So what else is new? I told you Microsoft can't make the Nokia business work any better than Elop could after he had destroyed it so totally.
First, my deepest sympathies to the 12,500 former Nokia staff who now carry Microsoft business cards, who will be fired. Its nearly half of what was left of 'The Division Formerly Known as Nokia Mobile Phones" after all the layoffs that Elop's mismanagement at Nokia caused in the previous four years. I did warn that the layoffs would not end, when the Microsoft purchase of Nokia was announced and as we've seen, the division has been producing ever more losses and ever shrinking market share. The solution by the new CEO Nadella at Microsoft is predictable as its harsh: more layoffs. I had hoped that Microsoft would have endured these highly skilled specialized labor for longer, letting them try to find some remedy to the handset business or assist other Microsoft hardware (or mobile) evolutions but no. The new CEO has spoken. And as new CEO, now is the right time to make the big cuts. Microsoft has never seen this kind of mass layoffs before, and as the whole corporation, the cuts are about one in ten employees. But they are almost exclusively inside the Nokia handset part. And unfortunately for Microsoft's mobile unit, Elop still gets to keep his job (for now).
But yeah. I told you this Nokia unit will not return to growth or profits when Microsoft takes it over; on the contrary, the decline will continue and the unit will make more losses. And further layoffs are of course inevitable in that situation.
I also said that Microsoft will shut down the Nokia X Android based smartphone handsets business 'immediately' after Microsoft takes over the Nokia handset business. Ok. So I was wrong by two and a half months. So sue me. I call that a pretty darn good prediction.. All those who applauded the bold X Series and Microsoft selling Android based smartphones.. haha, thats what you get. That was yet another boneheaded move by Elop and now the new CEO has clearly overruled the man who would still like to be called 'The General' haha... Indeed 'The General' who is so confused about strategy he invents quotes by Sun Tzu that are opposite to what the Master wrote in his strategy handbook 2,500 years ago...
But yeah. X Series is dead. Microsoft will continue to support and sell the existing Android based X Series for a little while longer but all upcoming X Series smartphones will be migrated to Windows Phone instead. Yes. That is the correct move by Microsoft. Now what in the world was Nokia handsets doing with this mad strategy last year, and wasting enormous resources on a doomed Android project? How many millions went down that drain? How many jobs could have been saved without this idiotic misadventure. And as this was so obvious, why did it take Elop 2 months and 17 days to learn the lesson that if you are 'Microsoft' whose strategy is built upon 'Windows' then you don't want to sell your hardware supporting a RIVAL platform called Android? What is wrong with Elop? (Why is he allowed to remain in charge of the MIcrosoft hardware division?)
What can we read between the lines? In Q1 the Nokia X Series was not sold for the full period but it already took 21% of Nokia's total smartphone business. Now in Q2 we've had the first full quarter of X Sries sales. How much might it have taken? I'd say its safe to say somewhere between 30% and 40%. Could even be half of Nokia's total smartphone business. AND very importantly, X Series is cannibalizing Lumia sales on Windows Phone, so those gains would come at least partly out of Windows Phone sales.
We can be pretty sure Microsoft won't release the actual numbers so we will be left to see what the big 4 analyst houses report, but I am expecting Windows Phone total unit sales to be down from Q1 to Q2 - and that is now more than 95% Nokia Lumia of course as the other Windows Phone partners are only pretending to support the dead platform.
But yeah. I told you that Microsoft cannot allow X Series to continue and thus suggest to Windows ecosystem that Microsoft is intending to shift to Android. This was obvious correct strategy by Microsoft - but typically for Microsoft - even this correct strategic move is done with harmful delay and damage .It should have been OBVIOUS to Elop on Day 1 when he returned to Microsoft, that the end of X Series was his first priority. But we know Elop, he's not exactly the sharpest knife in the strategy department. What this end to X Series does tell us, is that Nadella is paying attention to the hardware and Nokia handset business and he has clearly overruled Elop .Good. Nadella seems like the right man for the job (and can you imagine how miuch Microsoft would be screwed now, if Elop had been allowed to take control of the total company haha)
Talking of Elop. He's issued another memo. This one in typical emperor mode, Elop pushing propaganda talking points and just at the end of the memo reminds the readers that, oh, by the way, half of you will become unemployed... What an asshole. Incidentially, not only my view, this is how The Guardian just reviewed Elop's newest masterpiece in memo-writing. This is what New York magazine thought about the way Elop authors his memos when firing half of his staff.
