Pixel Envy

Written by Nick Heer.

Reading Tea Leaves

Microsoft announced some big changes to their smartphone hardware business (read: Nokia) today:

Microsoft Corp. today announced plans to restructure the company’s phone hardware business to better focus and align resources. Microsoft also announced the reduction of up to 7,800 positions, primarily in the phone business. As a result, the company will record an impairment charge of approximately $7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services (NDS) business in addition to a restructuring charge of approximately $750 million to $850 million.

[…]

“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,” [CEO Satya Nadella] said. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”

This is terrible. That’s a lot of lost jobs, and a lot of money Microsoft is spending to get rid of those jobs.

But the media coverage around this has been really interesting because of two things Nadella said: “standalone phone business”, and “first-party device family”. Vanessa Wong of Buzzfeed interpreted this in a fairly straightforward manner:

Microsoft is backing down from its attempt to become a major smartphone maker, saying today that it is moving away from efforts to build “a standalone phone business.”

Read: Microsoft won’t make phones any more.

Michael Calore of Wired read it differently:

Given that Microsoft is dismantling its “stand-alone phone business” (aka Nokia) and focusing instead on a “first-party device family” (aka Surface), it’s reasonable to expect a Surface Phone to show up soon.

Read: Microsoft’s doubling down on its efforts to make smartphones.

Only one of these can really be correct. Either Wong is simplifying the press release, or Calore is reading far too much into it.