A little more than a year ago Nokia officially ceased to exist as a mobile phone manufacturer. Nokia's efforts to reverse their decline in the mobile space by adopting Microsoft's Windows Phone operating system were unsuccessful, and eventually the company decided to exit from the mobile phone market entirely by selling their devices business to Microsoft. Former Microsoft CEO Steve Ballmer had stated that Microsoft was evolving from a traditional software company to become a devices and services company. With that mindset, the acquisition of Nokia made sense in order to acquire manufacturing, design, and software talent that had already been working on Windows Phones for quite some time.

Unfortunately, it appears that the purchase of Nokia's devices division has not worked out as well as Microsoft had hoped. New CEO Satya Nadella has also reversed course on the Devices and Services mantra and is instead focusing on software and services, but with first party hardware to showcase the software. After laying off 12,500 former Nokia employees last year, Microsoft has announced that will be eliminating up to 7,800 positions, with most of the cuts coming in areas of Microsoft focused on phones. In addition to the job cuts, Microsoft will be writing off 7.6 billion dollars which is essentially the entire value of the Nokia acquisition. There will also be a $750-$850 million restructuring charge. All-in-all, it's a big hit to their bottom line, and even companies that make billions every year have to answer to investors about charges like this. It is an even bigger write down than they took on the AQuantive deal a few years ago.

In an email to employees regarding Microsoft's future in the mobile business, CEO Satya Nadella stated “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.” One could interpret this as Microsoft consolidating their phone lineup which has arguably become a bit too large and filled with devices that only differ from each other in small ways. It's likely that the launch of Windows 10 for phones will be accompanied by more information about the future of Microsoft's phone business, but for the time being it appears that Microsoft is taking a step back from their role as a major devices company.

Source: Microsoft

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  • nikon133 - Sunday, July 12, 2015 - link

    I'm watch person, but not smartwatch person. My watches don't require support from my phone ;)
  • nikon133 - Sunday, July 12, 2015 - link

    You know... I used iPhones for a bit over 4 years, from late 2009 till early 2014. I had 3Gs all that time as my personal phone and got 4s later on.

    I replaced my personal iPhone phone with Lumia 920 (which was already a year on the market and very affordable), while my wife remained on iPhone with 5s. I guess beauty is in the eye of beholder... but much as my eyes go, I enjoy Win Phone a lot, and would not consider returning to iPhone. Eventually, early this year I have chosen Lumia 830 as my new work phone. Looking at my wife's experience - her 5s had more issues along the way than my Lumia 920. Nothing major, but a few more freezes, more rogue apps going crazy in the background and discharging battery in a few hours - my Lumia was rock-solid, and even being 3 years old, all the updates I have received through Preview for Developers were working great, not crippling my phone's performance like it happened back in 3Gs days.

    Hardware options in Win phone are badly formed, I must agree with that. Gazillion of SKUs on low-end, mostly differing in name but not in specs in any meaningful way, while high end was well overdue. New flagship rumors look promising, and I hope they will be followed with reduction on low-end offerings, resulting in not more than 3 units every year - single low, mid and high-end models.

    Re the software. This is the shady area. I don't game on phones and mostly use core apps - sms, mail, calendar, FB, weather, maps/satnav... and those, among others, are well executed on Win phone. For those who do crave to play latest Destiny Sword and whatnot, or need speciffic app that lives somewhere else... well... one shoe doesn't fit everyone.
  • BMNify - Wednesday, July 8, 2015 - link

    Microsoft is not backing away from the phone market, they are just trimming the lineup down to 3 segments with 6 phone per year, instead of 12-15 models per year.
  • Alexvrb - Wednesday, July 8, 2015 - link

    That would be a good start. They do need to get Win10 Mobile finalized so they can get the 940 on the market.
  • BMNify - Wednesday, July 8, 2015 - link

    yeah, the Windows 10 Mobile + 940, 940XL is expected in September/October.
  • Impulses - Wednesday, July 8, 2015 - link

    Were they really putting out over a dozen phones a year? By themselves or including OEM partners? Half a dozen a year for the ex-Nokia division still seems like a lot, I know that was child's play for Nokia back in the day but the market's changed drastically... Four tops IMO.
  • BMNify - Thursday, July 9, 2015 - link

    MS has released Lumia 4xx, 5xx, 6xx, 7xx, 8xx, 9xx series. Some series have 2-3 phones, so it is way more than a dozen phones a year. Now, they will trimming down to three segments with two phone each.
  • BillBear - Thursday, July 9, 2015 - link

    So when Nadella announces that Microsoft will no longer attempt to “grow a standalone phone business” you don't believe him?
  • jakoh - Thursday, July 9, 2015 - link

    i think more like 4 phones a year or less.
  • beginner99 - Thursday, July 9, 2015 - link

    MS won't move away after phone market. With windows 10 they are finally getting to where they should be and can finally leverage the huge user-base of desktop windows with the universal app store. I do believe it has a lot of potential. Google should be afraid.

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