Seki Berg

Professor Gabriel Muller

2.7.2020

Ruthless Rewrite

Hello there,

At Microsoft, our strategy is to focus on productivity and help people “do more.” As the Microsoft Devices Group, we commit to this strategy while creating the hardware for Microsoft’s digital work and life experiences. Our team is made up of top talent, which will make Microsoft’s applications, operating systems and cloud services.

We need to concentrate on the devices that add the most value to the company and build on our strategy of productivity. The direction of our team is largely unchanging, but we will continue to integrate the Nokia phone team with Microsoft.

We must recognize the role of phones within Microsoft is different than it was within Nokia. We focus on the entire user experience, while Nokia thought mainly about the hardware. When acquiring Nokia, Microsoft must affordably fulfill its strategy. Therefore, changes need to be made.

Our focus will be on selling the Windows Phone. We plan to target more affordable smartphone segments with Lumia. We will also deliver lower-cost Lumia devices by shifting select Nokia X designs and products to Windows Phone devices. The Windows team will make this shift immediately while continuing to sell and support existing Nokia X products.

To sell more expensive phones, the Windows team and Applications and Services Group will deliver breakthrough products. Innovations from the Windows team, such as the Universal Windows Apps, will continue to enrich the Windows application ecosystem. In the lowest price ranges, our first phones launched will be run by a smaller team.

These changes will impact our team structure, so we must consolidate the Smart Devices and Mobile Phones team into a single business. This new team will be led by Jo Harlow and key members from both of the original teams. Together, they will oversee new and existing phones.

We will select the appropriate business model approach for our sales market while offering products that maintain Microsoft’s consistency. We will choose each market approach based on local markets and how well the Lumia is selling in those markets.

Our manufacturing operations will align with our new strategy and take advantage of integration opportunities. Production of devices will continue in Salo, Tampere, Hanoi, Beijing, and Dongguan. However, we will be reducing engineering work in Oulu, Beijing and San Diego. In addition, Microsoft’s manufacturing and repair operations will begin in Manaus and Reynosa, which will soon be followed by an end to these operations in Komaron, Hungary.

We will continue growing our customer base by creating affordable smartphones and applications for the new Lumia phone in areas where Microsoft services and products are popular. We will also acquire new customers in the markets where Microsoft’s services and products are already being used.

Over the next year, we will let about 12,500 employees go to fulfill this plan. This was a difficult decision, but we will provide departing employees with severance benefits.

We will continue to bring iconic tablets that complement our OEM partners while expanding Windows’ interaction with new models; however, there will be limited change for the Surface, Xbox hardware, PPI/meetings or next generation teams.

These planned changes are broad and challenging for many team members; therefore, we will provide as much clarity and information as possible. Microsoft leaders will host information sessions to provide more details about these changes.

We operate in a competitive industry where change is necessary. The changes to be made are difficult but will increase our success in the future.

Regards,

Stephen