After acquiring Nokia’s phone business for $7.2 billion two years ago, Microsoft wrote off $7.6 billion last year and cut 7,800 jobs to refocus its phone efforts.
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Most of the job cuts will be in Finland, but Microsoft did not say how many employees now work on smartphones in the group as a whole, the report said.
A Finnish union representative told Reuters the cuts would essentially put an end to Microsoft’s development of new phones.
Many will argue Microsoft had no choice, as Nokia controlled more than 90 percent of the Windows Phone market and had been rumored to be considering switching to Android.
The tech giant also confirms that it will continue to support its Lumia series of smartphones as well as focus on Windows 10 Mobile Platform.
The cutbacks further shrink what’s left of the former Nokia Devices and Services business, which Microsoft acquired for $7.2 billion in April 2014 – a deal that has turned out to be a major strategic blunder.
Last week, a study indicated Windows-powered handsets accounted for less than 1% of global smartphone sales over the first three months of the year. Around 4,500 employees will be transferred from Microsoft to FIH Mobile – part of the deal the company made when they sold their feature phones division. Most (1,350) of the job cuts will happen at Microsoft Mobile Oy in Finland.
Microsoft has taken a drastic step with 1,850 job cuts in the wake of declining sales in its smartphone business over the last few years.
Microsoft CEO Satya Nadella said the company will focus on areas where it has “differentiation”, but he didn’t go into specifics.
Nokia was the world’s leading mobile phone maker from 1998 until 2011 when it bet on Microsoft’s Windows mobile platform which proved to be a flop. An additional 500 workers will be let go globally.
Microsoft Mobile Oy in Finland will be the hardest hit.
These layoffs and charges are in addition to the 7,800 job layoffs and $7.6 billion write-off at the unit announced previous year.
If Microsoft Corporation wishes to resume its operations in the smartphone market, we believe that having an open approach is more reasonable.
Terry Myerson, Windows and Devices chief, detailed the company’s plans for the future in an email.
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Microsoft announced its plans today.
