apple has crafted some iOS influences into OS X, but the operating systems are clearly meant to be used on different machines, in different ways.

So when Apple speaks of the foolishness of merging a refrigerator with a toaster oven, it just makes sense.

Meantime, I feel bad for the thousands of people at Microsoft who will find themselves on the unemployment lines because of the bad decisions of its management.

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4 Responses to “Microsoft Continues to Gut Nokia Handset Division”

  1. DaveD says:

    My recollection of the mobile handset business was that Motorola was once the king of the hill. Nokia came along, pushed Motorola off and claimed the hill. Over the years mismanagement began to set in with Motorola having a big lead. We all know what transpired when a newbie entered the mobile market in 2007. Blackberry is still looking for a lifesaver today.

    Microsoft purchase of Nokia likely hastened its demise. A disappearance of the technologies and talented workers is the end result in many of past Microsoft purchases.

    However, I can see unloading a huge mistake. Almost like Windows 10 is to sweep Windows 8 under the rug. Window 8 will not go away, it will be a first thought when seeing a Microsoft Surface, the showcase hybrid machine.

    That mock funeral put on by Microsoft’s phone software group ushering the demise of Blackberry and iPhone is rising from the grave. Blackberry may go down due to the iPhone boom and in the “other” spot, I can see the Windows smartphones.

  2. usergnome says:

    The Nokia acquisition was 100% successful. It made Stephen Elop even richer. Mission accomplished.

  3. dfs says:

    “Maybe that explains why Apple continues to resist calls to bring Siri to OS X. Apple has crafted some iOS influences into OS X, but the operating systems are clearly meant to be used on different machines, in different ways.” I can more or less buy this for desktop machines. But laptops may be an entirely different story. Personally, I think Apple is making a mistake to withjold Siri from the Mac. This probably made sense when Siri was first introduced because the bandwidth consumption would have been more than they could have handled, but surely by now that’s a dead argument.

    One of Apple’s weaknesses is its market research. I would guess that up at Cupertino they have a very fuzzy idea of how popular this feature would be. They are probably just guessing, and in this case they could be guessing wrong.

  4. DaveD says:

    On bringing Siri to the Mac, I agree with the viewpoint of Gene and dfs.

    Not sure if it is a must-have feature as I don’t use her on my iPad. I did play with Speakeasy way back in Mac OS days. It was nice to see the Mac to perform some simple tasks via voice commands. However, using the keyboard was faster and the novelty wore off.

    Use of Siri in a work or public environment may be better with a headset microphone just like talking to Siri with the iPhone close to your mouth.

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