Stephen Elop explains how recent job cuts will affect Microsoft's handset division

Microsoft Device Group leader Stephen Elop wrote his own email about how the company's announced plan to cut 18,000 workers will affect his division, stating that it will be "particularly focused on making the market for Windows Phone" by targeting the budget priced market..

In his email, Elop explained how the role of phones at Microsoft will be different than how it was handled at Nokia, which he led as its CEO before returning to Microsoft:

Whereas the hardware business of phones within Nokia was an end unto itself, within Microsoft all our devices are intended to embody the finest of Microsoft's digital work and digital life experiences, while accruing value to Microsoft's overall strategy. Our device strategy must reflect Microsoft's strategy and must be accomplished within an appropriate financial envelope.

Elop confirmed that Microsoft plans to target the lower end of the smartphone market for future products in the near term, stating:

In addition to the portfolio already planned, we plan to deliver additional lower-cost Lumia devices by shifting select future Nokia X designs and products to Windows Phone devices. We expect to make this shift immediately while continuing to sell and support existing Nokia X products.

Microsoft won't ignore the higher end smartphone market, with Elop stating that the company will release "great breakthrough products in alignment with major milestones ahead from both the Windows team and the Applications and Services Group."

Elop stated that the Smart Devices and Mobile Phones business units at Microsoft will be merged into one unit, adding, "This team will be responsible for the success of our Lumia products, the transition of select future Nokia X products to Lumia and for the ongoing operation of the first phone business."

Lumia 635

In terms of Microsoft's phone engineering efforts, Elop indicated that future high end Lumia devices will continue to be developed in Salo, Finland, while the budget priced phones will be developed in Tampere, Finland. Elop confined that the company will "ramp down engineering work in Oulu", which helped to develop software for Nokia's Asha feature phone line.

Elop added:

While we plan to reduce the engineering in Beijing and San Diego, both sites will continue to have supporting roles, including affordable devices in Beijing and supporting specific US requirements in San Diego. Espoo and Lund are planned to continue to be focused on application software development. We plan to right-size our manufacturing operations to align to the new strategy and take advantage of integration opportunities. We expect to focus phone production mainly in Hanoi, with some production to continue in Beijing and Dongguan. We plan to shift other Microsoft manufacturing and repair operations to Manaus and Reynosa respectively, and start a phased exit from Komaron, Hungary.

In terms of Microsoft's other hardware device teams that are developing the Surface tablets, the Xbox consoles, and the Perceptive Pixel large touchscreen devices, Elop stated there will only be a "limited change" for those groups due to changes that have already been made earlier in the year.

What do you think of Elop's announced plans to make the division a smaller team?

Source: Microsoft

John Callaham