May 27, 2016

    Microsoft makes call to shrink phone business


    MICROSOFT announced more big cuts to its smartphone business on Wednesday, just two years after it bought handset maker Nokia in an ill-fated attempt to take on market leaders Apple and Samsung.

    In a move that clearly puts the stamp of two-year chief executive Satya Nadella on the US company, Microsoft said it would shed up to 1,850 jobs, most of them in Finland, and write down US$950 million (S$13.1 billion) from the business.

    Remaking Microsoft, known primarily for its software, into a more device-focused company was a hallmark of previous chief executive Steve Ballmer.

    In one of his last major acts, he closed a deal to buy Nokia's struggling but once-dominant handset business for about US$7.2 billion in late 2013.

    Since then, Mr Nadella has shaved away at the phone business, starting with a 2015 restructuring that put the devices group, previously a stand-alone unit, under the Windows group.

    A Finnish union representative said the cuts would essentially put an end to Microsoft's development of new phones.

    Microsoft said it would continue to develop the Windows 10 platform and support its Lumia smartphones but gave no comment on whether it would develop new Windows phones.

    Global market share of Windows smartphones fell below 1 per cent in the first quarter of 2016, said research firm Gartner.

    Last year, Microsoft announced US$7.5 billion of

    writedowns and 7,800 job cuts in its phone business.

    The company said on Wednesday it expected to cut all 1,350 jobs at its Finnish mobile-phone unit and close down a research and development site in the country.

    Nokia dominated around 40 per cent of the world's mobile phone industry in 2008 before it was eclipsed by the rise of touch-screen smartphones.

    As a result, Nokia and Microsoft have slashed thousands of Finnish jobs over the past decade, and the lack of substitute jobs is the main reason for the country's economic stagnation.

    Nokia, now focused on telecom network equipment, last week said it was cutting around 1,000 jobs in Finland following its acquisition of Franco-American rival Alcatel-Lucent.