Thursday, June 16, 2016

Is Microsoft exiting the smartphone game?...lays off 1,850 workers

After spending $10 billion on former mobile heavyweight Nokia, Microsoft is selling off its smartphone business but continuing to back its struggling Windows Mobile platform.
Before the rise of Apple's iPhone, Microsoft's original clunky Windows Mobile handsets battled for smartphone supremacy against the likes of Nokia, Palm and Blackberry. They all failed to keep pace with the game-changing iPhone, which dominated smartphone sales for many years before Google's Android stole top spot.
Three years ago Microsoft bought Nokia's phone business, scrapping the Finnish tech giant's smartphone software but keeping the Nokia Lumia handset as its flagship Windows Mobile smartphone. The spike in sales was short-lived and Microsoft ditched the Nokia name last year while keeping the Lumia brand. Now Microsoft is abandoning the handset business completely, selling off the remnants of Nokia's phone-making business to Apple supply chain partner Foxconn.
While Microsoft will no longer make its own smartphones, it will continue to support existing Lumia phones as well as develop its Windows Mobile platform for other handset makers such as Acer, Alcatel and HP. Even so, Windows Mobile's long-term future is under a cloud, considering it only accounts for about 1 per cent of worldwide smartphone sales.
Due to the dominance of Apple and Android devices, many app developers have long treated Windows Mobile as an afterthought. In a sign of the times, online payments giant PayPal is scrapping its Windows Phone and BlackBerry apps in the middle of the year.
The recently released Lumia 650 looks to be the last handset Microsoft will sell in Australia. Rumours still persist that Microsoft is developing a "Surface Phone", in line with its range of Surface tablets, running Windows 10. Meanwhile, the Nokia name looks set to live on in mobile devices with a Finnish company acquiring the brand name with plans to release a range of Android-powered smartphones.
With the company still struggling to restart its mobile strategy after multiple misfires, early on Wednesday morning announced a further step in dismantling the mobile-phone operations it acquired from Nokia Corp.
Microsoft will lay off 1,850 workers, taking an impairment and restructuring charge of approximately $950 million, the company said. It will record the charge in the current quarter in its More Personal Computing segment. Last year, Microsoft wrote down $7.6 billion related to its mobile-phone business and laid off 7,800 workers in those operations.
Combined, the charges total a bit more than the $9.4 billion Microsoft spent in 2014 to acquire Nokia Corp.'s handset business. The latest charge and layoffs follow the sale last week of Microsoft's low-end phone business to FIH Mobile Ltd., a subsidiary of Hon Hai/ Foxconn Technology Group, and HMD Global Oy for $350 million.
In an email to employees, Terry Myerson, executive vice president of Microsoft's Windows and Devices Group, insisted that the company isn't exiting the mobile-phone business. Microsoft, which still makes three phones in its Lumia line, will continue to "develop great new devices," Myerson wrote.
"[We're] scaling back, but we're not out!" Mr. Myerson wrote. It would be difficult for Microsoft to be less in the mobile phone business that it currently is, though. The market research firm Gartner Inc. last week reported that sales of smartphones running various versions of Microsoft's Windows software amounted to 0.7% of the market in the first quarter of 2016. A year earlier, Windows' share of sales came to 2.5%.
The company intends to focus its mobile-phone efforts in areas where the company has "differentiation," Microsoft Chief Executive Satya Nadella said in a statement. That includes businesses that want to use Microsoft's technology to manage and secure devices on their corporate networks. Mr. Nadella also touted the company's Continuum feature, which enables a smartphone running Windows 10 to function as a surrogate PC when connected a video monitor and keyboard.

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