Earlier in the week, Microsoft Corporation (NASDAQ:MSFT) announced its decision to write off its mobile phone division leaving uncertainties about the mobile business.
The decision appeared to be abrupt especially since the company had only recently started to pursue the mobile venture as its own unit. Microsoft had proudly announced its plans to buy the mobile phone business from Nokia Corporation (ADR) (NYSE:NOK) towards the end of 2013. It seemed like a clear vision at the time and the business successfully switched ownership. This year the company quickly rebranded all Nokia stores with its brand name and also introduced Microsoft branded Lumia phones into the market.
Less than 15 months after the acquisition, the company has announced that it will terminate 7,800 jobs in the mobile division. The recent announcement also revealed that Microsoft plans to write down the acquisition for $7.6 billion and a restructuring charge that will range between $750m to $850m. It is a clear indicator that the mobile phone business has failed, and that leaves questions about the future of Lumia smartphones.
But not all hope is lost for Windows Phone enthusiasts. Microsoft CEO Satya Nadella said that the company will focus on first party devices including phones. He did not make a clear statement about the phone business but from the looks of it, the firm might focus on the production of high-end devices. Microsoft’s plan is to divert more focus on productivity, security and management. There is a high chance that the elements mentioned might not necessarily revolve around the company making Windows phones. However, the firm will definitely reduce its activities in the phone industry.
Nadella claims that the strategy will allow the company to run a more effective phone portfolio. According to Microsoft’s COO, Kevin Turner, they plan on employing the same approach that they have used with the highly successfully Microsoft Surface Pro franchise. They will therefore have to focus on the channels and markets that bring in the best returns.
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of USmarketsDaily.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: