Microsoft’s Bad Connection with Windows Phone

Over the past several years Microsoft has made a big investment in trying to become a major player in the smartphone industry. They created a new user experience with Windows Phone that was well received by technology professionals, yet they weren’t able to crack Apple’s dominance in the mobile industry. Stemming partially from Microsoft’s inability to convince developers to create apps for the platform, and from their inability to gain critical mass in a market dominated by the iPhone and various Android devices.

While Microsoft worked to convince phone developers such Samsung and Nokia to create Windows phone hardware, developers who create apps were focusing almost exclusively on creating apps for the iPhone and Android. Windows phone app designers and app developers were spending their time creating user experiences for Apple’s platform or writing code for Android. This led to many apps for these platforms, with fewer available for Windows Phone. Popular apps were slow to arrive on the Windows platform, and some key apps such as Waze that once were available for Windows phone are no longer being supported.

Today Microsoft announced that it is laying off 7,800 employees, mostly involved in the Windows Phone group. Many of these came from Nokia when Microsoft purchased the phone manufacturer. They still have more than 100,000 employees overall, and 80 percent of the employees that came from Nokia are still with Microsoft, but with the layoffs the company is effectively admitting that the purchase of Nokia was a significant misstep. Alongside the layoff announcement, Microsoft indicated that they are writing-down $7.6 billion associated with the Nokia acquisition, which, in finance terms, is admitting that they paid much more to Nokia than the phone business is now worth.

The Windows Phone UX, while well received and using many of the same principles covered in UX courses, still is not in widespread use. With the announcement today, it appears that Microsoft will likely be making even fewer phones, and the Windows Phone market share will drop even further.

This isn’t the first time that Micorosft has admitting to overpaying for a company that it acquired. In 2012 they took a $6.2 billion write-off for their purchase of the online advertising and marketing company aQuantive.