Microsoft is continuing to scale back its smartphone business, announcing plans to lay off up to 1,850 employees, as the tech giant has failed to gain traction against Apple and Google Android devices.
The cutbacks further shrink what’s left of the former Nokia Devices and Services business, which Microsoft acquired for $7.2 billion in April 2014 — a deal that has turned out to be a major strategic blunder.
The company said it will take a $950 million impairment and restructuring charge, of which $200 million will be related to severance payments.
Still, the company claims it’s not entirely out of the smartphone game.
“We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability, and consumers who value the same,” Microsoft CEO Satya Nadella said in announcing the layoffs Wednesday. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”
Microsoft said it will continue to update and support its current Lumia smartphones as well as those of third-party manufacturers based on the Windows 10 platform, and plans to develop new devices.
The Nokia deal was engineered by then-CEO Steve Ballmer, who was replaced by Nadella in February 2014.
The latest layoffs in the smartphone unit come after Microsoft last week announced a deal to sell its 4,500-employee feature phone businesses to FIH Mobile, a subsidiary of Hon Hai/Foxconn Technology Group, and HMD Global for $350 million.
Of the cuts, up to 1,350 jobs will be eliminated at Microsoft Mobile Oy in Finland, with another 500 other positions globally. Employees working for Microsoft Oy, a separate Microsoft sales subsidiary based in Espoo, Finland, will not be affected by the layoffs.
Microsoft said it expects the latest layoffs in the smartphone division to be substantially complete by the end of 2016 and fully completed by July 2017, the end of its next fiscal year.
Pictured above: Microsoft’s Lumia 950 smartphone