Microsoft is restructuring its smartphone business, will cut 1,850 jobs

Microsoft has announced that it is restructuring its smartphone business, laying off 1,850 employees associated with its hardware division. The move will impact 1,350 jobs at Microsoft's Finland unit, and an additional 500 jobs globally. Microsoft will undertake an impairment and restructuring charge of $950 million, of which $200 million is earmarked for severance payments. The vendor underwent a restructuring process last year, where it announced a $7.6 billion write-down of the company's acquisition of Nokia's Devices and Services division, laying off 7,800 employees from its phone unit.

Microsoft sold its feature phone manufacturing unit last week, and the Redmond giant is now saying that it will focus its phone efforts in areas where it can differentiate itself.

From Satya Nadella:

We 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.

The company will complete its restructuring efforts by the end of the year. We'll get to know more about the changes during Microsoft's fourth-quarter earnings announcement on July 19. The latest round of layoffs mean that only a fraction of Nokia's workforce that transitioned to Microsoft remain at the organization. It's never a good sight to see talented individuals let go, and we wish the employees affected the best of luck.

Microsoft's Windows and Devices head Terry Myerson sent out an internal memo to employees detailing the change. In the memo, Myerson said that Microsoft is committed to supporting the existing Lumia and OEM phones, and that it will "develop great new devices," which could turn out to be the Surface phone. The vendor is also focusing on its Universal app strategy. The Verge managed to obtain a copy of the memo, which is posted below.


Last week we announced the sale of our feature phone business. Today I want to share that we are taking the additional step of streamlining our smartphone hardware business, and we anticipate this will impact up to 1,850 jobs worldwide, up to 1,350 of which are in Finland. These changes are incredibly difficult because of the impact on good people who have contributed greatly to Microsoft. Speaking on behalf of Satya and the entire Senior Leadership Team, we are committed to help each individual impacted with our support, resources, and respect.

For context, Windows 10 recently crossed 300 million monthly active devices, our Surface and Xbox customer satisfaction is at record levels, and HoloLens enthusiasts are developing incredible new experiences. Yet our phone success has been limited to companies valuing our commitment to security, manageability, and Continuum, and with consumers who value the same. Thus, we need to be more focused in our phone hardware efforts.

With this focus, our Windows strategy remains unchanged: 1. Universal apps. We have built an amazing platform, with a rich innovation roadmap ahead. Expanding the devices we reach and the capabilities for developers is our top priority. 2. We always take care of our customers, Windows phones are no exception. We will continue to update and support our current Lumia and OEM partner phones, and develop great new devices. 3. We remain steadfast in our pursuit of innovation across our Windows devices and our services to create new and delightful experiences. Our best work for customers comes from our device, platform, and service combination.

At the same time, our company will be pragmatic and embrace other mobile platforms with our productivity services, device management services, and development tools -- regardless of a person's phone choice, we want everyone to be able to experience what Microsoft has to offer them.

With that all said... I used the words "be more focused" above. This in fact describes what we are doing (we're scaling back, but we're not out!), but at the same time I don't love it because it lacks the emotional impact of this decision. When I look back on our journey in mobility, we've done hard work and had great ideas, but have not always had the alignment needed across the company to make an impact. At the same time, Ars Technica recently published a long story documenting our journey to create the universal platform for our developers. The story shows the real challenges we faced, and the grit required to get it done. The story closes with this:

"And as long as it has taken the company, Microsoft has still arguably achieved something that its competitors have not... It took more than two decades to get there, but Microsoft still somehow got there first." For me, that's what focus can deliver for us, and now we get to build on that foundation to build amazing products.


Harish Jonnalagadda
Senior Editor - Asia

Harish Jonnalagadda is a Senior Editor overseeing Asia for Android Central, Windows Central's sister site. When not reviewing phones, he's testing PC hardware, including video cards, motherboards, gaming accessories, and keyboards.