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Bloomberg's Rana on Microsoft Paring Back Smartphones (Audio) · Bloomberg Intelligence

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  Speaker 1: Breakaway Summit here in New York City, top executives, top
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  Speaker 1: business people from around the country and the world talking
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  Speaker 1: about how to achieve growth in a company. One more
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  Speaker 1: signed today that Microsoft's for a into smartphones was not
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  Speaker 1: a very good way to provide growth and revenue for them.
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  Speaker 1: Microsoft it's going to cut back as many as one thousand,
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  Speaker 1: eight hundred fifty jobs and took a new imparamid chart
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  Speaker 1: charge as CEO Saye Nadella continues to pair back the
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  Speaker 1: company's ambitions in smartphones. Joining us now discuss all this
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  Speaker 1: and more is An gran, a senior analyst of software
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  Speaker 1: and I T Services for Bloomberg Intelligence, joining us from
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  Speaker 1: our Bloomberg eleven thirties studio in New York. Anorag It
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  Speaker 1: is just one more step down the path for Microsoft. Yes,
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  Speaker 1: I mean, once you know, start there inherited this phone
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  Speaker 1: business and it doesn't look like he was a big
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  Speaker 1: fan of it. And ever since he has coming, he's
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  Speaker 1: been you know, kind of right sizing it down to
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  Speaker 1: um and I would say almost close to zero. At
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  Speaker 1: this point with um, you know, very few phones left
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  Speaker 1: in the market at this point that Microsoft will ever make,
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  Speaker 1: you know, even in the future, for example on a rock.
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  Speaker 1: How did the business get to be so bad so quickly?
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  Speaker 1: This is nine and a half billion that they've had
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  Speaker 1: to write off of the Nokia DEALIM it's it's a
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  Speaker 1: question of strategy. I don't think that you know, you know,
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  Speaker 1: he he wants to be in the handset business. Frankly,
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  Speaker 1: you know, all he wants to do with sell software,
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  Speaker 1: whether it is to the consumers, all the enterprises, and
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  Speaker 1: he thinks it can be done without these you know,
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  Speaker 1: making these math devices, which is contrary to what the
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  Speaker 1: previous CEO thought. Yeah, you know, but how did two
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  Speaker 1: very smart people come to very two, two very different conclusions.
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  Speaker 1: I mean, it just doesn't it kind of spin your
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  Speaker 1: head a little bit. Well, that's a different approach to
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  Speaker 1: how to to make sure that you, as the user
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  Speaker 1: don't leave out of the Microsoft ecosystem. And the way
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  Speaker 1: Satia has gone about it, it said, it doesn't matter
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  Speaker 1: to me if you use an iOS divide as an
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  Speaker 1: Android device. If I just want to make sure you
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  Speaker 1: don't lose word, you don't loude Excel. You still use
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  Speaker 1: Skype on all these devices, So he wants to make
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  Speaker 1: sure that the software connection that you have as a user,
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  Speaker 1: you know, is not lost, irrespectable platform you have well,
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  Speaker 1: But isn't also the case that Steve Bomber made a
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  Speaker 1: bad business decision and starching Adella is making a good one.
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  Speaker 1: Look at this, Uh, Windows phones have less than one
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  Speaker 1: percent of the global smartphone market in the first quarter
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  Speaker 1: according to Gartner, and that compares with Android for Apple's iOS.
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  Speaker 1: So it seems to me, it doesn't boggle my mind
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  Speaker 1: at all. Seems that starting Adella is just reading the
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  Speaker 1: hand running on the wall. What about the business phone market?
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  Speaker 1: What's going on there for Microsoft? You know? Once again,
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  Speaker 1: I mean that is a market it's possible that they
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  Speaker 1: will still try to you know, penetrate given their large
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  Speaker 1: installed base off Windows operating systems. You know, already within
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  Speaker 1: the enterprise now that you know, BlackBerry has been the
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  Speaker 1: leader over there, and you know, the thing that the
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  Speaker 1: movement that's happening over there is you're bringing your own device.
