Report: Microsoft to wind down Nokia's feature-phone biz to focus on Windows Phone

Microsoft (NASDAQ: MSFT) 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.

Microsoft said Thursday that Nokia will consolidate the former Smart Devices and Mobile Phones business units into one phone business unit that will be responsible for all phone efforts. Under the plan, the phone business unit will be led by Jo Harlow, with key members from both the Smart Devices and Mobile Phones teams in the management team.

According to reports from The Verge and BGR India, Harlow sent out a memo saying that all "Mobile Phones" services, i.e. those not running on Windows Phone, will be placed into "maintenance mode" immediately. She wrote that this means "there will be no new features or updates to services on any Mobile Phones platform as a result of these plans. We plan to consider strategic options for Xpress Browser to enable continuation of the service outside of Microsoft." Existing customers will be supported and Microsoft will "ensure proper operation during the controlled shutdown of services over the next 18 months."

Harlow also wrote that Microsoft plans to "transition developer efforts and investments to focus on the Windows ecosystem while improving the company's financial performance. To focus on the growing momentum behind Windows Phone, we plan to immediately begin ramping down developer engagement activities related to Nokia X, Asha and Series 40 apps and shift support to maintenance mode."

A Microsoft spokeswoman declined to comment.

Microsoft had already confirmed that it would stop making the Nokia X phones that run on a forked version of Google's (NASDAQ: GOOG) Android platform.

The gradual winding down of Nokia's once-venerable handset business, especially for lower-end phones, is a striking symbol of how far the firm has fallen in the past several years. The decision indicates that Microsoft did not think it could or should continue to play in the feature-phone market and reflects its emphasis on bringing the Windows Phone platform to entry-level smartphone customers around the world, both via its internal products and through OEM and ODM partners.

The decision also cuts at Finnish pride, as Finns reflect on how Nokia, once a jewel of the country's tech industry, has tumbled in the past several years. Microsoft said that about 1,100 layoffs, or 6 percent of the total job cuts, will come from Finland, primarily from a manufacturing plant in the north of the country, according to the New York Times.

"Everyone had been expecting this news," David J. Cord, an American based in Helsinki, who wrote The Decline and Fall of Nokia, told the Times about Microsoft's job cuts. "It has hurt the Finnish psyche. When Nokia was on top of the world, so was Finland. Now that Nokia has fallen, so has the country."

Stephen Elop, a former Nokia CEO who is now the executive vice president of Microsoft's devices unit, indicated in a memo to employees Thursday that Microsoft would now focus squarely on Windows Phone. Microsoft's strategy seems to be that it will focus on high-end devices that showcase Microsoft services but also bring Lumia Windows Phones down to lower price points—presumably to make up for the loss of lower-end Nokia X, Asha and Series 40 devices.

"We will be particularly focused on making the market for Windows Phone," Elop wrote. "In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest growing segments of the market, with Lumia. In addition to the portfolio already planned, we plan to deliver additional lower-cost Lumia devices by shifting select future Nokia X designs and products to Windows Phone devices. We expect to make this shift immediately while continuing to sell and support existing Nokia X products."

Meanwhile, in other news related to the Microsoft shakeup, the company is also planning to offer Nokia MixRadio as a third-party service. A MixRadio representative told ZDNet that MixRadio will be spun out as a separate company but that the application will continue to be preloaded on Windows Phones and other Windows devices. "We are not closing down or ceasing to develop the service," the representative said. "We are being spun out as a separate company, although we will continue to be preloaded to Microsoft devices."

For more:
- see this The Verge article
- see this BGR India article
- see this TechCrunch article
- see this ZDNet article
- see this GeekWire article
- see this Re/code article

Related Articles:
Microsoft's Nokia job cuts reflect a shift away from devices
Microsoft to slash 18,000 jobs, many of them former Nokia workers
As Microsoft reportedly readies job cuts, Nadella promises to rethink core products
Microsoft's Nadella: There's room for us with Apple and Google in the consumer market
Nokia X2 shows Microsoft's continued support of Google's Android
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