Microsoft ends ‘Nokia experiment’

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Microsoft’s streamlining of its smartphone business continued this week when it announced it has written off a further $950 million and 1,850 jobs, effectively signalling the end of its failed Nokia experiment. It follows last week’s news that it would sell its feature phone business to FIH Mobile, a subsidiary of Foxconn, for $350 million.

Microsoft acquired Nokia in 2014 for $7.2 billion in an attempt to strengthen its presence in the smartphone market. However, the strategy hasn’t worked and resulted in Microsoft writing off $7.6 billion and cutting 7,800 jobs last year. The most recent cuts mean that the majority of Nokia staff are no longer employed by Microsoft, with around $200 million of the write off relating to employee severance payments.

“We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability, and consumers who value the same,” said Satya Nadella, chief executive officer of Microsoft. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”

Microsoft anticipates this will result in the reduction of up to 1,350 jobs at Microsoft Mobile Oy in Finland, as well as up to 500 additional jobs globally. Employees working for Microsoft Oy, a separate Microsoft sales subsidiary based in Espoo, are not in scope for the planned reductions.

“As a result of the action, Microsoft will record a charge in the fourth quarter of fiscal 2016 for the impairment of assets in its More Personal Computing segment, related to these phone decisions,” said the company statement.

About Author

Gary Eastwood

Gary Eastwood has over 15 years of experience as a technology and business journalist and editor. He has held editorship positions on customer magazines for Microsoft, CSC, and EDF, as well as on B2B magazine Mobile Enterprise. He is the former Deputy Editor of Computer Business Review. In a freelance role, Gary has contributed numerous features and articles to a broad range of publications, including New Scientist, Computer Weekly, MIS, Marketing Week, Corporate Financier, Real Business, Wireless Business Review, and driven marketing communications projects for clients, such as Intel, the Confederation of British Industry, IBM, Logicalis, the Department of Trade & Innovation, and many others. Gary has written many white papers on a range of ITC subjects for Datamonitor. He is also an editorial photographer and business videographer, and has authored and ghost-written four books on photography. He is the Co-Director of EastwoodMiddleton Publishing, which provides contract/customer magazines for a growing list of clients, and publishes the B2B magazine for business leaders, Strategist.