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  Speaker 1: You know, you really don't have that many you know,
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  Speaker 1: company issued phones that at this point and the bulk
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  Speaker 1: of them are still you know, used by the consumer.
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  Speaker 1: So I mean it's it's it's an opportunity, but I
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  Speaker 1: mean I don't think that's that big of a market
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  Speaker 1: for them. Well, how does that feed into the discussion
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  Speaker 1: about cybersecurity and Microsoft's role in securing the enterprise. The
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  Speaker 1: number one thing that you know they're doing is adding
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  Speaker 1: a lot more security to their co operating system, whether
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  Speaker 1: it's Windows tent or Microsoft Azure. They are investing a
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  Speaker 1: lot more money in security than than frankly any of
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  Speaker 1: the even pure play companies out there. So with that
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  Speaker 1: in mind, what they want to do is if your
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  Speaker 1: infrastructure is secured, then whatever endpoint that you use, whether
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  Speaker 1: it's a phone or a PC, you know, that should
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  Speaker 1: take care of it. So you're also following today and
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  Speaker 1: have been for a while on a rug, we're gonna
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  Speaker 1: uh this announced merger of the services segment of Hewlett
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  Speaker 1: Hewlett Packard Enterprise and Computer Sciences Corp. What's that about? Well,
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  Speaker 1: the thing is basic there. I mean, the the infrastructure
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  Speaker 1: outsourcing market is declining, which is what a large portion
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  Speaker 1: of what HP Enterprise and IBM and that cat you know,
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  Speaker 1: C s C these guys do along with Fijitsu now
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  Speaker 1: that industry has been declining, and what cs C c
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  Speaker 1: o A has done ever since he came there, he
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  Speaker 1: cut out a lot of costs, improved margins. Investor liked him,
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  Speaker 1: and it seems he's going to do the same thing
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  Speaker 1: for HPS business, you know, consolidated and then start cutting
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  Speaker 1: a lot of the fact I think the biggest feature
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  Speaker 1: of this deal, and you know, in my view, is
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  Speaker 1: the billion dollar plus savings that they are going to
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  Speaker 1: recognize just in the first field, which means you're going
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  Speaker 1: to be a lot of job losses. A lot of
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  Speaker 1: data centers been shut down, and it's possible that even
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  Speaker 1: the contracts that you know, these companies have the longer
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  Speaker 1: term contracts, if they come up for the new wells,
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  Speaker 1: if they're not high really profitable, he might just decide
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  Speaker 1: not to even bid on them, Anora, Can I just
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  Speaker 1: steer you back to Microsoft for just a second and
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  Speaker 1: get your thoughts on the Surface and the laptop that
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  Speaker 1: Microsoft is selling. Can we see the day when they
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  Speaker 1: just get out of that hardware business entirely, well, at
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  Speaker 1: least in the you know, in in both the case
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  Speaker 1: of Surface and their particular PC, they want to focus
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  Speaker 1: on the higher end market. And it's not because they
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  Speaker 1: think they can make a lot of money over there.
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  Speaker 1: They want to showcase the power of Windows, the power
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  Speaker 1: of all the applications that they have through these devices,
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  Speaker 1: and that's their strategy. They will not compete with the
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  Speaker 1: likes of del HP when it comes to you know,
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  Speaker 1: the PC market. But I know people who have purchased
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  Speaker 1: the Surface and they love it. They love it. They
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  Speaker 1: say it's the best device they've ever gotten, and they've
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  Speaker 1: had laptops of all kinds. I know a couple of
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  Speaker 1: people who use them all kinds of you know, economics,
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  Speaker 1: analysis and charts and graphs. They love them. And my
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  Speaker 1: wife hases and she loves it too, Anora, thank you
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  Speaker 1: very much for joining us. Sanara Grana is a senior
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  Speaker 1: analyst of software and I T services for Bloomberg Intelligence.
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