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Satya Nadella makes two announcements on Microsoft's future

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On Thursday Redmond-based Microsoft's CEO Satya Nadella made two announcements that were of no surprise to anyone. The first of these was that the Redmond giant would be laying off 18,000 employees and that 12,500 of them would come from the newly acquired Nokia mobile division. The second was that they would discontinue the Nokia X android-based smartphone.

“The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year,” Mr. Nadella wrote in a memo. He later added, “ In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows.”

The first of these announcements was expected for two reasons: The first of these was that when a new CEO comes in you can expect changes and that usually includes layoffs. The second reason was when in April they officially acquired Nokia's mobile division. When any company acquires another company there is always going to be overlap of position meaning layoffs. The only surprise on this was how large of a percentage of these employees would be coming from Nokia.

The only surprise on this second announcement is why would Mr. Nadella would unveil an android-based smartphone in the first place. One possible answer is that Nokia probably had the smartphone in development long before the acquisition was finalized. That would mean that Microsoft would have no say in the development. By the time the Microsoft took position of Nokia mobile the smartphone was to the point that it couldn't be changed over to Windows before time to unveil it. So, they just went ahead with the planned debut of the smartphone rather than kill it off outright.

“In addition to the portfolio already planned, we plan to deliver additional lower-cost Lumia devices by shifting select future Nokia X designs and products to Windows Phone devices. We expect to make this shift immediately while continuing to sell and support existing Nokia X products,” Stephen Elop wrote in an email to employees.

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