Microsoft cutting down 4700 jobs in smartphone unit is not good news

Microsoft (NASDAQ: MSFT) will lay off 2,850 workers in fiscal 2017 in addition to the previously announced 1,850 job cuts as part of the restructuring process. The reason for the massive layoffs comes in the wake of growing losses from its smartphone segment. According to industry analysts, the Redmond-based company’s decision to acquire Nokia in a $7.6 billion deal was an experimental failure.

In a regulatory filing, Microsoft revealed that it will eliminate around 4,700 jobs globally by the end of the fiscal year 2017. In June 2015, Microsoft had announced a massive 7,400 job cuts from the smartphone business unit.

In May 2016, Microsoft had announced the decision to cut 1850 jobs. The company also write off $950 million of which $200 million was allocated for severance payments. The workers who lost jobs will be paid a one-time package before their departure from the company.

Commenting on the development, Microsoft CEO Satya Nadella disclosed that the company is working out a model for the smartphone business. This includes enterprises that value security, manageability, and our Continuum capability. Moreover, the company is working hard to bring back lost customers by introducing cutting-edge Windows 10 Mobile platform.

Nadella added that the company will continue to focus on innovation across devices particularly the cloud services across all mobile platforms.

The future of Nokia employees in Microsoft

Meanwhile, a leading tech portal disclosed that the majority of former Nokia employees will no longer work at Microsoft once the restructuring process has been completed. Microsoft will lay off all former employees of Nokia since their services are no longer required after a sluggish sale of Windows Phone devices.

The fate of Microsoft Windows Phone

The key fact is that people who invested their money to buy expensive Windows phones are left with no or buggy updates, which doesn’t serve any purpose. In contrast, Google is continuing to launch new Android platforms based on latest technology innovations like VR.

Towards the end of first half of 2015, Nadella spoke about the need for a more effective and focused phone portfolio since the smartphone market has a demand for value, business, and flagship phones.

Responding to media queries, Terry Myerson, Microsoft’s head of Windows and devices categorically stated that although we are scaling back, the company is virtually not out of the race.

Microsoft Windows Phone market share

Technically, the market share of Windows Phone was very low under 1 percent during Q1 2016. It will be very difficult for the company to catch the attention of customers even if they manage to release new models of Lumia devices.

Even if the software giant releases Surface Phone in early 2017, you need not have to expect any improvement. This is because the pricing structure of new Surface Phone devices will not be compatible for budget category users.

Soon after Microsoft acquired Nokia, the company closed down its Chennai manufacturing plant causing 13000 job losses. However, Nokia had to struggle with local tax authorities and the relevant case is still pending without any conclusion.

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