Microsoft announced it will layoff 7,800 employees as it restructures its phone business to accommodate the $7.6 billion acquisition of Nokia Devices and Services.
In an e-mail to employees, Microsoft CEO Sataya Nadella said the move was in effort to “focus our talent and investments in areas where we have differentiation and potential for growth, as well as how we’ll partner to drive better scale and results.”
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The layoffs are expected to take place over the “next several months.”
“I don’t take changes in plans like these lightly, given that they affect the lives of people who have made an impact at Microsoft,” Nadella said. “We are deeply committed to helping our team members through these transitions.”
The restructuring comes with a steep price tag. Nadella’s e-mail said the restructuring will cost somewhere between $750 million and $850 million.
The Microsoft head honcho said the company’s focus will be to reinvent itself in the mobile device market.
“We need to focus our phone efforts in the near term while driving reinvention,” Nadella explained. “We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family,” Nadella said.
Microsoft recently formed a Windows and Devices Group that they hope will help them run a “more effective phone portfolio, with better products and speed to market.”
According to Nadella’s e-mail, the company’s new focus will be on three customer segments where they believe they “can make unique contributions and where we can differentiate through the combination of our hardware and software.”
The focus will now be on bringing “business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they’ll love,” the e-mail said.
Nadella also announced there will be increased focus on mapping and advertising businesses. The mapping changes come after a deal with Uber and other partners to acquire imagery and mapping data. Microsoft hopes this help improve products such as its Bing Maps, Map app for Windows and Bing Maps for Enterprise APIs.
The new advertising focus will be on search functions. Partnerships with AOL and AppNexus allow the company’s search engine, Bing to power search and search advertising across the AOL portfolio of sites, in addition to Yahoo, Amazon.com and Apple.
Last year Bing grew 20% in query share, as well as a 28% increase in advertising revenue over the past year, according to the e-mail.
