What Is Happening With Microsoft’s Mobile Division?

You may have already heard the news that Microsoft has plans to slash even more jobs from its mobile division, effectively burying the Nokia business that it bought for US$7.1 billion just three years ago. Has Microsoft given up on competing in the lucrative smartphones space? Not quite.

Microsoft can’t afford to. The company is even hopeful of releasing new mobile handsets later down the track, perhaps even a Surface Phone. The situation looks bleak now, but Microsoft’s mobile ambitions are not dead just yet.

Microsoft has announced it will streamline its Windows phone hardware business to focus on business customers. Approximately 1850 staff will be cut as the company essentially pulls out of the consumer smartphone hardware space. Most of the people that will be losing their jobs are from Microsoft’s ill-fated acquisition of Nokia’s Devices and Services business.

It was evident that Microsoft had struggled to make the Nokia acquisition worthwhile but the latest round of job cuts and restructuring of its mobile unit seemed exceptionally drastic given Windows 10 Mobile was only released a few weeks ago. It wasn’t met with the warmest reception, but it was an encouraging step for the company that has lagged behind competitors such as Apple and Google in the mobile space.

Smartphones played a big part in Microsoft’s plan for a unified computing experience for customers where the Windows 10 operating system would operate seamlessly across a variety of devices. This strategy birthed the Universal Windows Platform (UWP) and cross-device features like Continuum.

Then Microsoft acquired Xamarin earlier this year which facilitated cross-platform app development. There was a hope that it would make it easier for developers to port their existing Android and iOS apps over to the Windows platform, instantly bolstering the Windows apps ecosystem.

But the Lumia brand of Windows phones never gained enough traction in the market although it did acquire a small but loyal fan base in the enterprise sector. Microsoft is right to direct its mobile efforts to attracting business customers.

“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 a statement. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”

Original equipment manufacturers (OEMs) were also reluctant to produce Windows-based phones.

“Using OEMs has always been a strategy for Microsoft, particularly in the PC space, but Android already had a headstart,” Telsyte analyst Rodney Gedda told Lifehacker Australia. “If there’s not enough market demand for a handset, there’s no incentive for OEMs to produce devices; it’s a ‘chicken or the egg’ situation.”

As for Microsoft’s plans now, it has offloaded its feature phone business to Foxconn and consumers won’t be seeing a new Lumia handset any time soon.

This move will no doubt be a blow to fans of Windows mobile but all is not lost given that Microsoft is still committed in maintaining the Windows 10 Mobile platform and it’s still adamant that it will be releasing new handsets. This has fuelled speculation that we may still see the Surface Phone appear later down the track.

The Surface brand has gained popularity in recent years so it wouldn’t be a bad idea to piggyback off the success of the tablet PC range to boosting Microsoft’s position in the smartphones space. Nothing has been confirmed and there’s no timeline on when we will see a new phone from the company.

“It remains to be seen if Microsoft can build off the Surface brand. From that perspective, it will depend on the quality of the devices and whether they’re fit for purpose,” Gedda said. “Future Microsoft devices might fill voids here and there, which is what the company did with Surface tablets and 2-in-1s.”

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