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Microsoft Lays off 18,000, Including a Third of Nokia, in Largest-Ever Job Cuts

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Credit: Robert Scoble/Creative Commons

More than a third of the recently acquired Nokia employees are being let go.

As expected, the axe fell at Microsoft on Thursday, but the depth of the cut is surprisingly brutal: 18,000 Microsoft employees will find themselves without jobs over the next year, and the company is "moving now" to eliminate the first 13,000 positions. The job cuts are by far Microsoft's largest ever.

Most of the positions affected hail from Nokia's Devices and Services division. Microsoft recently acquired the division and approximately 32,000 Nokia employees for a whopping $7 billion; 12,500 of those people, or nearly a third of the entire team, will be handed pink slips as Microsoft works towards what it calls "synergies and strategic alignment."

In a letter to employees, former Nokia CEO and current Microsoft Devices head Stephen Elop explained that the changes mostly affect the Windows Phone team.

"It is particularly important to recognize that the role of phones within Microsoft is different than it was within Nokia," he wrote. "Whereas the hardware business of phones within Nokia was an end unto itself, within Microsoft all our devices are intended to embody the finest of Microsoft’s digital work and digital life experiences, while accruing value to Microsoft’s overall strategy."

To that end, Elop says Microsoft plans to release even more low-cost Nokia X-style devices in the future, albeit Lumia-branded ones running Windows Phone rather than Android, to take advantage of Microsoft's Universal Apps and other Windows Phone ecosystem benefits. Nokia's Smart Device and Mobile Phone divisions will be combined into a single overarching phone unit.

The Surface, Xbox, Perceptive Pixel, and "next generation" hardware teams will only see "limited change," Elop writes.

A leaner, meaner Microsoft

"It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas," CEO Satya Nadella wrote in the memo announcing the cuts. "My promise to you is that we will go through this process in the most thoughtful and transparent way possible."

satya nadella dynamic Microsoft

Microsoft CEO Satya Nadella.

The layoffs were expected. Nokia and Microsoft's existing Windows Phone division no doubt have an abundance of overlapping roles, and Microsoft pledged to cut $600 million in costs within six months of purchasing Nokia's hardware business. And just last week, Nadella released a massive manifesto for the new fiscal year which, beyond refocusing Microsoft as a productivity company rather than a devices and services company, pledged to shake up the status quo at the entrenched tech giant.

“Nothing is off the table in how we think about shifting our culture to deliver on this core strategy. Organizations will change. Mergers and acquisitions will occur. Job responsibilities will evolve. New partnerships will be formed. Tired traditions will be questioned. Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified. And if you want to thrive at Microsoft and make a world impact, you and your team must add numerous more changes to this list that you will be enthusiastic about driving."

In other words: Even the survivors should be thinking hard about what they bring to the table in a Microsoft that now considers itself an underdog in a world that's rapidly expanding beyond PCs alone. 

Nadella promises more details will be revealed during Microsoft's public earnings call on July 22. 

Updated with Stephen Elop's comments

This story, "Microsoft Lays off 18,000, Including a Third of Nokia, in Largest-Ever Job Cuts" was originally published by PCWorld .

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