Nokia announces 10,000 job cuts, sale of Vertu and change in strategy

Today Nokia announced plans to cut 10,000 positions in what the company called a "sharpening [of] its strategy" in an effort to return to profitability. The company also announced key leadership changes and the sale of its luxury smartphone line, Vertu. Nokia additionally revised its financial outlook for the second quarter, lowering financial expectations.

In a stock exchange release, the company announced it will eliminate 10,000 jobs globally by the end of next year. Layoffs weren't the only major employment changes, as the company also announced it will make significant alterations to its current senior leadership team. The company's chief marketing officer, executive vice president of mobile phones and executive vice president of markets have all stepped down as a result of the management change. Internal candidates have filled those positions, and two more senior leadership positions were added: a new executive vice president of sales and marketing and a new senior vice president of communications.

In addition to employment changes, Nokia also announced it will sell Vertu, the company's luxury smartphone line, to EQT VI, a European private equity firm. Additionally, the company revealed it will acquire "developers, technologies and intellectual property" from Scalado, an imaging specialist company. Nokia has been working with Scalado for 10 years and will use the company as a "key site" for Nokia's imaging software development for the company's smartphones.

The company's strategy overhaul will include an increased emphasis on location-based services and an attempt to create more unique Lumia devices to increase the sales of the company's flagship smartphone line. Nokia was recently rumored to be behind a new 3D maps service that will be integrated in all Windows Phone 8 devices. Nokia announced that it will continue to "invest in location-based services as an area of competitive differentiation for Nokia products and extend its location-based platform to new industries."

Since the announcements, Nokia's stock has plummeted, reaching a new 52-week low of $2.61.

Source: Nokia

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MS should not buy NOKIA. They dont need to start competing with Samsung etc on hardware. MS do however need to produce and sell a mobile OS that people care about and desire. The only people who care about windows phone are here on Neowin.

derekaw said,
MS should not buy NOKIA. They dont need to start competing with Samsung etc on hardware. MS do however need to produce and sell a mobile OS that people care about and desire. The only people who care about windows phone are here on Neowin.

It's not the OS's fault, majority of people who see it end up liking it, the lumia 900 actually has some marketing behind it and it seems to be selling well if you go by it's ranking at online shops. Also since Nokia released it's devices WP share in a number of markets has been growing, Finland ofc, Germany etc. Nothing will happen overnight though, it's a steady process.

What ever happened to Elops statement about new Nokia phones every 3 months or so? I'm starting to think that after the Lumia 900 we are going to be waiting until at least October.

jimmyfal said,
What ever happened to Elops statement about new Nokia phones every 3 months or so? I'm starting to think that after the Lumia 900 we are going to be waiting until at least October.

Well, yeah but on the flip side they're release the lumias in more and more markets as time goes on, the 900 is now out in a number of countries outside the US for example, and the 610 has started selling in China. I think WP8 is the real show though, then they can push it more with different hardware since the spec opens things up quite a bit.

jimmyfal said,
What ever happened to Elops statement about new Nokia phones every 3 months or so? I'm starting to think that after the Lumia 900 we are going to be waiting until at least October.

Of course you will be, wont be another set of new phones till Apollo now.

None of this addresses sheer lack of consumer interest in Windows Phone. It's been almost two years of WP7 being on the market. Two years of exposure to consumers on one form or another. What exactly is going to change in the near future?

In today's market, unlike years ago, you either redefine the game and out-Apple Apple, or you're really not going to get off the ground. That viable *third option* MUST outdo all others at this point.

Windows Phone just doesn't cut it. It might be decent, it might be adequate. But that just isn't enough anymore.

Deliciously_Random said,
None of this addresses sheer lack of consumer interest in Windows Phone. It's been almost two years of WP7 being on the market. Two years of exposure to consumers on one form or another. What exactly is going to change in the near future?

In today's market, unlike years ago, you either redefine the game and out-Apple Apple, or you're really not going to get off the ground. That viable *third option* MUST outdo all others at this point.

Windows Phone just doesn't cut it. It might be decent, it might be adequate. But that just isn't enough anymore.

