Microsoft has just announced plans to lay off nearly 2000 people as part of a move aimed at streamlining its phone business. What this means in practice is that the giant is effectively exiting the phone market.
According to a statement released by the company, up to 1,850 employees will lose their jobs, namely 1,350 in Finland and the rest around the world.
The move underlines the fact that the company is currently passing a difficult moment when strategic thinking is key. Microsoft acquired Nokia’s devices and Services business three years ago for $7.1 billion but since has had to scale down its smartphone division. The move was orchestrated by former Microsoft CEO Steve Ballmer and came at a time when Nokia’s mobile business was showing signs of struggle.
Last year the company laid off 7,800 people and last week sold the remaining phone operations for $350 million. The feature phone business was sold to Foxconn subsidiary FIH Mobile and to Finnish company HMD Global, which is owned by Nokia. As part of the deal, approximately 4,500 Microsoft employees will be transferred to HMD Global.
According to Microsoft CEO Satya Nadella, his company will still be active in the phone space but in a narrower way. Nadella is responsible for cutting over 25,000 jobs in the last two years both at the company’s hardware business and at the Nokia division.
According to the company, the layoffs will cost the company almost one billion; $200 million will be spent on severance payments. Microsoft said that most operations connected to the restructuring should be implemented by the end of the year and completed by the end of the 2017 fiscal year. The company’s upcoming financial report, to be released in July, is set to contain further details on the matter.
For the Nokia brand, however, things are starting to look up. The legendary phone maker is expected to return to the smartphone industry. Also, despite having to scale down, Microsoft is still committed to have its Windows 10 running on mobile phones. According to reports, the company is currently developing a new range of smartphones that would run the platform. The new ‘Surface’ phone could hit the market in 2017.
According to data supplied by Kantar Wordpanel, Microsoft counts 4.9 percent of sales in the five biggest countries in Europe.
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