This week, Apple’s Apple Watch sales have been declining. Microsoft CEO Satya Nadella announced 7,800 layoffs and wrote off US$7.6 Billion in assets. Ellen Pao, the CEO of Reddit, was also under pressure. A petition requesting her resignation after Reddit shut down earlier this week has reached 212,000 signatures.
Apple Watch sales in the US are reported to be falling sharply.
Slice Intelligence has reported this week that Apple Watch sales have dropped 15% from their April levels, with just 5,000 watches sold per day. Selling large numbers of Apple Watches was always going to be a challenge. Apple Watches and their accessories are expensive, even if they perform better than other products in the same category.
Smartwatches will be adopted as a technology category by the general public only if we change our behaviors, which have been ingrained in us over the last 20 years due to the adaptation of mobile phones. In the last decade, smartphones have become a general computing device that we are willing to spend considerable time on.
Apple’s watch interface is good, but its small screen will always limit its capabilities. It will be some time before users decide what they can do on their watch and what they will need their phone for.
This is still a very early version of the watch. Apple has yet to release global sales figures, so it’s impossible to determine if this is a success.
Microsoft writes off its Smartphone Business.
Microsoft CEO Satya Nadella announced, in what may be the final act to the tragedy of Nokia’s demise, that Microsoft will lay off another 7,800 employees and write down US$7.6 Billion worth of assets related to its smartphone business.
One could argue that Nokia and BlackBerry would have struggled in the smartphone market in any case. The company had already made a mistake by choosing to use Microsoft’s OS for its smartphones instead of Android. Steve Ballmer, the former Microsoft CEO, made an equally poor decision by buying the company to prevent Nokia from changing their mind and switching to Google’s platform.
Microsoft’s history is filled with poor acquisitions. In 2012, Microsoft booked a US$ 6.2 billion charge for the acquisition of aQuantive. Microsoft’s online business was not profitable because it wanted to compete with Google in online advertising.
Microsoft charged a US$900m charge for poor sales on the Surface RT, a device line that cost Microsoft US$ 2 billion in its first two years.
Microsoft’s experience with Nokia has at least convinced it that its future as a device company is unlikely to be successful. This is also what Satya Ndella appears to accept for the time being. Microsoft should not have to lose so many jobs before they learn this lesson.
Reddit CEO Ellen Pao (Chairman) clings to her role
The closure of Reddit in the early of this week has finally come to an end. The moderators have not been satisfied with CEO Ellen Pao’s apology. The NY Times reported that two moderators who were involved in earlier actions claimed that company leaders had not fully explained why they removed Victoria Taylor from the staff. This move sparked the users’ anger.
Ironically, skills that a CEO needs to have to recognize when to leave are the same as those skills that made them successful in the first instance. By definition, bad leaders are not able to make the right decision for a business and leave when it is time. No one in a position of authority has approached Pao to let him know that it’s time to move on.
There are only two members on Reddit’s board, which is a sign of poor governance. Alexis Ohanian is the founder of the company, but he may not be any more capable than Pao at managing the company. Samuel Altman works with the startup incubator Y Combinator. Reddit users will decide whether it’s worth staying around to see what the CEO does in the absence of an oversight board.