Microsoft announced its plans today.
The restructuring will result in a one-time charge of $950 million which includes roughly $200 million for severance payments.
Microsoft says up to 1,350 jobs will be lost at Microsoft Mobile Oy in Finland, plus 500 other jobs globally. The company said that it will be implementing significant job cuts in its devices division, to the tune of 1,850 jobs in addition to the 4,500 jobs that it said last week were going away. Microsoft has struggled to gain momentum in the mobile space. This mobile platform is actually what Microsoft has been working towards, and promising, since the debut of Windows Phone 7.
Whether this commitment to Windows Mobile is worthwhile if the operating system's market share steadfastedly refuses to rise above one or two per cent is something Nadella will have to address in the next few years. Instead, it is refocusing to ensure the division remains effective.
When asked to confirm whether Microsoft was fully halting its smartphone production, a spokesman for the tech giant in the United States told AFP: "We will continue to develop new devices and adapt Windows 10 for small screens, support Lumia Phones such as the Lumia 650, Lumia 950 and Lumia 950XL, and phones from our OEM hardware partners like Acer, Alcatel, HP, Trinity and Vaio".
Microsoft's Windows 10 is already on hundreds of millions of computers out there in the wild, and people seem to like it. At least, based on the feedback from Windows 8, Windows 10 is a pretty big hit. Mr. Nadella also touted the company's Continuum feature, which enables a smartphone running Windows 10 to function as a surrogate PC when connected a video monitor and keyboard. Current and previous Lumia devices will keep receiving software updates. This essentially kills off Microsoft as a serious player in the smartphone hardware market.
The company's stock was up more than 1.5 percent after the announcement Wednesday.
But Microsoft can't live in a mobile world without a mobile platform, even if it's only being used by a handful of core enterprise customers and the odd die-hard consumer. The lay-offs should be completed "substantially" by the end of 2017.
More information about these charges will be provided in Microsoft's fourth-quarter earnings announcement on July 19, 2016, and in the company's 2016 Annual Report on Form 10-K.
Source: Microsoft to Streamline Smartphone Unit
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