Microsoft Partners Hail Layoffs As Drumbeat In Cloud-First Mantra

Partners are cheering Microsoft's announcement Wednesday that it will cut up to 7,800 employees in an attempt to create a tighter cloud-first strategy.

The Redmond, Wash.-based company said it would make the cuts primarily in its Nokia smartphone division, which the company acquired in a $7.2 billion deal, as it seeks to transform it from a stand-alone phone business to a "vibrant" Windows ecosystem.

Partners applauded the layoffs as a signal of Microsoft's commitment to its core strength -- software, seen through its Office productivity apps and Windows operating system -- as opposed to hardware.

[Related: Microsoft Targets Hardware Business With 7,800 Job Cuts]

"I feel much better about Microsoft's direction, more so now than in recent memory," said Dave Powell, vice president of managed and cloud services at TekLinks, a Birmingham, Ala.-based Microsoft partner. "[CEO Satya] Nadella's looking at alignment of software and productivity, and Microsoft's big talking points are around the cloud. I'm enthusiastic about where things are headed."

As a result of the cuts, Microsoft said it will record an impairment charge of about $7.6 billion related to assets associated with the acquisition of the Nokia business in addition to a restructuring charge of about $750 million to $850 million.

According to Microsoft, future prospects for the phone hardware segment are below original expectations for its fourth quarter.

Robby Hill, founder and CEO of HillSouth, a Florence, S.C.-based Microsoft partner, called the layoffs a "temporary sting."

"As long as the message is that Microsoft is growing more focused in the areas that are key, like mobile, cloud services and Office, the PR hit is just a blip on the radar," Hill said. "Microsoft is aligning everything in its business to deliver on long-term growth in the rapidly growing cloud space."

Microsoft has stayed relevant in the mobile space not through its hardware, but by pushing its productivity software apps, like Office, onto various Android and iOS platforms.

In March, the company announced an extended collaboration with Samsung to deliver pre-installed services for consumers with Android devices.

More recently, the company has made a string of changes to restructure its phone hardware business, such as changes to its engineering teams and leadership and shifts in its display advertising business.

"I simply see this as one of the tough decisions executives have to make to keep their businesses healthy financially," said Steve Meek, president of Keller, Texas-based Fulcrum Group Inc., a Microsoft partner. "We do hope they make the cuts quickly and can get back on track quickly so we can keep any mobile or cloud momentum in our sales efforts. As the big industry players continue to gobble up complementary technologies and then shed excess, I feel we have learned how to be more self-sufficient in working around whatever vendor issues come up."

PUBLISHED JULY 8, 2015