Two years after it bought Nokia’s mobile phone division for $7.2 billion, it seems Microsoft is giving up on its own Windows Phone platform as well as its smartphone business on the whole. In a major announcement, the Redmond-based software giant confirmed significant cuts to its smartphone business on Wednesday. According to Yahoo News, Microsoft is letting go of more than 1,850 employees from the company’s smartphone division. The company also indicated that it will write off more than $950 million from the business that never really took off. Of the 1,850 affected employees, nearly 1,350 people work at Microsoft’s phone division in Finland. The rest of the affected employees are scattered across various other countries.
The move is seen by many to bear the trademark of Microsoft’s current CEO Satya Nadella who took over as the CEO succeeding Steve Ballmer just months after the Nokia-Microsoft deal was finalized in 2014. Unlike Ballmer, who was keen on making Microsoft a device-focused company by taking on Android and iOS head on, Nadella seems to be far less enthusiastic about Windows Phone’s prospects. In a statement issued by Microsoft, Nadella says,
“We are focusing our phone efforts where we have differentiation. We will continue to innovate across devices and on our cloud services across all mobile platforms.”
While Microsoft is yet to confirm this, a Finnish union representative has indicated that this move would put an end to development of new phones. He added that Microsoft would continue to support smartphones running Windows 10 for the next few years but will stop making any more smartphones. Microsoft has also issued a statement in which it promises to continue supporting Windows-10-laden mobile devices as well as its existing Lumia lineup. The statement, however, does not say anything about new phones for the future. The status of the much talked about Microsoft Surface Phone remains cloudy at this point as well.
— Onefruit (@_onefruit) May 25, 2016
As Android and iOS continue to dominate the smartphone OS space, other platforms continue to struggle to make their presence felt. While Windows Phone has been lauded by many for being a great platform, even four years since its launch, it could barely make a dent into the iOS or Android market share. In fact, in the very first quarter of 2016, the market share held by Windows Phone devices fell to less than 1 percent. The writing was on the wall.
It is still not known how many people work at Microsoft’s smartphones division. However, the latest cuts are only a part of the story. Last year, Microsoft gave the first hint about them not being very enthusiastic about the future of their smartphone division by axing more than 7,800 jobs. In all, almost 10,000 people lost their jobs in less than one year. This is a huge number and could effectively be the size of the entire smartphone operation.
This news also comes close on the heels of another major announcement that was reported just a week ago. Back then Inquisitr had reported Microsoft’s decision to sell off its entry-level feature phones business to Foxconn for more $350 million. This also coincided with the news of a possible Nokia comeback — this time with smartphones running Android.
With Microsoft’s imminent exit from the smartphone space, a leaner and meaner Nokia is expected to make a significant comeback. With all the right ingredients in place — design, features, OS, and above all, brand value, there is no reason why Nokia could once again end up being a force to be reckoned with in the smartphones space. What do you think?
(AP Photo/Manu Fernandez)