Microsoft is restructuring to grow Windows Phone business profitably, says Kevin Turner

Microsoft is restructuring to grow Windows Phone business profitably, says Kevin Turner

Today, at the second of two keynotes at the Worldwide Partner Conference, Microsoft’s Chief Operations Officer Kevin Turner spoke about Microsoft’s businesses heading into Windows 10, touting the Surface Pro 3 as a “winner”, hinting at a Microsoft Band v2, and took time to answer some questions about the future of Windows Phone.  Last week, CEO Satya Nadella, in a memo to employees, announced the restructuring of the Windows Phone business including a $7.6 billion write off of the Nokia phones businesses acquisition, a move that has raised as many questions as it answered.

In his keynote speech, Turner had this to say about Windows Phone:

“And let me talk about phone. A lot of people tweeted and said in social media “hey, we want to hear more about phone”.  Here it is: the reality is, we care about phones. We are still in phones.  We are restructuring that business for profitable growth so that it can be sustainable. We are in it, we are not going to have a lot of devices. We’re going to build a profitable portfolio, we’re focused on a few killer devices that grab share and that enable to help us showcase our uniqueness and solutions.  We are actually restructuring to grow, but grow profitably. That’s the ins and outs of what’s the deal with phones.

We’re changing our manufacturing processes, we’re modernizing those and making them contemporary, we’re changing some of our go-to-markets, and using multi-tiered distribution.  We are right sizing the organization, and we are hard at work at what’s the next big wave of innovation relative to that size of device that we need to be working on and geared towards.

So make no mistake we’re not giving up on phones, we’re resetting for profitable growth, and we will continue to innovate in that space, and it remains a very important part of the portfolio.”

 A few key points jump out from Turner’s remarks, ones that haven’t been documented before.  The first is that Microsoft is changing its manufacturing processes to make the building of Windows Phones more contemporary. The restructuring of the Windows Phone business appears to be far reaching, all the way from building phones to selling them.  

The next of course is that Microsoft, while it’s narrowing its focus to a “few killer devices”, is still committed to phones, and has a plan moving forward, and that Microsoft is planning to use “multi-tiered distribution” to sell phones. The company has been battling mobile carriers to get their phones promoted, are they now planning to bypass or lessen the impact of carriers by focusing on selling Windows Phones directly through Microsoft Stores and retail partners?

Microsoft also continues to push the idea that there’s a “next big wave of innovation” coming to phones.  Satya Nadella pushed this idea in his keynote speech from WPC on Monday, and while it would be silly to think that innovation in smartphones is done, does Microsoft have something specific in mind to bring to market sooner rather than later?

Of course, if Microsoft can’t sell some phones, either through carriers or Microsoft Stores or off the back of a truck, it isn’t going to be able to stick with Windows Phone forever, no matter what Turner or Nadella say.  But for now, Microsoft is “not giving up on phones”.

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