Believe it or not, there’s one thing formulaic crime shows get right—your signature really does reveal a lot about you. For example, handwriting analysts agree that a clear and legible signature is indicative of a person whose personality is open and straightforward. With that in mind, what do you think top tech personalities signatures say […]
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Nadella’s mobile first, cloud first strategy will centre more on software and cloud services than devices
Software giant Microsoft has announced a ‘restructure’ of its phone hardware business that amounts to a write off of the entire Nokia acquisition, reports Telecoms.com.
7,800 jobs will be lost, mainly in the phone business and on top of around $800 million in restructuring charges (over $100,000 per head!), Microsoft is recording an impairment charge of $7.6 billion, which is pretty much what Microsoft paidfor Nokia less than two years ago. No wonder Stephen Elop was shown the door.
In the light of this final Nokia disposal it’s hard to view Microsoft’s acquisition as anything other than a complete failure and to derive any positives from Elop’s involvement in the whole sorry saga. The only consolation is that the market had already priced this write-off into Microsoft’s share price, which at time of writing had been unaffected by the announcement.
“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,” said Microsoft CEO Satya Nadella. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”
The acquisition was always a strange one, as at the time Microsoft was still trying to apply its standard Windows business model to Windows Phone – i.e. get people to pay for the license. The problem was that a superior platform in the form of Android was already available for free, and Microsoft only secured Nokia’s loyalty with generous inducements. To then turn around and acquire its main customer was effectively an admission that the licensing model had failed in this case.
It was then assumed that Microsoft planned to make money from the devices themselves, in spite of the fact that the rest of the smartphone industry with the exception of Apple and Samsung was struggling to break even. Inevitably this was soon revealed to be a forlorn quest and Microsoft started supporting other mobile platforms.
Today Microsoft’s approach to mobile is to try to sell software and services such as Office 365 and Skype to all mobile platforms. At the same time Windows 10 has been designed to be one unified platform regardless of device, but with smartphones seemingly relegated to an afterthought.
Here’s Nadiella’s full internal email on the matter, which also touches on recent disposals in other non-core areas such as mapping and advertising:
Team,
Over the past few weeks, I’ve shared with you our mission, strategy, structure and culture. Today, I want to discuss our plans 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. In all we do, we will take a long-term view and build deep technical capability that allows us to innovate in the future.
With that context, I want to update you on decisions impacting our phone business and share more on last week’s mapping and display advertising announcements.
We anticipate that these changes, in addition to other headcount alignment changes, will result in the reduction of up to 7,800 positions globally, primarily in our phone business. We expect that the reductions will 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. We are deeply committed to helping our team members through these transitions.
Phones. Today, we announced a fundamental restructuring of our phone business. As a result, the company will take an impairment charge of approximately $7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services business in addition to a restructuring charge of approximately $750 million to $850 million.
I am committed to our first-party devices including phones. However, we need to focus our phone efforts in the near term while driving reinvention. 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.
In the near term, we will run a more effective phone portfolio, with better products and speed to market given the recently formed Windows and Devices Group. We plan to narrow our focus to three customer segments where we can make unique contributions and where we can differentiate through the combination of our hardware and software. We’ll bring 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.
In the longer term, Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly. Our reinvention will be centered on creating mobility of experiences across the entire device family including phones.
Mapping. Last week, we announced changes to our mapping business and transferred some of our imagery acquisition operations to Uber. We will continue to source base mapping data and imagery from partners. This allows us to focus our efforts on delivering great map products such as Bing Maps, Maps app for Windows and our Bing Maps for Enterprise APIs.
Advertising. We also announced our decision to sharpen our focus in advertising platform technology and concentrate on search, while we partner with AOL and AppNexus for display. Bing will now power search and search advertising across the AOL portfolio of sites, in addition to the partnerships we already have with Yahoo!, Amazon and Apple. Concentrating on search will help us further accelerate the progress we’ve been making over the past six years. Last year Bing grew to 20 percent query share in the U.S. while growing our search advertising revenue 28 percent over the past 12 months. We view search technology as core to our efforts spanning Bing.com, Cortana, Office 365, Windows 10 and Azure services.
