14 DAY TRIAL // Despite the Windows 10 for PC frenzy, Microsoft is still working to overhaul its mobile strategy, with CEO Satya Nadella having recently announced a series of changes that are supposed to help the company go forward in a much more effective way in the smartphone business.
Microsoft announced the write-down of the Nokia Devices and Services takeover, as well as the layoff of no less than 7,800 people, most of them from the Phone Hardware unit, with Nadella pointing out that Redmond would focus only on the core products for its mobile approach and develop only value, business, and high-end phones.
“An impairment adjustment was required”
And in Microsoft's annual Form 10-K filing with the SEC (via GeekWire), the company acknowledges Windows Phone’s missed goals, revealing that the Phone Hardware unit did not meet its goals.
“In the second half of fiscal year 2015, Phone Hardware did not meet its sales volume and revenue goals, and the mix of units sold had lower margins than planned. These results, along with changes in the competitive marketplace and an evaluation of business priorities, led to a shift in strategic direction and reduced future revenue and profitability expectations for the business,” Microsoft explains.
“As a result of these changes in strategy and expectations, we have forecasted reductions in unit volume growth rates and lower future cash flows used to estimate the fair value of the Phone Hardware reporting unit, which resulted in the determination that an impairment adjustment was required.”
As part of the new strategy, Microsoft will work exclusively on three different mobile phone categories, with two models from each to be launched every year.
The first flagships are expected to see daylight later this year together with Windows 10 Mobile, the new operating system that in its turn is likely to launch in October. Microsoft hasn’t yet provided any information on these flagships, but it has confirmed that high-end devices are scheduled to launch this year.