Microsoft to restructure its phone hardware business

Rebecca Gibson
Rebecca Gibson
By Rebecca Gibson on 09 July 2015
Microsoft to restructure its phone hardware business

Microsoft is to scale down and restructure its phone hardware business to allow the company to better align resources to its business strategy.

When Microsoft acquired its phone hardware business from Nokia Devices and Services for US7.5 billion in April 2014, the company said it planned to grow a standalone phone business that targeted the affordable mobile devices market.

Outlined in an e-mail to Microsoft employees, CEO Satya Nadella’s plans now call for a more focused phone portfolio.

“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,” Nadella said. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”

Following on from the loss of 18,000 jobs in the phone hardware business unit last year, Nadella’s e-mail also revealed that up to 7,800 jobs will be lost, primarily in the phone business. As a result, the company will record an impairment charge of around US$7.6 billion related to assets associated with its acquisition of the Nokia Devices and Services business in the fourth quarter of this financial year. Microsoft will also face a restructuring charge of around US$750 million to US$850 million.

Expected to be complete by the end of Microsoft’s financial year, these plans follow recent initiatives to better align the company’s structure with its business priorities.

As part of these plans, the company’s hardware and operating systems divisions will be merged into a single Windows and Devices Group, while its engineering efforts will be led by three main groups. These include the Windows and Devices Group; the Cloud and Enterprise team, which will absorb the Dynamics development team; and the Applications and Services Group.

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