5 Ways Microsoft Messed Up Mobile
Plenty of mobile mishaps led to Microsoft's decision to cut thousands of jobs in its phone division.
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Fresh evidence of Microsoft's crumbling mobile business hit the tech community July 8.
Microsoft has announced yet another reorganization intended "to better focus and align resources," the company reported. A new round of layoffs will eliminate 7,800 jobs, specifically in its struggling phone business.
As a result of the restructure, Microsoft will also record an impairment charge of about $7.6 billion related to assets associated with its purchase of Nokia last July. It will also take on a restructuring charge totaling between $750 million and $850 million.
The layoffs and financial charges will take place over the next few months and finish by the end of this fiscal year, Microsoft noted.
[ There's always Virtual Reality. Read: HoloLens Startup Cofounded By Former Microsoft Engineer.]
This news marks one of many restructures to occur under CEO Satya Nadella. Late last month, Microsoft sold Bing Maps imagery technology to Uber and transferred its display advertising business to AOL. Each announcement involved the transfer or layoff of Microsoft employees.
In mid-June, organizational changes within the engineering team resulted in the departure of former Nokia CEO Stephen Elop and executives Kirill Tatarinov and Eric Rudder. Last July, the Nokia acquisition led to 18,000 job cuts.
This reorganization, like many Microsoft shakeups we've seen over the past year, is intended to better align corporate strategy with the new priorities Nadella has implemented since stepping into the top position over a year ago.
Nadella wrote in an email to employees that he is committed to Microsoft's first-party devices, including phones. His focus, however, is on driving mobile efforts in the near term while prioritizing 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," Nadella wrote.
Microsoft's leader is taking big steps to reinvent its mobile strategy. It could be said Nadella is trying to make the best of a bad situation; after all, the struggling Windows Phone division fell into his lap when he took over for former CEO Steve Ballmer.
Competitors Apple and Google have long outpaced Microsoft in mobile market share. Where did Redmond go wrong in its mobile evolution? Let's take a look at a few key mistakes that put Microsoft's mobile division in its currently fragile state.
Microsoft ventured into mobile long before Apple's iPhone even entered its planning stages. The problem was, the developers behind Windows Mobile never put any real thought into what customers wanted from a mobile operating system. Windows Mobile was designed to look like a desktop and ultimately failed to appeal to a broad consumer base.
Bill Gates acknowledged this mistake in a 2013 interview with CBS, during which he admitted Microsoft didn't "get out in the lead very early" in the mobile space. "We didn't miss cell phones, but the way that we went about it didn't allow us to get the leadership," he said. "So it's clearly a mistake."
"Microsoft's mistake was not moving faster to start from scratch on their mobile strategy when the iPhone appeared," said Frank Gillett, Forrester VP and principal analyst, in an email to InformationWeek. "Windows CE was not succeeding compared to Blackberry and Palm, and the iPhone was transformative beyond those two."
Even when the iPhone hit the market, Microsoft failed to recognize its appeal. Former CEO Ballmer's reaction to the original iPhone was a bad omen for the future of Microsoft's mobile division
"There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item," he said.
Google did a good job imitating the iPhone's many innovations, Forrester's Gillett explained, and enhancing Android's appeal with strong cloud service offerings. By the time Microsoft launched its new mobile operating system, it was too late to capture significant market share with a product that was markedly better than Apple's or Google's. Microsoft also failed to provide the cloud services and variety of apps that Google did in order to compete with the iPhone, said Gillett.
Since its purchase of Nokia in 2014, Microsoft has lost money and mobile market share. The continuous decline of its mobile division has inspired Redmond's most recent financial and organizational changes.
Microsoft bought Nokia in a $7.2 billion deal intended to help make Windows Phone more competitive with iOS and Android. Industry opinions of the buy varied. It was deemed a "Hail Mary" acquisition, a colossal mistake, and a bold move necessary to make Microsoft relevant in the smartphone space. Turns out Microsoft's Nokia buy was too little too late, as an acquisition alone couldn't give Windows Phone the giant boost it needed to compete with Apple and Google.
Ballmer didn't recognize the value of building Office apps for iOS, claiming it unnecessary because people could access Office through their Internet browsers.
Many, including analysts and industry watchers, disagreed. "The day [Microsoft introduces] Office for iOS and Android, they'll start printing money," said IDC's Bob O'Donnell to ComputerWorld. "But if they wait too long, they risk people finding alternatives, or workarounds." The idea was that, in order to get more people using Microsoft products, eventually the company would have to accommodate iOS and Android users.
Nadella has since taken the leap, acknowledging that Micrososft is competing in a "mobile-first, cloud-first" world. Microsoft has made Office available on both iOS and Android, and an updated Office for Mac 2016 is in preview.
Ballmer didn't recognize the value of building Office apps for iOS, claiming it unnecessary because people could access Office through their Internet browsers.
Many, including analysts and industry watchers, disagreed. "The day [Microsoft introduces] Office for iOS and Android, they'll start printing money," said IDC's Bob O'Donnell to ComputerWorld. "But if they wait too long, they risk people finding alternatives, or workarounds." The idea was that, in order to get more people using Microsoft products, eventually the company would have to accommodate iOS and Android users.
Nadella has since taken the leap, acknowledging that Micrososft is competing in a "mobile-first, cloud-first" world. Microsoft has made Office available on both iOS and Android, and an updated Office for Mac 2016 is in preview.
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