After announcing a layoff of up to 7,800 employees (a massive 7% of workforce) at Microsoft, most of which will affect employees working in the company’s phone business, we might wonder what happens next. In a bid to what CEO Satya Nadella calls ‘restructuring’ the smartphone business, which entails the writing off $7.6 billion as well as a restructuring cost of $750 million to $850 million, the future doesn’t look good for Microsoft’s phone division.

Nadella wrote in an email to employees, “We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family. In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”

So what is going to happen? Microsoft will still make phones, only significantly cutting down on the number of models it produces. This focus will be on three segments (producing two phones per year in each segment): Value phones, business phones and flagship phones. From now on the company will concentrate on the “mobility of experiences” across all devices, and that includes the above phones.

But is this strategy still a little optimistic? Microsoft has launched seven low-end Lumia Windows Phones, none of which has gained any kind of widespread success. Against Apple’s iPhone and Android, Windows Phone has seen a steady decline, with only 4.3% of the market share in the US at the end of 2014, and in the first quarter of 2015 only 3.8%. Worldwide, Windows phone showed a market share of 2.7% in Q1 2015, and only very few places does Windows Phone break into double digits. Even in the UK, which is one of Windows Phone better markets, there has been decline over the last couple of years. Now that Microsoft services, such as the Office Suite, are available on other platforms, can Windows Phone really compete given its lackluster performance so far?

As it stands Microsoft doesn’t have many big hitters producing Windows Phones (90% of Windows Phones are Lumias), and it would be hard to see Microsoft doing anything other than gradually calling it a day in this department. One option could be that Microsoft takes the Apple model and produce variations of the same model, or even merge devices, such as what could have been the Surface Phone.

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