Microsoft Kills Entertainment Unit, May Shelve Flagship Lumia "McLaren"
July 18, 2014 7:40 PM
Neither Halo series will be affected by cuts
It's a bit early to tell whether new Microsoft Corp. (
CEO Satya Nadella
will be better or worse for Microsoft than
previous CEO Steve Ballmer
, who today is spending his days as
the new owner of the Los Angeles Clippers
. But we've already seen fireworks from Mr. Nadella and some of it hasn't been pretty.
I. Nokia X -- Casualty; Nokia Lumia McLaren -- Coincidental Cancellation
On Wednesday it announced perhaps the biggest tech layoff plan of 2014, committing to
culling 18,000 employees
from the herd. The move -- which Mr. Nadella says will allow Microsoft to be "more agile and move faster" -- will lay off roughly 12,500 Nokia Devices employees (
roughly 2 out of every 5
Nokia Devices employees) and 6,500 Microsoft employees (roughly 1 in 20 Microsoft employees, globally).
The big question everyone wants to know is how will this affect Microsoft?
In the case of Nokia Devices, part of the cuts were organic, as Microsoft was primarily interested in Nokia's resurgent smartphone business and not necessarily its
fading Asha feature phone business
dropped 30 percent
between September (when Microsoft announced
the $7.2B USD purchase
) and April (
when the acquisition completed
Many complained from the start that the Android reskinning project, Nokia X, diluted Microsoft's Windows Phone brand. And while its first generation interface bordered on clumsy to bizarre at times, the decision to phase out
must have been a bit harder.
Nokia X was a predictable cut.
The second generation Nokia X2
had only just launched and did show signs of improvement. And perhaps driven by the potential for easier pirating of software, the first generation model had cleared an impressive 10 million units in its Feb.-Mar. pre-sale, effectively selling out its first production run.
But Microsoft probably made the right choice. With the Lumia 520/521 already competing with the Nokia X/X2 at similar price points (<$150 USD), and with
the Lumia 530 "Rock" waiting in the wings
, the Nokia X project seemed a distraction in spite of its promising sales. Also making the choice easier, was
the Lumia 520/521's own sales success
. With the Lumia 530 "Rock" inbound, Microsoft would suffer too much, volume wise.
Somewhat more surprising and disappointing are reports that McLaren -- Microsoft's tentative multi-carrier fall flagship -- is reportedly cancelled altogether. And even more surprising is that this is reportedly not even due to the layoffs, but rather due to Microsoft being unsatisfied with developer response to a very early test build of the UI. It appears Microsoft feared McLaren would be taken as precisely what it had complained Samsung Electronics Comp., Ltd.'s (
) hands-free tech was -- a gimmick.
For those unaware, McLaren was rumored to be the coolest/most compelling Windows Phone. It was supposed to be
the first Nokia Lumia to feature Microsoft's "3D Multitouch"
, a technology that not only senses your fingers' positions on and near the screen, but also how far they are when off the screen.
For those who haven't seen it, here's a quick demo:
As we've seen with the Amazon.com, Inc. (
, unique hardware can draw plenty of attention/hype, even in a device with less-than-Earth-shattering hardware specs. In McLaren's case, the pitch would likely be even more compelling, as it was reportedly packing a bleeding edge spec including a quad-HD (QHD) (2560x1440 pixel) screen, a 20 megapixel PureView camera, and a model with 64 GB of built-in NAND storage.
II. Hope of Seeing 3D Touch Product This Year Isn't Gone Altogether, But Wanes
There's still some hope, though, that the 3D touch/gesture tech could find its way still into a 2014 device. The decision to cancel McLaren was reported by Windows Phone Central, which
Starting this fall, Microsoft was poised to release a new high-end Windows Phone featuring their new gesture technology dubbed 3D Touch. The project originally went by the name 'Goldfinger' but later moved to the prototype device stage under the moniker 'McLaren'.
Windows Phone Central has confirmed with multiple sources familiar with the matter that Microsoft is completely canceling McLaren. In effect, this leaves Microsoft in a potentially vulnerable position this fall as the hardware and services company does not have any flagship Windows Phones, to our knowledge, in the pipeline.
A couple of questions remain, however. First, it appears likely that Goldfinger is cancelled as well, but is it truly a separate device.
on June 9 offered a subtly different account, stating:
While Microsoft had originally planned to debut its 3D Touch features with Windows Phone 8.1 and a Nokia "Goldfinger" handset, we understand that the work has been pushed to an additional update planned for later this year. Goldfinger still exists, but it’s simply being used as an engineering device to prepare developers for the upcoming changes and the McLaren launch.
What is not known is that we had heard that Microsoft was working on at least two 3D touch devices, so are both devices dead? We do not know if this means the other device is dead too but we suspect that its future might be a bit bleak given this news.
The other device was rumored to be the Lumia 1530 phablet. Thus there's hope that either Goldfinger -- or the Lumia 1530 phablet -- could beat the odds and emerge sometime this holiday season bearing the technology, despite McLaren's cancellation. The odds of that, though, have certainly faded considerably.
III. Are You Not Entertained?
Another announcement made this week was the death of Xbox Entertainment Studios. The closure will result in the layoff of most of the roughly 200 employees in the unit.
Launched in 2012, Xbox Entertainment Studios was an experimental effort. While it produced some content for
Xbox Live subscribers
, the overall campaign seemed relatively random and scattered, with staff putting together a seemingly disparate, ever-growing collection of documentaries, mini-series, sports broadcasts, and other content.
In his final days as CEO, Mr. Ballmer tried to double down and refocus the vision of the team. At the
launch event for the Xbox One
, Steve Ballmer set forth a bold vision for 100s of TV shows, spanning
not just its most popular franchise, but all sorts of more obscure titles
plus a bunch of reality TV show concepts.
Satya Nadella entertained the idea of this new look for Xbox Entertainment Studios. But just weeks after the first series -- a reality soccer television series "
Every Street United
" -- launched, it's clearing house of most of the employees and scrapping most of these plans.
The cutbacks will not kill
the Ridley Scott-directed
or the Steven Spielberg-produced
Halo: The Television Series
as they're already in production. The same goes for
Every Street United
, but don't count on more seasons. The move was first reported by Re/code and later confirmed Microsoft Studios head Phil Spencer.
[Our] sources paint a picture of a disorganized studio that struggled to close deals and lacked a fully fleshed-out business model.
Carefully scrutinizing its business model to identify places to cut, Mr. Nadella in the end reportedly decided the studio was becoming too much of a chaotic circus show and distraction from Microsoft key objectives -- making software, making hardware, and making cloud services.
"Let's face it, we're not changing the world. We're building a product that helps people buy more crap - and watch porn." -- Seagate CEO Bill Watkins
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