Justin Sullivan

On Wednesday morning Microsoft announced its plans to axe nearly 8,000 jobs, primarily in its phone manufacturing arm.

This is Microsoft’s latest move in an effort to further streamline its overall structure. In addition to the massive layoffs, the company will also be writing off its $7.2 billion purchase of Nokia to the tune of $7.6 billion – that’s a $400 million loss.

“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,” Nadella said in a press release. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”

SAN FRANCISCO, CA - APRIL 02: Nokia executive vice president Stephen Elop takes a picture using the new Nokia Lumia 930 smartphone as he speaks during a keynote address during the 2014 Microsoft Build developer conference on April 2, 2014 in San Francisco, California. The 2014 Microsoft Build developer conference runs through April 4. (Photo by Justin Sullivan/Getty Images)
Getty Images

When Nadella took former Microsoft CEO Steve Ballmer’s place last year, he promised that he would focus on cutting the fat. Where Ballmer wanted to turn Microsoft into a consumer “services and devices” company, Nadella aimed at concentrating Redmond’s energies where it made its money: enterprise and cloud services. Last year Microsoft CEO Satya Nadella made similar moves by laying off 18,000 employees from across the company.

Advertisement

Nadella’s emphasis on a “more effective and focused” phone portfolio most likely means that we're likely to see fewer Lumia smartphones every year. This makes sense considering that the company is planning to unify the experience between its phones and its desktop operating systems in Windows 10. According to ZDNet, Microsoft currently has no comment on whether it plans on outsourcing the production of its phones.

In a company-wide e-mail, Nadella explained that Microsoft would be actively pursuing three key kinds of phones going forward.

“We plan to narrow our focus to three customer segments where we can make unique contributions,” he said. “We’ll bring business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they’ll love.”