Today Microsoft revealed that...
1. It's writing off $7.6Billion pertaining to its acquisition of Nokia's mobile division.
2. Laying off 7,800 employees (mostly from that division)
3. And finally it will dramatically scale down the number of Lumia phones it produced to just 2-3 Lumia models a year.
While the internet is translating these announcements as "The demise of Windows Phone" let's look at the facts here and NOT jump into conclusions that many MANY websites and blogs have done in the last 24hours.
First of all, Windows Phone is dying, nor is it dead. Quite the contrary, it's finally coming to life!
Of the 3 revelations Microsoft made today, only one of them is bad news really and that's the 7,800 employees that Microsoft laid off today. These are mostly former Nokia employees.
When Nokia sold its Mobile division to Microsoft, Microsoft also inherited 25,000 Nokia employees along with that acquisition and after this latest round of lay-offs, that number is now below 5,000.
It's no secret that then Microsoft COO Satya Nadella (who is now CEO) was always against the acquisition of Nokia's mobile division (which they acquired for $7.2Billion). It was a decision made by then CEO S. Ballmer.
Now S. Nadella is undoing that decision and a right move at that, because since the acquisition, Microsoft has made no profit from the acquisition, this led to a $7.6Billion write off!
And yea, you might be wondering well what about those huge market-share in emerging markets. The answer is that those were low budget Lumias being sold and as such the profit margin on those are tinsy winsy or non existent in some cases.
Microsoft will be scaling down its production line for Lumia devices to just 3 Lumia models per year, each focused on 3 main areas as stated by Microsoft CEO himself here
"We’ll bring the best management, security and productivity experiences they need; the communications services they want; and the flagship devices they’ll love.”
So the 3 are...
1. A Business enterprise oriented model for Businessmen and women
2. A Flagship for Windows Fans
3. A value phone for consumers who are more cautious on price
So why all the doomsday reports about Windows Phone? Well, it hasn't been doing well, it has got only 3% marketshare worldwide and hasn't grown since. It just got written off for $7.6Billion and following the CEO's email about having to make tough choices, you can see why it's easy to conclude that Microsoft is cutting off Windows Phone. These are the reasons you will read about from other blogs about why Windows Phone is dead, but they are short-sighted logic. Windows Phone failed because of a variety of reasons.
The first being that Windows Phone 8 was a failure from the beginning.
- Lack of hardware support,
- Lack of apps
- Lack of flagship devices
- Lack of Carrier support
- Oversaturated amount of low end Lumia phones released with no unique distinction between them.
All these factors have been or will be fixed by the time Windows 10 Mobile is ready.
Windows 10 Mobile is built to support more CPUs and more hardware. We could see HTC, Samsung or even Lenovo release Windows 10 Mobile phones.
The lack of apps will be fixed by Microsoft's Project Astoria which allows you to easily port Android apps to Windows ecosystem.
A couple of flagship devices will be released later this year.
Microsoft has announced that it wouldn't do business with carriers where things aren't working out. I also expect to see the upcoming Lumia flagship come under more carriers.
Microsoft has stopped producing an endless line of low budget Lumias, and will instead make a few Lumia devices each year.
All this coupled with the new features of Windows 10 Mobile (like continuum and Microsoft Hello), it isn't foolish to be optimistic but we will have to wait and see.
But so far, it looks like Microsoft is making all the right decisions towards.
However, it remains to be seen how long Microsoft CEO S. Nadella will give Windows Phone to succeed before dropping the hammer, most people say 12-24months, I agree.
My money is on 18months after the first Lumia flagship W10M phone is released