14 DAY TRIAL // Today, Microsoft announced plans to shift some of its Nokia X devices into Windows Phone handsets (included in the Lumia lineup) amid a wide range of layoffs that will affect around 12,500 people in the former Nokia Devices and Services division, and also detailed how this would affect its business.
Satya Nadella, Microsoft CEO, has announced said changes, and Stephen Elop, executive vice president of Microsoft's Devices Group, has provided some additional info on what these changes will mean for the company’s smartphone strategy moving forth.
He reiterates that select future Nokia X designs and products will be shifted to Windows Phone devices, but also confirms that the company will continue to sell and support the Android-based Nokia X phones that have already arrived on shelves.
According to Elop, this move will allow the company to focus on creating a market for Windows Phone. Moreover, he notes that Microsoft is determined to increase the Windows Phone volume sales through bringing new phones in the affordable smartphone segments, which are growing fast at the moment.
However, Microsoft still plans on delivering appealing high-end devices to users. Elop notes that “the very best experiences and scenarios from across the company will be showcased on our products.”
“We plan to take advantage of innovation from the Windows team, like Universal Windows Apps, to continue to enrich the Windows application ecosystem. And in the very lowest price ranges, we plan to run our first phones business for maximum efficiency with a smaller team,” he says.
These changes will also result in the transformation of the former Smart Devices and Mobile Phones business units in a single division, which will be led by Jo Harlow and which will also have members from the Smart Devices and Mobile Phones teams in key management positions.
“As part of the effort, we plan to select the appropriate business model approach for our sales markets while continuing to offer our products in all markets with a strong focus on maintaining business continuity,” Elop also notes.
Apparently, Microsoft will approach each market differently, in accordance with the local dynamics and with the company’s “ability to profitably deliver local variants, current Lumia momentum and the strategic importance of the market to Microsoft.”
As for the aforementioned layoffs, they will impact employees in Nokia’s engineering teams in Beijing and San Diego. Both sites will continue to operate for support purposes, it seems.
Thus, the company’s engineering efforts will concentrate in Salo (for future, high-end Lumia products) and Tampere (for more affordable devices). Both locations are in Finland.
Phone production will be concentrated in Hanoi, though some production will continue in Beijing and Dongguan as well. However, other Microsoft manufacturing and repair operations will shift to Manaus and Reynosa, respectively, while the Komaron, Hungary site will be closed.
Overall, Microsoft will focus on driving Lumia volume in areas where these devices have already proved popular, so as to increase Windows Phone’s market presence. New highly affordable devices capable of offering more differentiation will also be released, Elop says.