Microsoft announced on Wednesday it would lay off 1,850 people from its smartphone business in an effort to streamline its it. As a result of the restructuring, the Redmond-based software titan said it would write down $950 million, of which $200 million would go to severance payments, in the fourth quarter this fiscal.
The job cut, according to the executive vice-president of Windows and devices group Terry Myerson's email to all employees, is "incredibly difficult", but essential "to be more focused in our phone hardware efforts," CNBC reported. Most of the job cuts â€” up to 1,350 â€” is expected to take place in Finland, while the remaining 500 will be spread out globally.
"We are focusing our phone efforts where we have differentiation â€” with enterprises that value security, manageability and our Continuum capability, and consumers who value the same," Satya Nadella, Microsoft CEO, said in a statement. "We will continue to innovate across devices and on our cloud services across all mobile platforms."
Microsoft said the layoffs would be completed by July next year, which marks the end of the company's fiscal year 2016-17. The company did not mention anything about developing new phones, but Myerson was quoted by Financial Times as telling employees that "great new devices" would be developed. He also said these actions do not mean they are completely out of the smartphone business.
Just last week, Microsoft had said it had agreed to sell Nokia's feature phone division to Foxconn in a deal valued at $350 million, which would result in the transfer of about 4,500 employees. As part of Nokia's acquisition for $7.2 billion in September 2013, the software giant added around 25,000 workers. But the company started trimming its workforce in 2014 with 18,000 layoffs, and another 7,800 job cuts last year, which resulted in the shutting down of its Salo operations.
But Microsoft has been focusing on the software front lately. The company in February announced it had tied up with 74 hardware-makers across 25 countries to preload the Microsoft suite of apps on Android smartphones. The apps include Word, Excel, OneDrive, OneNote, Outlook, PowerPoint, and Skype, the company said.