ROBERT SIEGEL, HOST:
Microsoft announced today the largest job cuts in the company's history. Eighteen thousand jobs will be eliminated over the next year. During Microsoft's last big round of layoffs, the company was coping with a worldwide recession. That was in 2009. Today Microsoft is trying to catch up with the mobile explosion, as NPR's Aarti Shahani reports.
AARTI SHAHANI, BYLINE: Eighteen thousand jobs - that is 14 percent of the Microsoft global workforce. CEO Satya Nadella told employees this morning. Last week he issued a memo - really, a manifesto - on the priorities of the company, and when he first took over back in February, he outlined the same principles.
SATYA NADELLA: This business does not really respect tradition. What it respects is innovation on a go-forward basis. So it's really our collective challenge that we now need to make Microsoft thrive in a mobile-first and a cloud-first world.
SHAHANI: Microsoft, once known for desktop computers and its Internet Explorer web browser, has to play catch-up, and that takes trade-offs. The company won't say which countries are getting hit the hardest, but the vast majority of jobs are coming out of Nokia. Microsoft just bought the phone maker this year, and Frank Gillett, an analyst with Forrester Research, says the goal was to make some headway with mobile devices.
FRANK GILLETT: They were having trouble in the marketplace getting enough handsets into customers' hands, and they decided that buying Nokia would enable them to make sure that there were high-quality handsets out there that represented their vision.
SHAHANI: That vision doesn't mean being a big manufacturer. Microsoft can outsource the factory work to make phones and tablets, and Gillett says that's a strategic move in line with a much bigger goal.
GILLETT: Microsoft wants to be as important in people's lives overall as Google and Apple are today on their smart phones.
SHAHANI: To be kingmaker in our digital lives, Microsoft has to move aggressively into the new data economy.
GILLETT: Ideally that would happen on a Windows phone or a Windows tablet, but Microsoft will be nearly as successful if we pull out an Apple iPhone and open the Excel app or open the Xbox 360 app.
SHAHANI: Microsoft did not grant interviews today. The company expects to pay up to $800 million in severance to laid-off workers over the next year. Aarti Shahani, NPR News. Transcript provided by NPR, Copyright NPR.