Microsoft also disclosed it would stop making mobile phones powered by Google Inc.'s Android operating system. Nokia earlier this year introduced low-cost Android phones, known as the Nokia X line, putting Microsoft in the odd position of selling phones supporting the software of its arch rival Google. The Nokia X line will give way to lower-priced phones running Microsoft's own Windows Phone software, though the company said it will continue to sell and support existing Nokia X devices.
The company offered few other specifics in its announcement, but advertising-sales businesses, marketing functions, and parts of its engineering operations also have been preparing for job cuts, according to people familiar with the matter.
The job cuts are a sign Mr. Nadella, only the third CEO in Microsoft's 39-year history, isn't afraid to break from his predecessors, Bill Gates and Steve Ballmer, who favored pruning Microsoft's ranks to large-scale layoffs. The cuts also will test whether Mr. Nadella, who has won high marks so far from employees, investors and technology-industry executives, has built enough goodwill to make tough changes without second guessing.
Stockholders, and some Microsoft employees, say the company's most urgent need is to become more focused and nimble to keep pace in increasingly competitive technology industries. The question is whether significant workforce cuts and a rethinking of how work gets done at Microsoft will help kick start innovation.