Today’s plans were outlined in an email sent to employees by Microsoft’s CEO Satya Nadella. But the Windows OS could not compete with Apple or Android’s operating systems and the company continued to lose shares of the smartphone market.
Advertisement
Microsoft Corp. today announced plans to restructure the company’s phone hardware business to better focus and align resources. These will be in addition to the 18,000 employees which the company had announced to lay off previous year. “However, we need to focus our phone efforts in the near term while driving reinvention”, Nadella wrote.
Microsoft bought the Finnish phone manufacturer Nokia’s devices and services business barely 14 months ago, in a bid to strengthen and expand its presence in the ever-so-competitive smartphone market. The company will also spend up to $850 million on restructuring.
The deal means that AOL – recently acquired by Verizon – will sell all display formats, such as mobile and video, for the Microsoft portfolio across nine markets, including Brazil, Canada, France, Germany, Italy, Japan, Spain, United Kingdom and the United States.
The acquisition of Nokia took place in September 2013, under Steve Ballmer’s leadership, and faced immediate criticism from Wall Street analysts and tech experts skeptical of Microsoft’s role in the world of smartphones. Majority of the Jobs cut will be in Microsoft’s Windows Phone unit.
In a press release, Microsoft said, “The new agreement enables the companies to use a broader range of each other’s technologies in their respective products through a patent cross license.” The idea is to have a common interface and a common code base, allowing Microsoft and its customers to have something approaching a more seamless experience across the range of platforms.
Last month, Mr Stephen Elop, the Nokia’s ex- chief executive who became a senior Microsoft executive after the acquisition, overseeing its devices business, left the company.
Advertisement
Microsoft will record a charge in the fourth quarter of fiscal 2015 for the impairment of assets and goodwill in its Phone Hardware segment, related to the NDS business. The stock closed at $44.24 on Wednesday and the company has a market cap of $356 billion. Microsoft is still planning high-end Lumia devices alongside the Windows 10 launch this year, and while we’ll surely still see some low-end and mid-tier devices, we’ll likely see fewer choices than before as Microsoft looks to tighten up their device strategy.
