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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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Nokia X
By Flunk on 7/17/2014 9:21:57 AM , Rating: 3
Didn't everyone see the end of Nokia X coming miles away? It just doesn't make sense for Microsoft's strategy to sell phones with a derivative of their competitor's OS on it.

I would hazard to guess that the existence of Nokia X was a big factor in Microsoft's purchase of Nokia.

RE: Nokia X
By Brandon Hill on 7/17/2014 9:55:10 AM , Rating: 2
It never made sense to me either. Whatever gains they would make in the low-end and in developing markets with Nokia X/X2 would come at the cost of building up the Windows Phone base in those same markets.

And unifying their efforts across all platforms with a universal Windows codebase absolutely makes sense.

RE: Nokia X
By corduroygt on 7/17/2014 10:29:09 AM , Rating: 4
Plus WP runs much MUCH better than Android on low-cost devices and provides an infinitely better User Experience

RE: Nokia X
By quiksilvr on 7/17/14, Rating: 0
RE: Nokia X
By Labotomizer on 7/17/2014 10:59:39 AM , Rating: 5
This is pretty well documented by pretty much anyone who has reviewed both types of low end hardware. And if you're comparing it to low end Nokia X devices WP runs substantially better.

RE: Nokia X
By Reclaimer77 on 7/18/2014 8:29:38 AM , Rating: 2
The Moto G and E seem to be getting pretty good reviews. On par with any low-end Windows Phone. Well documented? I think you need to do some more research, as you're clearly only interested in one side of the truth.

Android owns the low-end smartphone market, and always has. But for some reason it makes sense for a minority representing 4% of the smartphone users out there, to spew hyperbole and claim their preferred devices are "infinitely" better than anything else out there.

Also the Nokia X's aren't running an official AOSP build. So no matter how good or poorly it runs, it's highly inaccurate to include it in a discussion about "Android".

RE: Nokia X
By Labotomizer on 7/18/2014 9:00:41 AM , Rating: 2
I thought about mentioning the Moto G and E in particular, as those seem to get good reviews. As for the majority of low end Android hardware, it's pretty bad.

And considering we're talking about using WP in place of Nokia X I wanted to focus more on that than Android. And the Nokia X has been shown to be a very poor performer. So if we're comparing those two then the WP platform should be superior.

As for your other comment about a minority saying something is "infinitely better" (a silly comment anyway), one must wonder why you so vocally defend against anyone who has had poor experiences with Android performance. I've used both platform extensively, had the Note 3 around 2 months, and the Lumia Icon runs much better than the Note 3 ever did despite almost identical hardware. This isn't something I heard from someone, something I read, any of that. This is personal experience. When you run a Lumia for two months perhaps you'll understand. But you can continue to tell us how this newest version of Android fixes performance issues that you said were never there to begin with.

RE: Nokia X
By Reclaimer77 on 7/18/2014 9:28:34 AM , Rating: 3
We know pure Android is spectacular on low-end devices. The Google Play Edition Moto G proves that. Even the stock Moto G and E's are great, because they basically run pure Android out of the box already.

Where "Android" get's a bad reputation, is when OEM's get their hands on it and force poor UI schemes and bloatware onto the operating system.

The bright side is, Google is aware of this and is going to address it. Android One is, hopefully, going to dramatically alter the landscape of low-end handsets for all involved.

Your Note 3 is a perfect example. Fantastic hardware, certainly enough to make Android scream, yet Samsung hamstrung it with so much resource-hogging crap that after a while the phone just feels sluggish.

If you were to flash your Note with an AOSP ROM (just an example, not recommending), the difference would be night and day. Same exact OS, radically different results. So the OS isn't the problem.

So yeah, when people say "ANDROID" is crap and can't run on even high-end hardware well, much less low-end, I feel we should be clear about the facts and what "Android" is and isn't.

It's no more accurate than people slamming Windows back in the day because OEM's were shipping PC's with 512 megs of system RAM with bloatware on Windows Vista machines.

is "infinitely better" (a silly comment anyway)

Yes it was silly. It was also voted to a 5. When lately anyone even offering the most unbiased opinion of Windows Phone is voted down into oblivion or trolled here.

RE: Nokia X
By Labotomizer on 7/18/2014 12:13:53 PM , Rating: 1
I'm sure it does run much better on low end hardware without all the bloat. But that's not what people are buying for the most part. The E and G and the Nexus are easily the best devices.

And if I had more time I would likely enjoy tinkering with Android and getting it rooted, etc. I just don't. And yes, I'm sure Samsung was to blame for the Note 3 kind of sucking. And on Verizon it was a bitch to root and I'm not even sure 4.4 ever came out.

Oh well... If I were looking at a Nokia X or a Nokia WP, there's no doubt which would be better. And which would perform better. Along with the dozens of various dirt cheap android devices that get sold every day. And for most people, a poor experience gets attributed to Android rather than the OEM. Just like it did with Vista on underpowered and bloated devices. I think the analogy is quite good actually as I never had those issues with Vista but I was always on current hardware and ran everything clean.