Original Xbox ran at a loss for MS for a long time...WP wasn't going to come along and magically take a third of the pie, it takes years..not one or two.

I am betting MS sees consumer interest with windows phone increasing with the release of win8, smartglass etc and a host of other interconnected things that seem to be coming in the future.

Deliciously_Random said,
None of this addresses sheer lack of consumer interest in Windows Phone. It's been almost two years of WP7 being on the market. Two years of exposure to consumers on one form or another. What exactly is going to change in the near future?

In today's market, unlike years ago, you either redefine the game and out-Apple Apple, or you're really not going to get off the ground. That viable *third option* MUST outdo all others at this point.

Windows Phone just doesn't cut it. It might be decent, it might be adequate. But that just isn't enough anymore.

MS seems preoccupied with Windows 8 to really push WP, and the premise that Windows 8 will drive WP adoption is going to be proven false. People will just want connectivity with what they already have, and with the way contracts work they will be able to get it and have no reason to get WP. This is going to be a failed strategy.

LaP said,
Yeah but MS could handle the loss. Can Nokia handle it ?

imo it was a stupid move to go WP exclusive.

I think it is a great way to differentiate themselves from the rest of the crowd. I think they joined the smartphone party extremely late and that's affecting them immensely!

Osiris said,

Original Xbox ran at a loss for MS for a long time...WP wasn't going to come along and magically take a third of the pie, it takes years..not one or two.

Microsoft still subsidises the price of the Xbox. Hell, they are giving them away with special bundles now.

Osiris said,

I am betting MS sees consumer interest with windows phone increasing with the release of win8, smartglass etc and a host of other interconnected things that seem to be coming in the future.

The only way Microsoft is going to sell WP is if it subsidises it like the Xbox.

LaP said,
Yeah but MS could handle the loss. Can Nokia handle it ?
imo it was a stupid move to go WP exclusive.

That's a good point. Nokia's having to shed thousands of jobs and sell off parts of itself just to stay afloat. I don't see them lasting for more than a couple of years at this point.

Deliciously_Random said,
None of this addresses sheer lack of consumer interest in Windows Phone. It's been almost two years of WP7 being on the market. Two years of exposure to consumers on one form or another. What exactly is going to change in the near future?

In today's market, unlike years ago, you either redefine the game and out-Apple Apple, or you're really not going to get off the ground. That viable *third option* MUST outdo all others at this point.

Windows Phone just doesn't cut it. It might be decent, it might be adequate. But that just isn't enough anymore.

Seriously, in the technology world there really is no such thing as late to the game. Things change fast, anyone and everyone who has a serious product has a chance, and MS can definitely do with phones what they did with the XBOX. It ain't over in technology till the sun spots blow out the satellites.

Deliciously_Random said,
None of this addresses sheer lack of consumer interest in Windows Phone. It's been almost two years of WP7 being on the market. Two years of exposure to consumers on one form or another. What exactly is going to change in the near future?

In today's market, unlike years ago, you either redefine the game and out-Apple Apple, or you're really not going to get off the ground. That viable *third option* MUST outdo all others at this point.

Windows Phone just doesn't cut it. It might be decent, it might be adequate. But that just isn't enough anymore.

Ya, WP7 has been on the market for 1.75 years, it should be the leader by now, right, just like the iPhone was in that time frame, oh wait is was not, or like Android was, oh wait it was not. (The iPhone hadn't even passed Windows Mobile at the 1.75 year mark.)

WP7 is doing just fine, with its biggest problem being two simple things. The wait for upcoming WP8 and Windows 8, and politics with large carriers like Verizon, that only have one phone, and don't even require it to be stocked in corporate stores, and is NOT promoted whatsoever.

There are even good Microsoft partners like Virgin Mobile that does well with WP7 everywhere but the USA, where it DOES NOT offer a WP7, again waiting on WP8 and also catering to Apple to gain access to the iPhone.

(Notice that Verizon announced the iPhone right before WP7 was released, and Verizon then DROPPED their planned WP7 device rollout. (Microsoft employees had verizon coupons for the phone that never happened.)

