Microsoft Corporation (NASDAQ:MSFT) In Mass Layoff In Phone Department
Microsoft Corporation (NASDAQ:MSFT) is in the process of retrenching more than 1,800 employees in its smartphone hardware division. The company is expecting to encounter a $950 million charge related to the mass layoff. The majority of the staff cut is expected to hit Finland, where the company has a device production business. Microsoft added the mobile manufacturing facility to its portfolio after the ill-fated acquisition of Nokia Corporation (ADR) (NSE:NOK)’s handsets operation.
Shrinking Windows Phone sales
Microsoft Corporation (NASDAQ:MSFT) is planning layoff of about 1,850 employees at a time when the company is struggling with shrinking mobile sales. According to Gartner, sales of smartphone running Windows accounted for just 0.7% of smartphones sold in 1Q2016. Windows phone sales were 2.5% of smartphones sold in a similar quarter a year earlier.
Shake up in Finland
Of the 1,850 positions to be eliminated, 1,350 will be lost in Finland. The layoffs will culminate in Microsoft closing its Finnish subsidiary called Microsoft Mobile Oy that produces mobile devices. However, the company plans to retail its Finnish sales and marketing unit called Microsoft Oy. Microsoft inherited the Finnish mobile production operation from Nokia.
Shift in mobile strategy
It was the immediate former CEO, Steve Ballmer, who led Microsoft Corporation (NASDAQ:MSFT) to acquiring Nokia with the hope of expanding the company’s mobile interest in the consumer market. But things didn’t work as anticipated and the current CEO, Satya Nadella, was been trying to remodel Microsoft’s mobile strategy. Nadella is focusing more on the corporate mobility market. It seems to Nadella that Microsoft stands a better chance of success targeting enterprises with mobile devices and software that are suited for production environments. Microsoft is also hoping to capitalize on the trend in which companies are offering mobile devices to their employees instead of letting those employees bring their private gadgets to work and run them on company network.
Microsoft in foreign land
But Microsoft Corporation (NASDAQ:MSFT)’s mobile strategy is multipronged. In addition to targeting the market with native Windows devices and services, the company is also serving its mobile productivity solutions on foreign platforms. For example, its Office word processing software has been widely distributed on Alphabet Inc (NASDAQ:GOOG)’s Android and Apple Inc. (NASDAQ:AAPL)’s iOS.
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