RE: Nokia X
By Labotomizer on 7/18/2014 12:15:08 PM , Rating: 2
Also, most of the ROMs I looked at lost most, if not all, S-Pen support. Which would have defeated the purpose of a device that large.

RE: Nokia X
By retrospooty on 7/18/2014 10:10:37 AM , Rating: 2
"I've used both platform extensively, had the Note 3 around 2 months, and the Lumia Icon runs much better than the Note 3 ever did despite almost identical hardware. This isn't something I heard from someone, something I read, any of that. This is personal experience."

Yup, the GS4 and Note3 are the bloatiest phones ever made. If you have one, you really need to root it and kill the bloatware. Once you do, they will both run great. You just need to ID what the issue is, that isn't Android, that is Sambloat. Androids weakness is the Dalvik cache. It just bogs down when too much is going on, thus why it runs great on a debloated low end phone and awful on a bloated high end phone... The point here is, it does run great on a debloated low end phone.

RE: Nokia X
By EasyC on 7/17/2014 12:01:11 PM , Rating: 2
You forgot /sarcasm.

RE: Nokia X
By Drafter on 7/17/2014 7:27:43 PM , Rating: 2
how can you quantify "infinity better" when talking about low-cost devices? they aren't meant to be infinity better at anything except costing less.

if nokia had told microsoft to get bent from day one and joined the android craze when things were heating up, they would probably have a large piece of samsung's android market share and a small piece of motorola, HTC, and LG's android share right now. look what happened instead.

RE: Nokia X
By Labotomizer on 7/18/2014 12:21:44 PM , Rating: 2
It's actually impossible to quantify infinity so something that is infinitely better could not possibly exist.

RE: Nokia X
By bug77 on 7/17/2014 1:36:58 PM , Rating: 2
Android apps have the ability to be side loaded (and pirated). Apparently, this is held in high regard in markets like India and China. Microsoft tried to give these people what they want, without compromising their own market place. It was probably not the brightest idea, but it was worth a shot; dumber ideas have turned out to gain traction in the market after all.

RE: Nokia X
By w8gaming on 7/17/2014 7:08:59 PM , Rating: 3
Even iOS apps can be side loaded with the right knowledge. The factor that affects sales in India and China should be the lower price of the device.

RE: Nokia X
By Labotomizer on 7/18/2014 12:22:27 PM , Rating: 2
You can side load on Windows Phone as well.

RE: Nokia X
By NellyFromMA on 7/17/2014 10:10:10 AM , Rating: 3
It was a really strange decision to proceed with it. However, I'm not 100% sure the Nokia X existence weighed into the buyout because MS still released it.

I presume the X's confused purpose is ultimately what tanked it. It was probably far enough along that MS figured it was worth a shot.

Still, it was very strange choice to everyone, I think.

RE: Nokia X
By Labotomizer on 7/18/2014 12:23:28 PM , Rating: 2
I think it's more because they're consolidating business units, so having a team dedicated to supporting a forked Android product wasn't deemed worthwhile in the reorg.

Why do they show this image?
By peterrushkin on 7/17/2014 12:30:15 PM , Rating: 1
Of nadella somehow congratulating himself?

Here is what I found lol :

RE: Why do they show this image?
By amanojaku on 7/17/2014 1:15:28 PM , Rating: 2
You really need to get over your prejudice. As others have said before, the majority of CEOs are NOT Indian, and the majority of CEOs layoff workers when necessary:

1) Who laid off 27,000 HP employees in 2012? A white person.
2) Who laid off 2,000 BlackBerry employees in 2011 and 4,5000 in 2013? White people.
3) Who's planning on laying off 25% of IBM's hardware division this year? A white person.
4) Who laid off 2,500 employees at Xerox in 2012? A black person.
5) Who laid off 5,800 employees at Microsoft in 2009? A white person.

If you pulled your head out of your ass for a few moments you'd realize that MS is bloated and in dire need of restructuring. Keeping a company running is not about the ethnicity of the CEO, it's about the money needed to operate. Layoffs mean the employees aren't generating enough money for the company to operate at it's current size.

And Nokia clearly had a lot of bloat when MS purchased it. The company laid off 24,500 employees in the two years just prior to MS' purchase of the Devices and Services unit.

And that picture is of him giving a speech, not congratulating himself, you bigot. The bulk of Nokia's D&S employees are from Asia and Europe. The impact to American jobs will be tiny.

RE: Why do they show this image?
By Argon18 on 7/17/2014 2:06:19 PM , Rating: 1
"If you pulled your head out of your ass for a few moments you'd realize that MS is bloated and in dire need of restructuring."

I've been saying that for years! Of course I was referring to their operating systems, not the business itself. Seems like they're dead and bloated in more ways than one, lol!

By peterrushkin on 7/17/2014 2:50:41 PM , Rating: 2
Wow just how butt hurt are you?

I wasn't the one who made the image. So it stands to reason people must feel the same?

I never said anything about him being Indian either.

Oh no, someone doesn't agree with me, lets throw around him being a RACIST! I realise thats the cool thing to do in Murrica right?


