Nokia has faced a triple assault on its global domination of the smartphone business from Google’s Android platform, Apple’s iPhone empire, and Research In Motion’s BlackBerry corporate tool. Nokia once owned more than 50% of the global smartphone market, a market in which Nokia was a leading pioneer, but the company has watched its market share slip faster than you can say “When will Apple release the white iPhone 4?”
“At Nokia, we have new clarity around our path forward, which is focused on our leadership across smart devices, mobile phones and future disruptions,” Stephen Elop, Nokia president and CEO, said in a statement. “However, with this new focus, we also will face reductions in our workforce. This is a difficult reality, and we are working closely with our employees and partners to identify long-term re-employment programs for the talented people of Nokia.”
In February of this year, Nokia and Microsoft announced a surprise agreement that has the Finnish mobile giant ditching Symbian OS in favor of Microsoft’s Windows Phone 7. The move indicated that Nokia didn’t feel it could compete with Android/iOS/BlackBerry using Symbian, and it also dramatically reduces Nokia’s cost structure, as it transitions into more of a hardware developer, while Microsoft develops Windows Phone 7.
Which is why the company is undertaking the restructuring announced Wednesday. With Microsoft doing the heavy lifting on the software side, Nokia simply doesn’t need as many employees. The company said it expects both the employee shifts to Accenture to be complete by the end of calendar 2011. Employees affected by the layoffs will remain on the payroll through 2011, while the company conducts the layoffs in phases through the end of 2012.
Nokia said it expects to save €1 billion (US$1.48 billion) in development costs in 2013 compared to what the company spent in 2010 with the changes.
Out of respect for those employees and workers facing the loss of their jobs, we will resist all our impulses to make any jokes about Foxconn accepting applications.