Apple pushed Verizon by offering them the 2nd exclusive US carrier if they specifically walked away from WP7, and they did, because the iPhone was a known product and it also fit their politics.


There are also the tons of prepaid and smaller carriers around the world that do not yet offer a WP7 phone.

So for WP7 to be offered only by a few carriers, they have done well, especially when the US carriers that push WP7 just STARTED doing this in March and May of this year. (TMobile/ATT)

If you think WP7 or Windows Phone is done then you have NO understanding of the industry and how history has treated products that look exactly like WP7 in the market. Windows 3.0 was in the same place, Windows NT 3.1 was in the same place, Word and Excel were far behind Wordperfect after 10 years, and even, the XBox was called dead many many times in BOTH generations, and on and on and on...

There is also the fact that Windows Phone prior to WP7 did alright, as PocketPC back in 2002 through 2009. They far out did Microsoft's estimates in 2002/2003 because it was sold and marketed to business and technical users and not average phone buyers.

However this is the unfair advantage, Windows Phone PocketPC back in 2002 could launch Apps by Voice, which I hear is going to be a really COOL and MODERN feature that iOS 6 will finally be able to do.

LaP said,
Yeah but MS could handle the loss. Can Nokia handle it ?

imo it was a stupid move to go WP exclusive.

Nokia was going under before they went exclusive, its far easier to devote all your resources to one platform that was ready to go than it was to keep floundering around with Symbian which is now a dead.

I feel sad for Nokia. I don't want it to die, at all. It just shouldn't.

Happy owner of a Lumia 710. My sister likes her Lumia 800. My brother likes his 610.

FalseAgent said,

Happy owner of a Lumia 710. My sister likes her Lumia 800. My brother likes his 610.

Just about to say there is somebody on thy verge with the same members of family who own the devices you mention... then I realise its the same username
/offtopic

ShMaunder said,

Just about to say there is somebody on thy verge with the same members of family who own the devices you mention... then I realise its the same username
/offtopic


really? haha, I guess I must have posted there too.

Gaara sama said,
Nokia announces job cuts .... what going to happen now everybody going to blame Obama for this?

yes..... blame Obama for something a foreign Finnish company does

Forgot to mention these cuts will save around $3.8bn per year and Vertu will probably sell for $250m. WP7 has a larger market share in America than Symbian and is increasing. The problem is the millions of cheap devices they were selling which has only recently began to be filled by devices like the Lumia 600 and 610.

Gaffney said,
Forgot to mention these cuts will save around $3.8bn per year and Vertu will probably sell for $250m. WP7 has a larger market share in America than Symbian and is increasing. The problem is the millions of cheap devices they were selling which has only recently began to be filled by devices like the Lumia 600 and 610.

Which they are on track to add several more low end devices in the 600 and even below the 600 range of features to compete with dirt cheap Android devices that have a big share of sales at non-contract carriers.

If these were key positions or important company divisions involved with the Windows direction and other services that Nokia is counting on, Microsoft would have handed them the cash to continue running them, just like they have done even non-partner companies over the years like Facebook, Apple, etc...

It is pretty obvious that these have been planned cuts and changes for a while now, with the timing of contracts being the factor in when it happened.

nice but they just need more phones. lumia 900 was nice but there should be a new nokia handset every 3 months that pushes the boundaries of design and innovation further. nokia's portfolio should be the envy of the fandroids. do that and the have a bright future. keep being slow to the market and samsung is going to eat their lunch.

no doubt the windows phone version of the galaxy III is already in the final stages and the lumia 900 simply won't do until windows phone 8.

neonspark said,
no doubt the windows phone version of the galaxy III is already in the final stages and the lumia 900 simply won't do until windows phone 8.

Well there's not much more they can do with a WP7 spec phone. WP8 is going to open up a lot in terms of what hardware makers can do to push the envelope. So really they have no choice but to wait.