Please do remember it was BECAUSE of this Elop's failing strategy, that tens of thousands of colleagues of these last ex-Nokians were already fired in the previous four years. This Elop and his mad self-destructive strategy caused the previous layoffs. And those series of layoffs were always accompanied with promises that there would be no more, that Nokia was now on an even keel and headed in the right direction. Bear that in mind when you read this latest cruel document about why half of the people Elop brought with him, have to be fired only months later. Half fired. And he starts his layoff verbage with 'Hello there'... truly an asshole. Arrogant son of a bitch. But Elop doesn't care, as he already collected his 31 million dollar bonus for wrecking Nokia's handset business and causing 50,000 talented hard-working highly-skilled labor to lose their jobs in four years (including this latest batch).
And yes, to be VERY clear, the smartphone unit was not in any kind of financial trouble before Elop started to destroy it. The Nokia smartphone unit was more than twice the size of its nearest rivals - that is a bigger lead than Samsung has over Apple today or bigger than HP has ever in its existence had in the PC business or bigger than Toyota or GM have EVER had in the car business. And Nokia did this profitably in 2010 (its smartphone unit) and the profits in the smartphone unit were growing and set a Nokia-record by the fourth quarter of 2010, right before Elop decided to wreck that successful and dominting business. Yes, there is a myth that Apple was destroying Nokia when in truth - the gap between Nokia smartphones and the iPhone did not shrink in 2010 - the gap GREW. Nokia grew MORE than Apple in 2010. You are the biggest and you grow more than your rivals, and you set record-profits. This is not a 'failing' strategy, this is a highly successful strategy that ANY CEO would want if you were Boeing or Coca Cola or Apple - to be more than twice as big as your nearest rival and set your company's record in profits and you grow faster than your rivals. That was the smartphone business that Elop destroyed (Nokia's problems in 2009-2010 were in its networkng unit and its delivery schedules ie 'execution' not the strategy itself). So Elop takes a successful winning smartphone unit, destroys it totally, sees tens of thousands fired, promises the rest - dont' worry you are safe - then fires ever more, eventually sells the unit to MIcrosoft, and now fires HALF of those last souls who remained. And now he does not have the decency to write 'I have some grave news' or something like that in his memo.
Are we sure Elop is a Canadian? Canadians are generally some of the kindest most considerate people on the planet. And how can this Elop then author such as cruel letter when firing HALF of his staff?
So the ever-diminishing saga of Nokia the once giant handset brand continues its slow death at Microsoft. I told you this business will never fly at Microsoft. I told you the unit will be shut down, but not until Elop is fired and some other Microsoft exec is given a chance to try to revive it first. So lets see how long Elop stays at the hardware division. I'm expecting him to be removed to some non-job by year-end.
To those ex-Nokians who lost their jobs or will be losing them in the coming weeks and months - my sympathies are with you, but don't despair. The world is going mobile and your skills are incredibly hard to develop and you will be finding worthwhile work in the tech space if you want to - or else, if you wanted to change careers, gosh, almost every other industry is also looking to get into mobile. So this may be the opportunity to shift gears and try something new. To those ex-Nokians still at MIcrosoft - take this as a severe warning. You know perfectly well that Lumia is going nowhere and the cheap phones are not part of Microsoft's stretegic intent. Try to switch to any other job inside Microsoft hat is not involved with handsets. Your current job is also going to be gone. Probably not this year, but in the coming few years, there will be more cuts and then at some moment suddenly, the whole handsets business will be shut down. Try not to be there when that happens...