Today’s restructuring at Microsoft included layoffs of 18,000 people and one platform.
In separate memos, CEO Satya Nadella and Executive Vice President Stephen Elop made it abundantly clear it was also giving a pink slip to the forked version of Android it inherited with Nokia’s devices division.
That’s a surprise move to some observers, who had bet on the proposition that Microsoft was going to give up on Windows Phone and go all in with Android. They can now tear up those losing tickets.
Microsoft’s mid-2014 Android strategy could best be described as “complicated”:
- Nokia X series devices, including the X2 device announced less than a month ago, are powered by Nokia X Software Platform 2.0, which is based on the Android Open Source Project.
- The Nokia Store serves as a proprietary Android app store exclusive for Nokia X devices.
- Microsoft-developed Android apps like OneDrive, OneNote, and Outlook.com are available via the Google Play Store, with strong rumors that a touch-first version of Office for Android will appear this year.
Effective immediately, any work on future members of the Nokia X family stops, with those resources going to “lower-cost Lumia devices” powered by Windows Phone. Microsoft says it will “[continue] to sell and support existing Nokia X products,” but it’s hard to imagine that effort being anything but half-hearted and transitional.
This move had to be a surprise even for some Microsoft insiders. Just yesterday, Microsoft Devices “reiterated its commitment to the Saudi market” with the Middle East launch of the X2. And hours after today’s restructuring announcement, the Nokia.com Global website still features the X2 on its home page, above flagship Windows Phone products.
That tagline is inadvertently prescient: Say hello to Android apps, but say goodbye to Android devices under any of Microsoft's brands.
After today’s announcement, the only active Android effort left at Microsoft is its portfolio of business and consumer apps and their complementary services. You can expect development on them to continue full throttle—Android is one of the key “other ecosystems” for which Nadella has previously pledged to build Microsoft productivity tools and services.
Elop’s memo says Microsoft’s mobile phone business will target two markets, with engineering teams literally miles apart. One team, in Salo, Finland, will tackle "future, high-end Lumia products," while a separate group in Tampere, Finland, will design "more affordable devices."
At the low end, those affordable smartphones will be designed with a focus on “driving Lumia volume in the areas where we are already successful today in order to make the market for Windows Phone.” Those regions include the company’s new manufacturing hubs in Vietnam and Brazil. Brazil in particular has been a sucess story for Microsoft, and it's the gateway to a large emerging market in the rest of South America.
Conveniently, choosing those markets dodges a confrontation with Google’s Android One effort, under which Google reportedly will subsidize handsets and spend $1 billion on advertising for those devices in India.
Meanwhile, premium devices will be delivered “in alignment with major milestones ahead from both the Windows team and the Applications and Services Group.” It doesn’t take a secret decoder ring to figure out that means a new wave of high-end Lumia devices running Universal Windows Apps and new versions of Windows and Office in early 2015.