Microsoft Lays Off 1,850 as It Shrinks Its Smartphone Operations - Page 2

Rob Enderle, principal analyst at Enderle Group, said the latest layoff move is "largely the result of a failed strategy to accurately estimate the cost of entering a market and too slowly escalating the investment chase … and executing badly. Had Microsoft taken their entire investment and moved it up front they likely would own this market today."

For Microsoft in the future, "their only real path is to pivot the market much like Apple did with the iPhone" and head in a bold direction, said Enderle. "With Motorola bringing back the flip phone there is a possibility that a Continuum-based flip phone with accessories, like a tablet, could be seen as a better solution than today's smartphone, but they'd have to execute far better than they have so far."

Maribel Lopez, principal analyst at Lopez Research, told eWEEK that "it's obvious that Microsoft won't be a longstanding smartphone provider" in the future, based on the latest round of cutbacks in its mobile phone business. "I have to wonder how many times they can lay Nokia people off. It must be down to the base crew by now."

Another analyst, Tuong H. Nguyen of Gartner, told eWEEK that Microsoft's smartphone division layoffs seem "like a continuation of the story that's been unfolding for a while now." The cuts are the result of poor sales, he said. In the first quarter of this year, Windows Phone had only a 0.7 percent market share of the global smartphone market, and it's been at less than two percent for more than a year, said Nguyen.

"Given their overall limited market share in the phone market, it's difficult to impossible for them to gain any significant traction in phones and other licensees haven't done much to improve this position," he said. "That having been said, there’s still the Continuum/bigger Windows story – having the platform available across different device types. Therefore, they can't just outright give up on mobile, nor do I think they will."

Earlier in May, Microsoft sold its feature phone assets to Foxconn Technology Group's FIH Mobile Ltd. (FIH) for $350 million, according to an eWEEK report. That deal was related to a 10-year licensing deal that will allow Nokia mobile phones, smartphones and tablets to be built and sold around the world by a newly formed Finnish company, HMD Global.