Microsoft’s dreams of competing with iOS and Android in the mass consumer smartphone market are officially dead. Microsoft on Wednesday announced a major restructuring of its hardware division that will include layoffs of 7,800 employees “primarily in the phone business.” Instead of trying to appeal to the mass market, Microsoft CEO Satya Nadella said on Wednesday that the company is narrowing its focus to three distinct markets. 

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“We’ll bring business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they’ll love,” Nadella wrote in a letter to Microsoft employees.

Let’s go through these one by one.

When it comes to business customers who value security and productivity, it seems Microsoft will be competing for the small niche of customers that BlackBerry is still trying to hang onto, which isn’t exactly a big market. Diehard Windows Phone fans, meanwhile will certainly love the idea of new flagship hardware, although there just aren’t enough of them to give Windows Phone a boost in market share. And when it comes to value phone buyers, companies like Xiaomi and Micromax have been owning that market with their insanely cheap Android phones.

Taken together, Microsoft really isn’t trying to compete with Apple or Android anymore. Instead it’s trying to add more of a mobile experience to the Windows ecosystem that won’t necessarily include phones.

Nadella’s full email to Microsoft employees can be found here.