Microsoft on Wednesday unveiled the first Lumia-branded Windows Phone that will be sold at a price below €100 ($134), hot on the heels of news that sales of Lumia smartphones declined in the U.S.-based company's fiscal fourth quarter to the end of June.
Microsoft reported a 7 percent decline in its quarterly profit, largely due to the effects of incorporating Nokia's handset business. But the company's revenue increased with the addition of the $1.99 billion in revenues the company scored from Nokia's handset operations. Importantly, Microsoft sold 5.8 million Lumia-branded Windows Phones, a decline from the 7.4 million Lumia smartphones Nokia sold during the second quarter of last year.
Microsoft is going to wind down Nokia's Asha and Series 40 feature-phone businesses over the next 18 months to focus solely on devices running Microsoft's Windows Phone platform, according to an internal company memo. The decisions come as part of Microsoft's decision to cut 18,000 jobs, including 12,500 former Nokia workers, the largest restructuring in the company's history.
The job cuts Microsoft made to its Nokia devices business were not surprising, and they reflect Microsoft CEO Satya Nadella's drive to change Microsoft into a software and services company that enhances productivity for enterprises and consumers through its platforms. Devices will still be a part of Microsoft, but they will be used for a specific purpose: to showcase the best Microsoft experience, primarily in high-end gadgets.
The axe is falling for former Nokia handset workers. In its largest round of layoffs to date, Microsoft said it will cut up to 18,000 jobs this year, or 14 percent of its workforce. It is expected that many of those cuts will be to employees the company acquired when it bought Nokia's devices and services business for around $7.4 billion.
Microsoft CEO Satya Nadella laid out a manifesto for the company to move beyond the "devices and services" mantra supported by his predecessor Steve Ballmer and into an era where the software giant focuses on "productivity and platforms."
Microsoft's Nokia unit is going to release a smartphone in its flagship Lumia line that runs Google's Android software, according to a post from noted mobile leaker @evleaks.
Microsoft will release this fall a wearable fitness band that will display smartphone notifications, according to a report from SuperSite for Windows.
Microsoft, Mozilla, the Tizen Association and others are moving to lower-cost hardware in an effort to gain share in emerging markets. However, Google's Android One software and hardware reference design program could undercut those efforts by enhancing the Android experience on cheap devices in the developing world.
Microsoft appears likely to phase out the Nokia brand in its mobile products, especially smartphones, following its $7.5 billion deal for Nokia's devices and services business, according to newly leaked internal documents.