Microsoft restructures phone business; cuts 7,800 jobs

By MoneyTimes

Jul 10, 2015 09:37 AM EDT

Microsoft is writing off the $7.6 billion that it paid to buy Nokia's handset unit in 2014 and dropping some 7,800 jobs in its roll, most of them from the phone business. The reductions will take place over the next few months.

In his email to Microsoft employees which was also published in Microsoft's News Center, chief executive officer Satya Nadella was empathetic in saying, "I don't take changes in plans like these lightly, given that they affect the lives of people who have made an impact at Microsoft".

The layoff however is the second round of retrenchment that took place in Microsoft since Nadella took the helm in February 2014 on top of the 18,000 job cuts that Microsoft reportedly plan to execute globally as part of its restructuring plan. 

But Microsoft is not giving up yet on its phone business. Further to his email, Nadella offered assurance to continue the phone business.

"I am committed to our first-party devices including phones. However we need to focus our phone efforts in the near term while driving innovation. We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Microsoft ecosystem that includes our first-party device family", he said.

Despite its aquisition of Nokia Devices and Services business, Microsoft penetrated only 2.5 percent of the smartphone market, a far third from industry leaders Apple and Android. 

The struggle continues with Windows 10, which will be available on July 29. The operating system is intended to build a more seamless experience between mobile and computing devices. Microsoft is expecting customers using Windows 10 on their PCs to be more inclined to use the same software in their mobile phones. 

A market analyst quoted by Reuters however remains optimistic of the recent Microsoft decision, describing Nadella's approach as a "positive tipping of the hand around Microsoft's future focus on software".

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