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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  • svan1971 - Wednesday, July 8, 2015 - link

    wonder if the jobs will be replaced by lower wage foreigners?
  • BMNify - Wednesday, July 8, 2015 - link

    What foreigners? Microsoft is a Global company with employees all over the world, Most people who were laid off this time were from Finland, i guess that makes you happy since they were not 'Murican.
  • svan1971 - Wednesday, July 8, 2015 - link

  • BMNify - Wednesday, July 8, 2015 - link

    Don't troll by bringing a separate topic here, Microsoft is a Global company which sells products and services worldwide and also has offices all over the world and this layoff affects everyone. So, nobody is a foreigner here, go spew your 'Murican stuff elsewhere and remember that posting such comments/crusade won't help you from getting priced out in a Globalised World.
  • svan1971 - Thursday, July 9, 2015 - link

    Apparently your one of the globalist sucking of Americas tit. I see my country overrun with illegals and losing its job to foreigners while our politicians only care about votes and cheap labor so you can spew your one world globalist crap all you want I can care less.
  • Michael Bay - Thursday, July 9, 2015 - link

    If you _can_ care less, you deserve to be overrun by illegals. All things considered, they probably have more command over your native language than you do.
  • khanikun - Thursday, July 16, 2015 - link

    You do know that America sucks everyone's tits, so that the American public can get their cheap clothes, electronics, cars, etc.

    If American companies only made/built/whatever in America, the American public would riot, cause their shirts now cost $200, pants cost $300, the iPhone would be $2000, the base model Ford Fiesta is now $35,000, etc.

    Everyone would just start buying imported items and you'd hurt the US economy, as all the money would flood out to foreign companies. Increasing import taxes would just mean price hikes for foreign products coming in. So everyone loses out that way too.
  • BMNify - Wednesday, July 8, 2015 - link

    They are just restructuring the phone lineup to three segements, This email from Satya Nadella clarifies Microsoft's position on smartphones:

    ""We plan to narrow our focus to three customer segments where we can make unique contributions and where we can differentiate through the combination of our hardware and software. 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."

  • Gadgety - Wednesday, July 8, 2015 - link

    Yes, I read this and thought, OK, sounds good, straightforward, and... and wasn't that what they were trying to do all along? What have they been up to? Which customer segments were they targeting? Not business customers? Not the value phone buyers?

    I can see that the flagship devices have been lacking, the 1020 was nearly there, but hardware wise it was too strapped. So essentially they are moving away from the mid range segment? Trying to move upmarket? While keeping the low end happy.
  • BMNify - Wednesday, July 8, 2015 - link

    Nope, they were not doing this all along. Microsoft was releasing 12-15 phones every year like old Nokia/ samsung with throwing everything to the wall strategy now it will be a trimmed lineup with just three segments and 6 phones.

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