How Microsoft intends to get out of its bad patch on mobile

by bold-lichterman

We knew that Satya Nadella, the current CEO of Microsoft, did not share the same point of view as his predecessor Steve Balmer regarding the takeover of Nokia’s mobile activities. But there, nothing could be clearer. The Redmond firm will cut an additional 7,800 jobs, mainly in its cell phone division. A decision that follows to another social plan, started last year, which concerned 18,000 jobs, including 12,500 in its subsidiary.

After the acquisition of the Finnish company, the American group had to integrate more than 30,000 additional employees into its ranks, enough to inflate its workforce to a level higher than those of Apple or Google. Ultimately, with these new departures, the restructuring charge will weigh between $ 750 million and $ 850 million in its accounts for the fourth quarter of its fiscal year 2015.

On the financial level, too, the bill is steep: Microsoft will record a depreciation charge of approximately $ 7.6 billion on its assets linked to the acquisition of Nokia. To put it simply, that’s more than the 7.2 billion put on the table to acquire it as part of an operation completed in 2014.

Only 2.7% market share for Windows Phone

At the time, Microsoft’s ambition was clear. Barely on the mobile operating system market, the firm hoped to boost its sales by mastering the entire value chain, from software to the manufacture of smartphones, like Apple, which is developing its iOS and marketing its own iPhone.

Source: IDC, Smartphone OS Market Share, Q1 2015.
Source: IDC, Smartphone OS Market Share, Q1 2015.

But the takeover of a former telecommunications giant, already on the decline at the time, after having badly anticipated the arrival of smartphones, was not enough to go up the slope. Thus, in the first quarter of 2015, Windows Phone captured only 2.7% of market share, according to calculations by the firm IDC. A level clearly lagging behind iOS (18.3%) and Android (78%).

Develop the ecosystem

As a result, beyond the actual sales of Windows Phone terminals, the entire construction of an ecosystem was slowed down; application publishers favoring platforms where consumers are located. While iOS and Android each claim more than 1.4 million apps available on their blinds – on which Apple and Google collect commissions when making purchases, including in-app – Microsoft’s OS only displays a meager catalog of 340,000 opuses.

Heir to a strategy that was not his own, Satya Nadella is therefore reviewing Microsoft’s copy. “We are moving from a strategy to grow a stand-alone business in the phone, to a growth strategy that creates a dynamic ecosystem around Windows», He declares. Even if it means spending millions of dollars to achieve it!

A necessary refocus

The software giant has recently put its hand in the portfolio several times to acquire applications that are both popular and complementary to its Office suite. In December he redeemed the Accomplished email manager, since integrated with Outlook. The press then evokes a transaction at 200 million dollars.

In February, it is the turn of the start-up Sunrise, publisher of a so-called “intelligent” agenda, of pass under his lap. Founded by a Belgian and a French, the company was reportedly acquired for $ 100 million. An acquisition that reveals the intentions of Microsoft number 1: “when Satya Nadella arrived, he had decided to put the package on mobile, productivity, and the cloud. Sunrise was at the intersection of these three areas», Explained Pierre Valade, the co-founder, in an interview to be published soon on Frenchweb.

Satya Nadella also kicked off the group’s focus again in January when Microsoft announced the end of software fragmentation between different devices. Exit Windows Phone, Windows RT and others, the next version, Windows 10, will be unified for all devices, whether it is a smartphone, a computer, a tablet. The same operating system to reach more consumers. And more developers too.