Bloomberg – Microsoft 'expects to make its own phones for at least the next two years'

The tech world is still reeling from today's announcement by Microsoft regarding the restructuring of its phone division. Between the costly write-down of the Nokia devices acquisition and the 7,800 layoffs, it is hard to see a silver lining in today's news. Many tech sites are going right for the jugular and proclaiming Windows Phone's death, despite the coming release of Windows 10 Mobile and new flagships this fall.

In a new article, Bloomberg BusinessWeek cites an unnamed source familiar with Nadella's plans for phone. Regardless of some expecting Windows Phone to be phased out by 2016, Microsoft will evidently stick with making phones for at least the new two years. Bloomberg's Dina Bass and Olga Kharif explain the strategy:

"The company expects to make its own phones for at least the next two years, said a person familiar with Nadella's plans who asked not to be named because the plans aren't public. Microsoft will try to play up its strengths in the markets it has chosen, such as corporate security and collaboration software for business customers.""Instead of trying to sell as many phones as possible, Microsoft will concentrate on three categories: business phones, high-end models and value phones like the Lumia 520, which, at more than 25 million units sold, is the company's best-selling device."

Microsoft is likely to exit deals with carriers that are not productive to their bottom line as well:

"The company also will exit carrier relationships and countries where it hasn't been successful, the person said, although it will continue to sell handsets in the U.S. because of the market's size and significance."

Contrasting the news with Microsoft COO Kevin Tuner's words from a leaked email obtained by ZDNet, the bigger picture begins to emerge for Windows Phone:

"Going forward, we will focus on building the very best Windows phones on a quicker timeline. We will also focus on the channels and markets that offer the best returns. This is a similar approach to the one we have taken with Surface, which has been very successful. Phones remain a critical component of the Microsoft device portfolio and an important piece of our mobility strategy, but a restructuring is in order."

Microsoft is clearly trimming the fat in regards to Windows Phone and changing how it approaches devices in the future. For a few years now critics have been calling on Nokia to scale back on all the Lumia releases. Microsoft is now doing just that, including utilizing the 'Surface approach' to making new flagships, something once again that users have requested numerous times.

Despite the course correction, critics, and even some Microsoft fans seem to have lost confidence.

It is not clear what Microsoft – and specifically Nadella – expect for Windows 10 Mobile in the coming years. Is the whole division a write-off too or do they seem themselves biding time, using a concerted effort to rebuild and restructure?

Related: 'Microsoft's restructuring of their phone business was necessary, obvious, and good for Lumia'

Regardless, my guess is that much of this negativity will die down in the coming months Windows 10 and Windows 10 Mobile come online later this year. Sources close to Windows Central suggest that a flagship reveal for the Lumia 940 could come as early as September at the 2015 IFA tradeshow in Berlin. Indeed, it was in Berlin 2014 that Microsoft announced the Lumia 730 and Lumia 830, so the chances seem high for a repeat.

If the source to Bloomberg BusinessWeek is accurate, Microsoft will still be in the mobile phone business for another two years. Let's see what happens.

Source: Bloomberg BusinessWeek

Daniel Rubino

Daniel Rubino is the Editor-in-chief of Windows Central. He is also the head reviewer, podcast co-host, and analyst. He has been covering Microsoft since 2007, when this site was called WMExperts (and later Windows Phone Central). His interests include Windows, laptops, next-gen computing, and watches. He has been reviewing laptops since 2015 and is particularly fond of 2-in-1 convertibles, ARM processors, new form factors, and thin-and-light PCs. Before all this tech stuff, he worked on a Ph.D. in linguistics, watched people sleep (for medical purposes!), and ran the projectors at movie theaters because it was fun.