Microsoft on Wednesday announced another reorganization of its smartphone business with plans to streamline operations and eliminate redundant personnel. The company will lay off 1850 of its employees in Finland and other countries and will take a $950 million charge. The actions seem to be in line with Microsoft’s plans to focus on development of flagship smartphones and leave the market of mass handsets.

When Microsoft closed its acquisition of Nokia in late April, 2014, it received approximately 25,000 new employees from around the world, who were involved into development, production, sales, and distribution of smartphones and feature phones. Shortly after, in July, 2014, Microsoft laid off 12,500 former Nokia staff as a part of its major reorganization, when it let go 18,000 Microsoft employees in total. The first wave of dismissals eradicated numerous positions at Nokia and shut down the division, which developed software for feature phones, leading to eventual elimination of Asha devices from Microsoft’s lineup.

A year after the company announced the first phase of streamlining, the software giant revealed further plans for phone business restructuring. In July, 2015, Microsoft decided take an impairment charge of approximately $7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services business, and take a restructuring charge of approximately $750 million to $850 million. As part of its second phase of optimizations, the company laid off another 7,800 former Nokia employees globally. Besides, Microsoft announced their intentions to focus on flagship smartphones and generally to phase out inexpensive handsets going forward.

Today’s announcement further eliminates 1350 jobs in Finland as well as 500 additional jobs globally. The actions are to be fully completed by July, 2017, and will cost Microsoft approximately $200 million related to severance payments. Microsoft further noted that sales teams based in Espoo, Finland, will not be affected by the layoffs.

As a result of its optimizations of the handset business, by mid-2017 Microsoft will have eliminated approximately 21,650 former Nokia employees out of the iniitlal ~25,000 who joined Microsoft in 2014. Moreover, as 4,500 former Nokia staff are set to join FIH Mobile or HMD Global in the coming months, it means that by mid-2017 the absolute majority of the former Nokia employees will be gone from Microsoft.

Microsoft did not reveal any new plans concerning its smartphones going forward, but repeated what it said in 2015: the company will concentrate on flagship models and will support its traditional hardware partners with development of their smartphones featuring Windows 10 Mobile. The software giant sees security, manageability and Continuum feature as its key strengths on the smartphone market going forward, which essentially indicates that the company sees enterprises as the main customers for its handsets. Microsoft did not mention its PureView camera and other consumer focused assets it got from Nokia as its unique advantages to address consumers, which may indicate that the company no longer considers consumers as its main customers in the smartphone world.

“We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability, and consumers who value the same,” said Satya Nadella, chief executive officer of Microsoft. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”

What the head of Microsoft did mention is that the company will continue to offer cloud-based services to all mobile platforms. Again, this is not something new as it emphasizes Satya Nadella’s cloud approach to mobile and his reluctance to fight against Apple, Google and Samsung in the world of mobile platforms and mobile hardware.

Source: Microsoft

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  • damianrobertjones - Thursday, May 26, 2016 - link

    It was dead waaayyyyyyyyyyyy before WM appeared. Reply
  • Murloc - Thursday, May 26, 2016 - link

    Nokia was dying regardless, at least they made a last-ditch attempt. Reply
  • tim851 - Thursday, May 26, 2016 - link

    When Nokia committed to a monogamous Windows Phone relationship, the Android market wasn't dominated by Samsung yet. Being the biggest name in the phone industry, having the best camera technology, offline apps and some of the best phone designs they could have arguably made a better last-ditch attempt by going with Android.
    It was a huge gamble to go with WP exclusively, sweetened by a billion bucks out of Redmond.
    Reply
  • Kepe - Wednesday, May 25, 2016 - link

    I f***ing hate Microsoft! They completely ruined Nokia, and in the process tens of thousands of Finns are now unemployed. The city of Salo, whose thriving economy was completely based on all the Nokia related stuff that was located there, is in a huge financial crisis because thousands of well-paid Nokia workers are now unemployed or have moved elsewhere. If you ask me, I hope the entire board of directors and whatever else blood-sucking low-lives are in charge of what they do at Microsoft dies in a horrible ball of fire. Reply
  • Kepe - Wednesday, May 25, 2016 - link

    Oh and let's just add that for all the "good" work mr. Eflop did at the helm of Nokia, he was awarded a bonus of millions of dollars when he left Nokia and went back to M$. All this injustice drives me completely mad...!! If I ever happen to see Eflop somewhere, I'm going to kick his sorry ass. Reply
  • JoeMonco - Thursday, May 26, 2016 - link

    No you're not. You'll slink away like the scared little keyboard warrior that you are. Reply
  • id4andrei - Wednesday, May 25, 2016 - link

    Forgive me but that's stupid. MS saved Nokia by buying its division in their attempt to become a 3rd player. Nokia outwardly refused Android comparing it to little kids pissin' in their pants to keep warm on an arctic day. And from certain technical standpoints they were right. Symbian and Meego were better than Android in stability but sucked in usability. Nokia's phone division and its sense of pride would have brought the entire Nokia down. Reply
  • Kepe - Wednesday, May 25, 2016 - link

    Elop came from Microsoft, and suddenly right after that Nokia completely abandoned the very promising MeeGo project and all the devices they had planned and went 100% for Windows Mobile instead. After a couple of years of releasing products nobody wanted to use because of WinMo, Nokia's share prices had fallen enough for M$ to buy their phone division for cheap. After that, Elop went back to M$ and got millions of dollars as a reward for his good job of bringing Nokia down. Reply
  • name99 - Wednesday, May 25, 2016 - link

    All that might be true, BUT it doesn't change the fact that pre-MS Nokia was running around like a chicken without a head in the face of iPhone and Android.
    To imagine that they could have achieved some sort of save, given everything their culture and history displayed is fantasy. The most likely path would have been the same as that of RIM.

    You can't just claim that MeeGo was "very promising". Making OS's is brutally difficult; making mobile OS's, substantially more so; making mobile OS's that substantial numbers of people want to use is something that only two companies have ever actually achieved.
    Even MS didn't get there, and they had a substantially better chance in terms of talent pool. But MS was crippled by an insistence on stupid ideas, and I suspect, if Nokia HAD ever got MeeGo out of the lab, they would likewise have been crippled by stupid ideas (in their case, most likely a constant dumbing down of the OS so that some version of it could run on dumbphones).

    We're about to see a grand experiment on whether a third contender (Tizen on watches) can actually make a go of it. Are you betting they succeed? Because I certainly am not.
    Reply
  • JKflipflop98 - Wednesday, May 25, 2016 - link

    Nokia was dead anyways. They had 0 compelling products and were circling the financial drain at the time of MS's purchase. If anything, Microsoft's cash infusion helped keep the lights on longer than would have been possible. Reply

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