Microsoft has pulled the plug on the Android mobile operating system, discontinuing its Nokia X smartphone products less than five months after it launched them.
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In an email sent to staff, Microsoft Devices EVP and former Nokia chief executive Stephen Elop said the Devices Group needed to focus its efforts on better aligning with Microsoft’s strategy. The firm’s fundamental focus should be to build on its strengths around “productivity and helping people get things done”, he said.
To this end, wrote Elop, “it is particularly important to recognise that the role of phones within Microsoft is different than it was within Nokia”.
He added: “Whereas the hardware business of phones within Nokia was an end unto itself, within Microsoft, all our devices are intended to embody the finest of Microsoft’s digital work and digital life experiences, while accruing value to Microsoft’s overall strategy. Our device strategy must reflect Microsoft’s strategy and must be accomplished within an appropriate financial envelope.”
In effect, said Elop, this means that the Devices Group will now be exclusively focused on making the market for Windows Phone by targeting affordable smartphone segments with its Lumia devices, and shifting Nokia X designs and products from Android to Windows Phone, although he stressed that existing Nokia X products would still be supported.
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Higher-priced segments will be more focused on “delivering great breakthrough products”, taking advantage of innovation from the Windows team, he said.
To accomplish this, Microsoft will consolidate its Smart Devices and Mobile Phones business units into one Phone business under Jo Harlow. A number of facilities in Beijing, San Diego and Hungary will be scaled back, and production will be concentrated in Hanoi, Vietnam. Engineering efforts will continue to be concentrated in Finland.
About 12,500 Nokia staff are losing their jobs because of the restructuring, out of a total of 18,000 redundancies at Microsoft.
The Nokia X products, launched at Mobile World Congress in February 2014, were designed to appeal to low-cost smartphone buyers in emerging economies. Although built on open-source elements of Android, the on-screen experience still closely resembled Windows Phone.
At the time, Elop said the devices were to act as a “feeder” system for higher-end Lumia products.
Gartner research director Annette Zimmerman said the timing of the announcement was a surprise, but not the fact that Nokia X was being discontinued.
"Nokia X was developed long before the acquisition, and it was a clever strategy for Nokia to sell more hardware," she said. "However, for a software company like Microsoft, it was not as good a strategy.
"I never thought Microsoft would keep Nokia X for the long term. I thought it would stop production, but I did not expect it to come now. The devices had been selling quite well and feedback was positive."