Microsoft is taking another almost $1 billion hit on its failed Nokia acquisition today. The software maker is "streamlining" its smartphone business, writing off $950 million and cutting 1,850 jobs. The cuts come almost a year after Microsoft wrote off $7.6 billion and cut 7,800 jobs. Only a small number of former Nokia employees will remain at Microsoft, and the company's consumer phone making days are over.
Microsoft has wasted at least $8 billion on its failed Nokia experiment, including the costs of restructuring and severance payments for thousands of employees. Microsoft originally hired 25,000 Nokia employees as part of its $7.2 billion acquisition of Nokia's phone business, but a series of layoffs over the past two years has triggered the end of Microsoft's mobile subsidiary.
Nadella was never interested in running a phone business
Microsoft's Nokia phone business acquisition was always tricky and risky, but it was a deal organized by former CEO Steve Ballmer. It has been clear from the start that Satya Nadella, Microsoft's new CEO, wasn't interested in running a phone business. Nadella announced a strategy shift away from a "devices and services" focus just a couple of months after the Nokia acquisition finalized, and last year the strategy shifted even further away from producing multiple handsets.
Many will argue Microsoft had no choice, as Nokia controlled more than 90 percent of the Windows Phone market and had been rumored to be considering switching to Android. Google's experiment with making its own Android phones resulted in the search giant selling Motorola to Lenovo for $2.91 billion, less than two years after paying $12.5 billion to acquire it. While Google's investment was primarily driven by the need to obtain key patents, it's not clear how Microsoft has benefited from its Nokia deal.
We might not ever know the true reasons for Microsoft's Nokia phone business acquisition, but right now it's clear the company has wasted billions of dollars on a failed experiment to try and claw its way back into the mobile market. Microsoft might be preparing a Surface phone, but if it ever debuts it will only cater to the very few who are interested in phone versions of Windows, and it's not going to be enough to reverse Windows Phone's decline. For everyone else, Microsoft's phone making experiment is truly over.