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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