The other shoe dropped this week on Microsoft’s acquisition of Nokia, and it was a big one. The company announced that its restructuring will require its deepest manpower reduction ever, 18,000 jobs, and that about two-third of the cuts will come from the workforce that came over with the phone manufacturer. That constitutes about half of Nokia’s workforce, according to re/code.
It seems the Nokia reductions were more extreme than expected. Reports from before the announcement suggested that 1,000 employees would be laid off in Finland, where Nokia was headquartered. The reports didn’t discuss non-Finnish Nokia workers, but it seems unlikely that they could have represented the balance.
Microsoft is in a frantic struggle to remain relevant. The PC business with which its fate is deeply entwined is, depending upon the observer’s perspective, becoming an ever-smaller niche or is readjusting to a more limited but still consequential stature. The company’s fate in the post–Steve Ballmer era has little to do with PCs. It is tied to making itself relevant in cloud and mobility.
The main headline of the week was the downsizing. But in another significant move that was somewhat under the radar, Microsoft abandoned a flirtation with Android, which means that its future in mobility is definitively tied to Windows Phone. Microsoft had created a bit of wiggle room by starting a line of phones — the Nokia X — that is built on the Android operating system (OS). CEO Satya Nadella’s memo says that “select Nokia X product designs” will be merged into the Lumia family, which relies on Microsoft’s home-grown mobile OS. The wording is vague, but the conclusion clear: Microsoft is a Window Phone shop.
Others saw a more subtle move by the company. For years, Microsoft fought against open source. The new regime is giving up the fight. The idea is that in a world of mobility and cloud computing, the winners will be the organizations that provide the best products and services. Which OS is behind them is secondary.
Wired’s Cade Metz said that Microsoft’s mindset is shifting. The company said that it is collaborating on Kubernetes, which Metz describes as a tool aimed at improving the convenience and efficiency of cloud services. This is anything but a Microsoft initiative:
This is significant not only because Kubernetes was created by Google—Microsoft’s biggest rival—but because it’s an open source software tool that only works with the open source Linux operating system, traditionally held up as the bête noire of Microsoft’s Windows OS. This shows that, as Nadella says, Microsoft sees its future in cloud computing and that the company fully realizes its success in this burgeoning area depends on dovetailing with the greater community of cloud companies and software projects—not just working against them.
If Microsoft does rebound, this week will be seen as important. The company vastly and unapologetically streamlined operations, confirmed its mobile OS strategy, and suggested that it is willing to acknowledge that times have changed and that it is planning to work in an open manner that it has resisted in the past.
Carl Weinschenk covers telecom for IT Business Edge. He writes about wireless technology, disaster recovery/business continuity, cellular services, the Intenet of Things, machine-to-machine communications and other emerging technologies and platforms. He also covers net neutrality and related regulatory issues. Weinschenk has written about the phone companies, cable operators and related companies for decades and is senior editor of Broadband Technology Report. He can be reached at [email protected] and via twitter at @DailyMusicBrk.