Nadella's headcount reduction is larger than expected

We heard reports earlier this week that Microsoft would be announcing a huge round of layoffs. Microsoft CEO Satya Nadella last week foreshadowed the cuts in a letter to employees by outlining this plans to “flatten the organization and develop leaner business processes.”
Today, Microsoft made the move official and the numbers are staggering. Earlier reports were expecting cuts ranging from 5,800 employees [on the low end of estimates] to nearly 13,000 [on the high end]. However, Nadella announced this morning announced that 18,000 positions would be cut over the next year.
Nadella says that 12,500 of those positions will come from redundancies as a result of its Nokia Devices and Services acquisition, and that it will eliminate the first 13,000 positions within the next six months. Nadella promises that the job cuts will be down in a “thoughtful and transparent” manner, and that severance packages would offered to affected personnel.

Microsoft CEO Satya Nadella
This move will allow Microsoft to simplify its workflow and “drive great accountability, becoming more agile and move faster.” Microsoft also plans to simplify its management structure, including “flattening organizations and increasing the span of control of people managers.”
As for future product news, there was one nugget of information to be gleaned from Nadella’s announcement. Nokia’s [now, Microsoft’s] endeavor into the world of Android-based smartphones may be soon coming to an end. Nadella confirmed that it would “shift select Nokia X product designs to become Lumia products running Windows,” which would allow it to further unify its goal towards Windows Universal Apps.

Microsoft’s Stephen Elop echoed those sentiments in his own letter, adding:
We will be particularly focused on making the market for Windows Phone. In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest growing segments of the market, with Lumia. 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.
With Microsoft reducing its headcount, and looking to unify its devices and software operations, Android just doesn’t make sense for its aspirations in the devices market. It should also be noted that Microsoft is already able to hit extremely low price points without the help of Android, as witnessed by AT&T’s announcement of the Nokia Lumia 635.
That smartphone has meager specs (4.5” 480x854 display, 1.2GHz quad-core Snapdragon 400 processor, 512MB of RAM, 8GB of storage, microSD slot, 5MP camera, and LTE), but it comes packing Microsoft’s latest mobile operating system: Windows Phone 8.1. That means that even its lowliest devices feature support for features like Cortana, Word Flow, and Action Center — this is something that Microsoft would NOT be able to provide with a hacked up Android operating system.

And best of all, the Lumia 635 will be offered on AT&T for $99 off-contract beginning July 25.

Sources: Microsoft [1], [2]

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