Microsoft's big push into the smartphone market seems to have failed. The company recently sold off its consumer phone business, and now is scaling back again to focus on the enterprise smartphone market while laying off 1,850 employees.
Microsoft laying off 1,850 employees as its smartphone business goes on life support
CEO Satya Nadella made a point to say Microsoft isn't out of the smartphone business, but instead is shifting its efforts to the parts of the market where it has a chance of succeeding. He said,
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. We will continue to innovate across devices and on our cloud services across all mobile platforms.
Translation: Microsoft may not be able to make smartphones that sell, but it can still have a presence on the iPhone and Android-based phones.
Microsoft completed its purchase of Nokia in April 2014 to boost its position in the smartphone market, but that clearly didn't pan out. Only three months later the company announced it was laying off 18,000 employees, most of whom were coming from the Nokia purchase. Earlier this month, Microsoft sold the Nokia feature phone business to Foxconn, further distancing itself from the hardware side of the mobile phone market.
Narrowing its focus seems like a smart move for Microsoft, but success is far from a sure thing in this case. While the enterprise market has always been pro-Microsoft, Apple's iPhone already has a strong foothold in that space. Apple has also teamed up with IBM, and now SAP, to shore up its position in that market, which will make it even harder for Microsoft to make any significant headway.
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Considering how poorly Microsoft has performed in the smartphone market, it won't be easy for enterprise-level buyers to feel comfortable getting on board. The company already has a poor track record and has all but exited the market. Those aren't good selling points when Apple is already a dominant player, and Android smartphone makers are doing well, too.
The unfortunate side effect of Microsoft's inability to compete with Apple, Samsung, and other smartphone makers is that thousands of people are out of a job. Considering Microsoft's smartphone track record, it won't be long before more jobs are on the chopping block.