With that said, there's really nothing wrong with the 900. It's a great phone (I own one), just not very "future proof."

neonspark said,
nice but they just need more phones. lumia 900 was nice but there should be a new nokia handset every 3 months that pushes the boundaries of design and innovation further. nokia's portfolio should be the envy of the fandroids. do that and the have a bright future. keep being slow to the market and samsung is going to eat their lunch.

no doubt the windows phone version of the galaxy III is already in the final stages and the lumia 900 simply won't do until windows phone 8.

A new device every month might push people away from Nokia. Oversaturating the market is getting rather unpopular and people would rather have iconic phones that they're sure will have mass support by third parties for continued longevity. See iPhone or Droid.

Im not convinced MS want to get into the smart phone hardware arena. They are very cautious when it comes to core device hardware...we dont see MS produced pc's, laptops or tablets (Yes they produce limited accessories for them)....only 360's.

Osiris said,
Im not convinced MS want to get into the smart phone hardware arena. They are very cautious when it comes to core device hardware...we dont see MS produced pc's, laptops or tablets (Yes they produce limited accessories for them)....only 360's.

Microsoft needs to choose if they want multiple hardware partners or not. If they don't then they should buy Nokia and make WP devices themselves but if they do want multiple parters they need to stop stacking the deck in favor of one by giving Nokia exclusive early access, rights to change the OS in way others can't, etc. and create a level playing field. Other hardware partners aren't going to go all out on WP devices if the deck is stacked in favor of Nokia. As for Nokia it looks like WP8 is going to be make or break for them. I don't think they can survive until WP9 if 8 flops for some reason. Good thing 8 looks very promising.

Asmodai said,

Microsoft needs to choose if they want multiple hardware partners or not. If they don't then they should buy Nokia and make WP devices themselves but if they do want multiple parters they need to stop stacking the deck in favor of one by giving Nokia exclusive early access, rights to change the OS in way others can't, etc. and create a level playing field. Other hardware partners aren't going to go all out on WP devices if the deck is stacked in favor of Nokia. As for Nokia it looks like WP8 is going to be make or break for them. I don't think they can survive until WP9 if 8 flops for some reason. Good thing 8 looks very promising.

If the platform is a success then hardware partners will still produce devices for it regardless of special benefits to Nokia. I also don't think things are as dire for Nokia as one more product cycle (wp8) they completely changed strategies and a core part of their business, turn arounds in that industry and with a company that big don't happen overnight or even in a year...they would have known these layoffs were coming for a long time and things will still get a bit worse before they get better.

Osiris said,

If the platform is a success then hardware partners will still produce devices for it regardless of special benefits to Nokia. I also don't think things are as dire for Nokia as one more product cycle (wp8) they completely changed strategies and a core part of their business, turn arounds in that industry and with a company that big don't happen overnight or even in a year...they would have known these layoffs were coming for a long time and things will still get a bit worse before they get better.

Big if.

Osiris said,

If the platform is a success then hardware partners will still produce devices for it regardless of special benefits to Nokia. I also don't think things are as dire for Nokia as one more product cycle (wp8) they completely changed strategies and a core part of their business, turn arounds in that industry and with a company that big don't happen overnight or even in a year...they would have known these layoffs were coming for a long time and things will still get a bit worse before they get better.


I'm not saying other hardware partners won't produce devices at all. I'm saying they won't seriously try to push the platform. They'll just make some also ran devices to pick up what they can at a minimum effort, maybe just stick WP8 on hardware initially designed for Android. There is no point in devoting a ton of resources competing on a platform where a rival company has been given a distinct advantage over you. Not when there are other, larger, more even footed platforms available.
As for Nokia changing strategies when that strategy is an "All In" on a specific platform and they're already struggling (as noted in this article) then should that platform fail (though it currently shows a good potential for success) I don't think they can ride out that failed strategy and hope for a fix (WP9?) or go through another radical strategy change.

Hm... Hopefully this will allow them to position themselves for profitability. In this market a lot of companies have been forced to trim the company.

FoxieFoxie said,
MS should buy it already

And do it quickly before someone grab it.
Imagine Samsung takes over Nokia and its huge patents portfolio................
Come on Ballmer was willing to pay more than $44 Billions to grab Yahoo........ this would be a piece of cake............