I deeply appreciate all of the ideas and hard work of everyone involved in these businesses, and I want to reiterate my commitment to helping each individual impacted.
I know many of you have questions about these changes. I will host an employee Q&A tomorrow to share more, and I hope you can join me.
Satya
Nadella said Microsoft is well on its way to becoming a cloud-first, mobile-first company
Microsoft pulled in $21.7bn in revenues for the three months ending March 31, 2015, up 6 per cent year on year. But the company said its commercial cloud revenue more than doubled in the past quarter alone.
Microsoft reported mixed success in its devices segment (Surface revenues increased 44 per cent; phone revenues decreased, with volumes this quarter shifting from 10.5 to 8.6 million units sold) and Windows OEM revenues declined.
But he company reported commercial cloud revenue grew 106 per cent (111 per cent in constant currency), driven by Office 365, Azure and Dynamics CRM Online. Microsoft claims its cloud services now have an annualized revenue run rate of $6.3bn.
Office 365 and Azure accounts for a great deal of that growth according to Satya Nadella, Microsoft’s chief exec. Office 365 consumer subscribers increased to over 12.4 million, up 35 per cent sequentially
“We have 50 trillion objects stored in Azure, a three times growth year-over-year in storage transactions, and more than five trillion in March alone. And Azure websites are growing with nearly half a million sites hosted,” Nadella said during a call with analysts and journalists this week.
“It’s clear that we are well on our way to transforming our products and businesses across all of Microsoft. The early signs are evident in how our customers are using our products.”
“Our momentum in the cloud is a highlight. Increasingly, customers are choosing Microsoft cloud services to transform their own businesses, going beyond just moving existing workloads to the cloud. These results showcase our ability to transform and perform simultaneously.”
However, Office commercial products and services revenue declined 2 per cent.
“Enterprise penetration is accelerating with over half of all agreements signed during the quarter including cloud services,” added Amy Hood, the company’s chief financial officer.
Microsoft chief exec Satya Nadella previewed a number of new services at Convergence this week
Microsoft revealed a slew of new cloud offerings and updates to its productivity offerings at the company’s annual Convergence conference this week, including a developer and enterprise preview of Office 2016, a re-branded Microsoft Lync (Skype for Business), and an Azure-based suite of Internet of Things services.
The company was keen to show off Office 2016, which will be available later this year and ship with a few new services – notably Office Delve, which uses machine learning algorithms to surface corporate Office 265 documents and files that are relevant to specific users in a cloud-based collaboration environment.
“You know how Facebook has a newsfeed? Think of this as your work newsfeed,” said Satya Nadella, chief executive officer of Microsoft. “It’s about enabling anyone in the organisation to find useful information without having corporate hierarchies get in the way.”
Microsoft also announced the general availability of PowerBI, it’s analytics and dashboarding platform, which will come with new connectors for Google Analytics, Microsoft Dynamics Marketing, Zuora, Acumatica and Twilio – with connections for other analytics platforms coming in the near future.
Microsoft Lync, the company’s enterprise collaboration and communications platform, has been re-branded to Skype for Business and been given a noticeable facelift.
The company also unified its Azure-based analytics and machine learning offerings into what Microsoft is calling the Microsoft Azure IoT Suite. The suite combines Azure Stream Analytics and Azure ML (machine learning) and is being aimed at developers creating real-time data services.
“Devices will come and go. But the most interesting thing is the data being collected,” Nadella said, adding that the rapid increase in the volume and velocity of data requires better and more unified tools for developers.
“We’re going to have something like 26 billion internet-connected devices and 44 zettabytes of data in the cloud by 2019,” Nadella said. “How do we make sure that the ability to have access to that data, the ability to act on the insight – those small patterns that, we as humans, recognise in data? The real power comes from our ability to act on those insights.”