In an email sent to employees today (17 July), Microsoft CEO Satya Nadella said its work towards finding “synergies” with the Nokia devices and services business it acquired earlier this year will account for 12,500 of the eliminated jobs. This swingeing round of cuts is reported to affect marketing, engineering and other areas where there is overlap with the Microsoft business, as the company looks to make $600m in annual cost savings by 2016.
Microsoft says the Nokia phone portfolio going forward will focus on “breakthrough innovation that expresses and enlivens Microsoft’s digital life experiences”.
Some changes have already been made. Microsoft’s smart devices and mobile phones divisions have been consolidated into one division, led by Jo Harlow.
In a separate email to staff, Nokia’s former CEO and executive vice president of Microsoft’s devices and services business unit, said: ”It is particularly important to recognise that the role of phones within Microsoft is different than it was within Nokia. Whereas the hardware business of phones within Nokia was an end unto itself, within Microsoft all our devices are intended to embody the finest of Microsoft’s digital work and digital life experiences, while accruing value to Microsoft’s overall strategy. Our device strategy must reflect Microsoft’s strategy and must be accomplished within an appropriate financial envelope.”
In addition, it plans to shift some Android-running Nokia X designs to become Lumia products running Windows, to strengthen its position in the affordable smartphone space.
Outside of the Nokia division, Nadella says Microsoft plans to have fewer layers of management to “accelerate the flow of information and decision making”.
Further reductions across the business are expected to be announced within the next six months.
Microsoft also says that while it is eliminating roles in some divisions, it will be adding others in areas strategic to the business.
Last week Nadella outlined Microsoft’s transition from being a “devices and services” company to becoming “the productivity and platform company for the mobile-first and cloud-first world”.
Nadella says he will provide further specifics on where it is focusing its innovation investments on 22 July during the company’s quarterly earnings call.