RE: Why do they show this image?
By Drafter on 7/17/2014 7:04:16 PM , Rating: 2
Your trollish racial sensitivity almost rubs off as reverse-racism. I took peterrushkin's commente to be CEO bashing... the same kind of bashing you see in any other mass-layoff news posting. You're stretching yourself to think otherwise and revealing yourself to be racially confused and insecure... which are absolutely terrible personality traits that you should keep to yourself.

RE: Why do they show this image?
By amanojaku on 7/17/2014 7:56:16 PM , Rating: 2
I'll assume you're unfamiliar with peter's previous comments specifically calling Nadella a "useless Indian" and claiming layoffs are something only Indian CEOs do. And he's done it more than once. The fact that he didn't do it this time doesn't mean that's not what he meant. I'm not the only DT poster who's called him on this, just the latest.

By peterrushkin on 7/18/2014 1:21:19 AM , Rating: 2
Dude, stop being butt-hurt.

When someone doesn't like what you are saying you changed the conversation.

I stopped talking about what I was initially talking about. Now I have moved on.

If you want to continue bashing me on that, fine. I will continue bashing on the topics at hand.

Oh, know... someone doesn't agree with me? HE'S RACIST! See, its easy to say that ... right?

Want some cream for your butt-hurt amanojaku ?

By Reclaimer77 on 7/18/2014 11:19:37 AM , Rating: 2
Every time a company does layoffs, the comments on Daily Tech are EXTREMELY negative toward that company.

However here, Microsoft is being overwhelmingly supported in the layoffs.

It's just....really strange watching what's happening here unfold.

Even HTC was bashed for layoffs, a company teetering on the edge. I mean at least they had an EXCUSE for the layoffs. Microsoft is posting record stock surges and profits, clearly they need to be laying people off?

I didn't see that meme as being 'racist' at all. In fact I got a chuckle out of it.

By CaedenV on 7/17/2014 10:25:16 AM , Rating: 3
So MS with 100,000 employees was already a bit large and in need of pruning; adding 25,000 employees on top of that with the Nokia acquisition certainly didn't help things. I would not be surprised to see another large (though not AS large) round of layoffs next year. I feel bad for the families impacted by this, but at the same time it is absolutely the right decision being made by the company.

As for Nokia X... what an odd project. I mean Nokia already had the Lumia 520-720 lineup that already hit these price points and lower while offering more features and a better experience. I think the only reason it was really released was because some engineers had already sunk a ton of time into the products and the company (Nokia at the time) wanted to recoup some of that wasted effort. I was very surprised at the announcement of 2nd gen devices recently and thought that they were just going to no longer make any more of them rather than outright canceling or stop supporting the line. Sort of sad that we never got to see a real Android variant of something like the 920, but I am glad that the junk X lineup is going to get buried as it should.

The big disappointment for me this week is that I thought we were going to start hearing about Threshold/9/One/8.x or whatever the 'next version of Windows' was going to be. I mean we are less than a year out. A year before win8 came out we already had widely distributed dev previews to play with. Even a year before win7 we had a fair amount of leaks and information as the company was talking about it pretty freely, and then they introduced the Customer Preview thing which was pretty great. With this next version we have a few little screenshots of early builds, and that is it. MS has barely admitted to working on it yet. It makes me wonder if the UI changes are going to be minor usability improvements much like 8.1 brought to the table, and that the real work will be on the back end. Hopefully we will start hearing something substantial soon!

RE: Ya...
By Argon18 on 7/17/2014 2:10:52 PM , Rating: 2
"The big disappointment for me this week is that I thought we were going to start hearing about Threshold/9/One/8.x or whatever the 'next version of Windows' was going to be."

As much of a market turd as Eight was, I'm sure the worker bees in Redmond are carefully strategizing, building synergies, and innovizing. Lmao. The Aging Gorilla of Redmond cannot afford another market failure like Eight. Can anyone say 'nail in the coffin'? Lol

By half_duplex on 7/17/2014 10:02:40 AM , Rating: 2
A friend of mine just took a MS job he'd been dreaming of the last few years, hope he's OK as he relocated.

RE: Hmmmmm
By Murloc on 7/17/2014 10:40:53 AM , Rating: 2
maybe it will be fine if he was hired after the acquisition. It wouldn't make sense to hire people you don't need when you're already planning to fire people to "streamline the process" and "create synergies" after an acquisition. But you never know... maybe they weren't coordinated and he'll get fired too.

By chµck on 7/17/14, Rating: -1
RE: Jealousy
By hughlle on 7/17/2014 10:47:29 AM , Rating: 2
Odd to make a statement then follow it with a link that contains absolutely nothing to back up said statement..

RE: Jealousy
By Manch on 7/17/2014 11:57:46 AM , Rating: 2
He was banking on you not opening the link! lol

RE: Jealousy
By amanojaku on 7/17/2014 11:58:17 AM , Rating: 2
Unsubstantiated claims are common on DT, nothing new here. It's not guaranteed that people will read your sources, either. I've seen many comments rated down despite providing credible sources. People believe what they want to believe.

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