As Microsoft’s (NASDAQ:MSFT) new fiscal year begins, the company is making changes in its product game. In an open letter to Microsoft employees, CEO Satya Nadella outlined a culture shift at the company from PC first to mobile and cloud first. In the days since then, how that strategy will happen is still unfolding.
Microsoft’s game change is the Nadella’s work. The CEO is making sweeping changes at the technology firm since its appointment to the top job last February. Unlike his predecessor, who considered the Windows PC Microsoft’s core product, Nadella is willing to make changes that emphasize mobile and cloud-based technology over Windows.
Microsoft revealed at the 2014 Microsoft Worldwide Partner Conference that the company’s latest products would be taking on Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Chromebooks and other competitors head on. HP is releasing a $199 Windows laptop just in time for the holiday shopping system. Low-priced Chromebooks have been a thorn in Microsoft’s side as the inexpensive netbooks lured customers away from Windows products. Between that and Apple’s (NASDAQ:AAPL) Mac computers, the dominance of the Windows PC was being challenged. It is also working on low-end tablets to better compete with the iPad and Android tablets.
The company is also allowing more of its software to run on rival devices. The Office for iPad app was a great success among iPad users. It is also doing more to encourage its partners to use more of Microsoft’s cloud-based products, a transition that shows Microsoft’s announced new direction is not just for show. So far the reaction has been mixed.
All of these changes are an attempt by Microsoft to change its direction. Windows may be the dominant operating system right now, but how customers use computers and other devices is changing. In a world where the cloud is becoming more important, Microsoft is following the pack. It’s a good time for change since it’s early in Microsoft’s fiscal year. July 1 marked the start of Microsoft’s fiscal year 2015. A new year is generally regarded as a time for change. Microsoft is making changes as it transitions to a more cloud friendly company. Not surprisingly, some growing pains will occur as well.
Another change as a result of this new direction is that the company will be laying off workers in numbers comparable to the layoffs of 5,800 employees in 2009, according to a report in Bloomberg. Exactly how many employees will be laid off will be announced likely in late July. The Nokia, engineering, and Xbox marketing teams are considered the likely targets of these layoffs. These layoffs are to reduce the overlap between departments, especially after the acquisition of Nokia. Considering that Microsoft has more than 125,000 employees, this will likely be small in comparison to the total size of the workforce. It is one of many likely changes ahead at Microsoft.