Microsoft Cuts more Smartphone Jobs, Hopes for Enterprise Success

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Microsoft's big push into the smartphone market seems to have failed. The company recently sold off its consumer phone business, and now is scaling back again to focus on the enterprise smartphone market while laying off 1,850 employees.

Microsoft laying off 1,850 employees as its smartphone business goes on life supportMicrosoft laying off 1,850 employees as its smartphone business goes on life support

CEO Satya Nadella made a point to say Microsoft isn't out of the smartphone business, but instead is shifting its efforts to the parts of the market where it has a chance of succeeding. He said,

We are focusing our phone efforts where we have differentiation—with enterprises that value security, manageability and our Continuum capability, and consumers who value the same. We will continue to innovate across devices and on our cloud services across all mobile platforms.

Translation: Microsoft may not be able to make smartphones that sell, but it can still have a presence on the iPhone and Android-based phones.

Microsoft completed its purchase of Nokia in April 2014 to boost its position in the smartphone market, but that clearly didn't pan out. Only three months later the company announced it was laying off 18,000 employees, most of whom were coming from the Nokia purchase. Earlier this month, Microsoft sold the Nokia feature phone business to Foxconn, further distancing itself from the hardware side of the mobile phone market.

Narrowing its focus seems like a smart move for Microsoft, but success is far from a sure thing in this case. While the enterprise market has always been pro-Microsoft, Apple's iPhone already has a strong foothold in that space. Apple has also teamed up with IBM, and now SAP, to shore up its position in that market, which will make it even harder for Microsoft to make any significant headway.

Remember when Steve Ballmer laughed at the iPhone?


Considering how poorly Microsoft has performed in the smartphone market, it won't be easy for enterprise-level buyers to feel comfortable getting on board. The company already has a poor track record and has all but exited the market. Those aren't good selling points when Apple is already a dominant player, and Android smartphone makers are doing well, too.

The unfortunate side effect of Microsoft's inability to compete with Apple, Samsung, and other smartphone makers is that thousands of people are out of a job. Considering Microsoft's smartphone track record, it won't be long before more jobs are on the chopping block.

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Arnold Ziffel

Sad news for Finland and its people. It’s tragic Nokia got sucked up by the MS borg.


Feel sorry for the people losing their jobs.

But if you arrive late to the show, have a confusing product line, tie it to a dog like Windows 8, and then advertise it badly, this is what you get. A few things to I take away from this:

Just because you’re big does not mean you will succeed.
Just because you have products people like does not mean people will flock to anything you pull out of your, <ahem>, ear.
While you’re bringing out new things you need to maintain the old ones.

These are lessens Apple needs to keep in mind.



There is an old martial arts saying, ‘He who hesitates, meditates in a horizontal position’, that has some relevance here. Indeed, MS paused for critical moments before engaging on the hardware side of the smartphone business, to be fair, they already had a business presence on the software side of that space, a presence that was at least competitive with extant offerings from the likes of Palm, Nokia (smartphones, not feature phones) and even Blackberry to a lesser extent. That presence likely contributed to lulling MS into a false sense of security relative to Apple, a company that they had bested in the PC space and that conventional wisdom held would witness repetition of that victory wherever the two competed.

MS’s current posture (horizontal) in the smartphone space has important lessons for all concerned.

First, again using a martial arts analogy (and why not, martial arts are a metaphor for, and therefore great teacher about, life) Apple’s first strike with the iPhone was particularly devastating due to economy of motion, in this case, two blows with one move; one was that they redefined the smartphone with a compelling design in form and function, catching the industry flat-footed and unprepared and the other was that they hit the soft belly of the consumer market, a section that had historically followed the lead of industry during the PC wars, a model that industry assumed would continue, and whose adoption practices had heretofore remained discretionary and non-threatening to enterprise. The effect of this double strike was a body blow that brought the industry to its knees and cost it precious recovery time. The two lessons here are not so much about first strike, as important as that can be, but rather when you make your move, make it devastating and take your opponent down. The other is, fight according to your own style, that is, one that plays to your strengths and skills. The more original the style, in this case the iPhone, the more likely it is to confound your opponent and bequeath the element of surprise.

An entirely second set of lessons might seem at first contradictory to the first, but they are in fact complementary, namely Apple seldom enters a market first, but typically late. Is this not a contradiction to the above? No, it is not. It’s about sizing up the competition and actively looking for an opportunity to make that devastating strike. This means that one has to be able block and parry or be prepared, like Ali vs Foreman (one of my favourite fights due to its sheer genius) to take and withstand your opponent’s best shot while you hunt for that opportunity. In Apple’s case, the company has centred the determination of when to strike around a best in class and consistent user experience in device feature set and capability, certainly on the hardware side; and not the uncertain proposition of being first to deploy a new technology.

In this vein is yet another lesson, namely despite Apple’s tendency to hang back before making their move, they nonetheless and fairly consistently succeed in dominating the competition by important metrics. In the smartphone arena, not only MS, but Google (certainly in their hardware) and Amazon. Worse they make it look easy. How is that? My observation again goes to martial arts. They do so by dominating the centre of the mat, even when that means redefining that centre. In smartphones, they did both. They shifted that centre from enterprise to the personal consumer. But they didn’t stop there. Critically important, neither MS nor Blackberry perceived that shift as a threat, indeed they treated it as a lesser niche. Apple then used that consumer mass as a battering ram to storm the enterprise castle and seize the high ground before their opponents could perceive the threat, and by the time they recognised that they had been outflanked, they were unable to dislodge Apple. In other words, they were both outflanked and simply outgunned. Dare I say, outsmarted?

Pink slips all around for the competition.

In my view, these are lessons worth study, not only as history, but for the challenges that lie ahead. After all, martial artists have been successfully applying these for centuries, and business is combat by other means.


I should add that I am a real fan of Satya Nadella and of what he is trying to accomplish, as seen from the outside, at MS.

His response to MS’ smartphone bid is a sober assessment of where they are and a practical response to take them out of the kill zone to an area where they can not only compete but grow and thrive as a business.

Importantly, and not unlike Apple, MS is a company in dynamic flux, undergoing substantive changes as it adapts, hopefully successfully, to an evolving environment.

I predict that, in the short term, these two companies mutual adaptations will draw upon different skill sets and, hence, carry them in divergent evolutionary directions; directions that will result in fewer occasions for direct competition, but possibly, indeed likely, more opportunity for collaboration.

The long term will depend, in no small measure, on how successfully each company makes these near term adaptations.

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