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Microsoft’s Nokia Layoffs: ‘It Wasn’t a Shoe That Dropped, But a Chainsaw’

By Kelly Teal
July 21, 2014 - News

**Editor's Note: Click here for a recap of layoffs impacting some of the biggest names doing business in the indirect channel.**

The IT industry is still reeling from the news that 18,000 Microsoft employees are going to lose their jobs. But chances are that few workers within Nokia – the division expected to experience the bulk, if not entirety, of the cuts – are shocked.

Microsoft inked its $7.2 billion acquisition of Nokia’s Devices and Services Business in April and, since that time, Nokia employees have probably been nervous, says one analyst.

"Ever since Microsoft’s acquisition of Nokia closed, I think most within Nokia have been waiting for the other shoe to drop regarding how the acquisition would affect them," said Carl Howe, vice president of 451 Research, in a July 18 blog. “Nokia employees found out that it wasn’t a shoe that dropped, but a chainsaw."

Microsoft CEO Satya Nadella has made no secret of his plan to make big changes within the company once he took over from Steve Ballmer. And he went big: this round of layoffs is the largest Microsoft ever has implemented. The previous record was 5,900 people in 2009.

Not only did Nadella take the axe to the employee rolls, he also did away with Microsoft’s use of “forked Android" in Nokia smartphones and dumped Nokia’s entire feature phone lineup. The decisions make a statement, Howe said.

“Nadella’s elimination of roughly half of Nokia’s employees and staff says that Microsoft didn’t buy Nokia for its phone business, but just for the Windows Phone business," Howe explained. “We can’t really blame these layoffs on Microsoft making a financial adjustment; both the feature phone and Asha phone businesses made money for Nokia."

Instead, Howe said, Nadella is continuing the “Windows Everywhere" strategy that Bill Gates started and Ballmer also supported.

“The corollary to that strategy is that if a Microsoft hardware device doesn’t run Windows, expect it to be nowhere in Microsoft’s future," Howe sad. “That’s why the layoffs cut so deeply at Nokia: Microsoft decided that it didn’t need platforms other than Windows."

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