Microsoft is back at layoffs, and has announced today that it is laying off 1850 employees off its smartphone businesses in addition to a restructuring charge of $950 million and $200 million in severance payments as it so direly tries to streamline its business to divert its focus towards enterprise and cloud applications.
The Redmond giant has been trying very hard to make it’s mark in the hardware space but has always been pushed to the lower rung of the ladder by market leader like Apple and Google. Satyla Nadella, the CEO of Microsoft believes that,
We[Microsoft] 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. We will continue to innovate across devices and on our cloud services across all mobile platforms.
Just last week we had reported that Microsoft has sold its feature phone business, including the Nokia trademark usage rights to two corporations in the homeland of Nokia, Finland for a meager sum of $350 million. This decision had also been been corroborated by Nokia who also issued a press release deciding to make a comeback to the market with Android smartphones and tablets. The company has also partnered with HMD Global and Foxconn subsidiary FIH Mobile both based out of Finland.
We were already anticipating Microsoft to finally get rid of the feature phone business, which would make a random appearance at events for seconds and held no importance for the company. But, the sudden news regarding the revamped smartphone business, the Lumia line-up for which Redmond giant had acquired the technology and rights from Nokia is definitely a shocker.
Microsoft still believes that it could make a comeback to the market with its upgraded and remodeled approach towards Windows 10 being a service rather than just a software that you update every couple years. The company will still manufacture and produce smartphones, maybe under the moniker – Surface Phone – but it will still try to conquer the growing smartphone market. It’s entry even though was late, but Redmond accounts for about 3 per cent of smartphone market share and hopes to revive the platform and give users a hands-on experience to a productive and useful product.
With regard to today’s update, Microsoft believes it will result in the reduction of about 1,350 personnel at Microsoft Mobile Oy in Finland, and another 500 jobs from around the globe. Microsoft has also clarified that personnel belonging to Microsoft Oy, a sales subsidiary in Espoo wouldn’t be affected by this change. The charge of reduction in jobs and the substantial shift to cloud will amount into Q4 of the company’s results.
The condition of Microsoft Mobile division and company’s related to the same, Nokia are in a state of disarray. As reported last week, the iconic mobile manufacturer Nokia is also planning to restructure and layoff about 1,000 employees in Finland before making a solid return to the market.
Microsoft reports that the layoffs will ultimately be completed until the end of fiscal year 2016-17, leading upto July 2017. This is a huge iteration for the company’s hardware division, and the only thing left to see is whether Microsoft will still continue to launch Windows Mobile 10 powered devices after 2-3 years or the business has run its course and will be depleted, when Redmond realizes it is no longer lucrative.