Microsoft 'poised to axe more jobs from hardware, smartphones'
Microsoft is set to announce a further round of job cuts, less than a year after a round of redundancies hit 18,000 roles.
Microsoft could announce the new layoffs as early as Wednesday, according to the New York Times (NYT), which cited anonymous sources briefed on the situation.
The layoffs would be in addition to Microsoft's biggest ever round of job cuts, which began last July after its €5.4bn acquisition of Nokia's devices business. Those layoffs, affecting 18,000 staff including 12,500 from Nokia, occurred in several waves during July, September, and October 2014, and were followed by another round this April affecting hundreds of employees. A Microsoft spokesperson told ZDNet at the time that the April 2015 cuts were the last round of the 18,000 layoffs announced in July 2014.
According to the NYT, the new cuts are expected to hit staff in Microsoft's hardware group and will include more layoffs from its smartphone unit.
The cuts may not be that surprising, given Microsoft executives' suggestions over the past several months that more tough decisions need to be made over its phone business. Earlier this year the company flagged up that it might need to write off a big chunk of its Nokia acquisition related to the phone hardware side of the business.
While Microsoft's smartphone volumes have been rising, Microsoft CEO Satya Nadella said the company needed to "take further action to reduce our costs across devices as we execute on our Windows 10 first-party hardware plans".
In late June Nadella told employees in a company-wide email that the company would need to "make some tough choices in areas where things are not working and solve hard problems in ways that drive customer value". In other words, more layoffs could occur, or more products could be phased out.
The rumoured cuts also follow a recent reorganisation which saw Microsoft combine its Windows and Devices units, and the announcement by Nadella that Stephen Elop, who headed up Microsoft's smartphone business after its acquisition of Nokia, would "retire".
Some took the reorganisation as a sign that Microsoft may exit the first-party hardware business, which includes Microsoft products Surface, HoloLens, Windows Phone hardware, Surface Hub, and XBox. Yet, as Nadella said in April, the company does intend to execute its Windows 10 first-party hardware plans, despite needing to make tough decisions along the way.
As for smartphone hardware, as ZDNet's Mary Jo Foley pointed out, it's unlikely Microsoft would dump its smartphone hardware business altogether, given its investments in Windows 10 Mobile and the absence of OEM partners building flagship hardware for Windows Phone. Rather, it appears Nadella is reshaping the company so hardware will play a supporting role to software and services.
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