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Finland left to pick up the pieces after software giant’s failed phone experiment.
If the iPhone killed Nokia and the iPad killed Finland’s paper industry, then Microsoft this week showed up late to the funeral and blew raspberries at the mourners.
It has been 18 months since Finland’s then prime minister Alexander Stubb went on CNBC and casually accused Apple of murder, and the picture in the country hasn’t improved much since then.
After years of contraction, the economy edged up 0.5% in 2015. According to the EU’s latest forecast, this year it is expected to grow by 0.7%, with unemployment holding steady at 9.4%.
Microsoft hasn’t done much for the jobs market in Finland lately.
This week it announced that it will cut a further 1,850 positions, 1,350 of which will be at Microsoft Mobile in Finland, effectively putting a stop to new handset development.
The news attracted criticism from Stubb, who now serves as Finland’s finance minister.
"I am disappointed because of the promises made by Microsoft," he said during a plenary session of parliament, according to Reuters. "One example is that the data centre did not materialise despite the company’s promise."
Indeed, Microsoft pledged to spend $250 million on a new data centre in Finland as part of the Nokia deal.
1,350 is a relatively low number compared to earlier rounds of redundancies, but that is perhaps because there aren’t that many positions left to cut.
When Microsoft completed its €5.44 billion acquisition of Nokia’s devices business in April 2014, an estimated 25,000 staff transferred to Microsoft. Three months later, half of those employees were shown the door, when Microsoft announced that 18,000 jobs would go, with redundancies at Nokia accounting for 12,500.
Almost exactly one year later, Microsoft cut a further 7,800 positions, again, primarily at its handset division.
Last week, Microsoft agreed to sell the rights to the Nokia brand to Finland-based HMD Global. It also agreed to sell its feature-phone assets to HMD and Foxconn subsidiary FIH Mobile for $350 million. That deal will see as many as 4,500 Microsoft employees transferred to FIH or HMD.
Added together, those redundancies and transfers come to 26,650, which begs the question, is there anyone left to even keep the lights on at Microsoft’s phone business?
Its operational performance suggests that one or two people are still knocking about, posting phones on an ad hoc basis to people mad enough to order one.
According to the latest figures from Gartner, Windows’ share of the smartphone OS market in the first quarter fell to 0.7% from 2.5% a year earlier, with unit sales declining to 2.4 million from 8.27 million.
Microsoft CEO Satya Nadella said this week that he wants to focus the company’s phone efforts on "enterprises that value security, [and] manageability," which suggests he is taking a similar approach to another fallen giant of the phone world, BlackBerry.
Handset hardware has taken a backseat to software and services at BlackBerry, with the company focusing primarily on enterprise mobility and security solutions that don’t just run on BlackBerrys, but also support rival operating systems, including market leaders Android and iOS.
Of course, Microsoft has a much stronger position in the enterprise thanks to the prevalence of Windows PCs, Office, Windows server, and its aggressive push into corporate cloud services with Azure.
But Nadella has claimed that we live in a mobile first, cloud first world, and beyond putting its apps on Android and iOS, Microsoft barely has any presence left in mobile.
"Users bring their digital lives with them into the workplace not the other way around," said Edison analyst and Radio Free Mobile founder Richard Windsor, in a research note on Thursday.
"Users maker their choice about where to live their digital lives based on their experience on a smartphone or a tablet. With no device, the route to market suddenly becomes much more difficult," he said.
Nokia is of course on its way back to the handset market, having licensed its IP and brand to the aforementioned HMD Global, which intends to launch a range of phones and tablets that will run on Android.
That will come as little comfort to the people of Finland though, after news emerged this week that the kit maker intends to cut 10,000-15,000 jobs following its acquisition of Alcatel-Lucent.
Maybe they should get together and form their own smartphone company. Oh wait, they already did that.
Indeed, Jolla, which emerged phoenix-like from the ashes of Nokia’s failed MeeGo OS, on Friday announced a new series of events aimed at attracting third-party app developers to its Sailfish operating system.
Called the Sailfish Community Device Programme, tickets sold out in one day. Jolla also announced a new smartphone aimed at developers, the Jolla C, which is due to begin shipping in July.
Let’s hope this fledgling Finnish firm can become a success story, and not another sob story.
