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Elop on Layoffs: Microsoft's Focus Is on Windows Phone

Among the casualties of the massive layoffs Microsoft announced on Thursday will be Nokia's non-Windows Phone devices, including the Android-based Nokia X.

As previously reported, over two-thirds of the 18,000 planned cuts to Microsoft's workforce will come from the Nokia Devices & Services business that Microsoft acquired this spring. As part of the $7.2 billion acquisition, Microsoft inherited 25,000 of Nokia's employees.

Microsoft CEO Satya Nadella said in a letter to employees that the cuts are part of an effort to integrate the Nokia business into Microsoft. In a separate memo, Stephen Elop, executive vice president of Microsoft's Devices Group and former Nokia CEO, took that message a step further, indicating that the cuts are a move to realign Nokia's goals to focus on Windows Phone.

"It is particularly important to recognize that the role of phones within Microsoft is different than it was within Nokia," Elop said. "Whereas the hardware business of phones within Nokia was an end unto itself, within Microsoft all our devices are intended to embody the finest of Microsoft's digital work and digital life experiences, while accruing value to Microsoft's overall strategy. Our device strategy must reflect Microsoft's strategy and must be accomplished within an appropriate financial envelope. Therefore, we plan to make some changes."

Those changes include designing future versions of the Nokia X smartphone to run Windows Phone instead of the open source version of Android it currently runs. Elop said that while Microsoft will continue to support existing Nokia X devices, the transition to make it a full-fledged Windows Phone under the Lumia brand will happen "immediately."

According to reports, two other Nokia devices will also be affected: the Asha and the Series 40 feature phones. Citing an internal memo from Jo Harlow, head of the Microsoft Smart Devices team, The Verge reported on Thursday that Microsoft plans to downshift the development of these handsets over the next 18 months to "maintenance mode."

"This means there will be no new features or updates to services on any mobile phones platform as a result of these plans," The Verge quoted Harlow as writing.

Microsoft has not made Harlow's memo public, but a company spokesperson explained in an e-mail that "some of the models will be phased out and some will evolve into Windows Phone devices."

The phase-out of these non-Windows Phone devices underscores Microsoft's commitment to "making the market for Windows Phone," particularly in the low-end smartphone arena, Elop said in his memo.

"We will focus on driving Lumia volume in the areas where we are already successful today in order to make the market for Windows Phone," he said. "With more speed, we will build on our success in the affordable smartphone space with new products offering more differentiation. We'll focus on acquiring new customers in the markets where Microsoft's services and products are most concentrated. And, we'll continue building momentum around applications."

As part of the restructuring, Elop said all of Microsoft's mobile phone efforts be consolidated under a new unit, led by Harlow, that combines the Smart Devices team with the Mobile Phones team.

About the Author

Gladys Rama is the senior site producer for Redmondmag.com, RCPmag.com and MCPmag.com.