Microsoft Writes Down $7.6 Billion Nokia Business, Cuts 7800 Jobs

“In the near term, we’ll run a more effective and focused phone portfolio business while retaining capability for long-term reinvention in mobility”. Such ambitions haven’t worked so far, with Windows Phone unable to gain meaningful traction against iOS and Android. The downsizing is expected to take place by the year-end, the Redmond, Washington based software behemoth said. The software giant had more than 118,000 employees worldwide at the end of March.

WASHINGTON – Microsoft will cut 7,800 jobs and reorganise its Windows Phone unit, which has struggled in the mobile market.

The announcement on job cuts is an acknowledgement that its 2013 US$7.2-billion (S$9.7-billion) purchase of Nokia is not going to help paltry sales of its Windows Phone, and that it needs a new approach.

It is evident that Microsoft needs to revamp their business strategy, however only time will tell what their next step will be. To boot, thousands of Nokia employees were among the 18,000 laid off previous year.

While this admission was harsh not only for investors but also for the employees, it also underscored the fact that Microsoft still can’t seem to get a grip of the smartphone industry, this after more than a decade of strategizing and billions of dollars spent. In its latest attempt to restructure the phone business, Microsoft is said to decide on launching one or maximum two models each year in three different categories catering to affordable segment, business customers, and premium end or the flagship segment. Microsoft ultimately wanted to build an ecosystem that created customers that were loyal to a slew of its products, much as Apple and Google have done so successfully.

“I am committed to our first-party devices including phones,” he wrote. Last year, the company revealed that it was looking to cut 12,500 jobs and pointed to its challenged phone business. The 7,800 cuts announced Wednesday, which mainly come from smartphones, are in addition to those 18,000.

While Microsoft will not stop making smartphones, Nadella on Monday said Microsoft would no longer focus on the growth of its own smartphone business.

The email goes on to say that the company has also written off around $7.6 million, spent acquiring Nokia’s Devices and Services division.