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No More Smartphones for Microsoft?

May 27, 2016
With just 1% of the market, Microsoft cuts the cord on a cordless industry to focus more on other new tech — closing the book on Nokia in the process.

Microsoft has all but abandoned the smartphone game.

The company has said that it will axe as many as 1,850 jobs, many of them in Finland — home base of the handset business Microsoft acquired two years ago from Nokia Oyj.

Since becoming CEO in 2014, Satya Nadella has been gradually exiting a business championed by predecessor Steve Ballmer and had already written off most of the $9.5 billion Nokia acquisition. This month, Nadella sold a division that made old-school “feature” phones that connect to the web but do little else.

Microsoft never became a real force in smartphones, an industry dominated in recent years by Apple and Google’s Android handsets. Windows phones captured less than 1% of the global smartphone market in the first quarter, according to Gartner Inc. By comparison, Android and Apple had 84% and 15% of the market, respectively. Now even those companies are struggling to maintain sales growth because consumers are upgrading their phones less often.

Nadella, who initially opposed Ballmer’s move into the handset business, hasn’t publicly declared a full retreat, saying in a statement that the company “will continue to innovate across devices.” But it’s clear he has other priorities, including tablets, gaming devices, cloud services and software designed to boost workplace productivity.

Microsoft will take a $950 million impairment and restructuring charge, including $200 million for severance payments, according to an e-mailed statement. The company expects to complete the cuts and other actions by year-end. Microsoft had 112,689 employees at the end of last year.

About 1,350 jobs will disappear in Finland, another blow to a nation already struggling to reduce unemployment and revive an economy hurt by Nokia’s mobile-phone demise. Microsoft will be left with a skeletal crew in Finland, where Nokia once employed thousands of workers back when it dominated the global handset market.

By Selina Wang

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