The Nokia layoffs were expected, between the overlapping roles at Nokia and Microsoft's hardware teams and Microsoft's pledge to cut $600 million in costs within six months of purchasing Nokia's hardware business. It's the other cuts that prove Nadella isn't fooling around with his plans to make Microsoft more competitive in an increasingly mobile world.
Just last week, Nadella released a massive manifesto for the new fiscal year which, beyond refocusing Microsoft as a productivity company rather than a devices and services company, pledged to shake up the status quo at the entrenched tech giant.
"Nothing is off the table in how we think about shifting our culture to deliver on this core strategy. Organizations will change. Mergers and acquisitions will occur. Job responsibilities will evolve. New partnerships will be formed. Tired traditions will be questioned. Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified. And if you want to thrive at Microsoft and make a world impact, you and your team must add numerous more changes to this list that you will be enthusiastic about driving."
In other words: Even the survivors should be thinking hard about what they bring to the table in a Microsoft that now considers itself an underdog in a world that's rapidly expanding beyond PCs alone.
"The [5,500 layoffs] outside of [Nokia] are probably going to make the biggest changes to Microsoft," Moorhead says. "Lowering the bureaucracy, lowering the amount of people checking other people's work, in areas like program management for example. That's actually all goodness for the company. Microsoft needs to increase its pace. When you look at companies like Apple and Google, Apple can bring out a major revision to its operating system three times faster than Microsoft can, and OS X is just as complex as Windows."
And these 18,000 layoffs may just be the beginning of a bigger shake-up at Microsoft.
"I expect more layoffs at Microsoft, but for different reasons-skills changes," Moorhead continues. He expects Nadella to continue to restructure the company to better attack mobile and scale its cloud services even faster, to name just two examples.
Nadella promises more details about the layoffs will be revealed during Microsoft's public earnings call on July 22.
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