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Nokia will shift phone production from Europe to Asia by the end of 2012, a move that will result in 4,000 job cuts.
The cuts will occur at three factories in Finland, Mexico and Hungary. On its Website, Nokia suggested it would provide financial support and assistance with local re-employment.
There will be no assembling of mobile phones at our plants in Europe after this, a Nokia spokesperson told the Associated Press Feb. 8. We plan to focus product assembly at our plants in Asia where the majority of our suppliers are based, while our facilities in [Finland, Hungary and Mexico] will focus on the software-heavy aspects of the production process.
Early last year, Nokia made the decision to abandon its homegrown operating systems, including Symbian, in favor of Microsofts Windows Phone. According to Nokia CEO Stephen Elop, that decision positioned his company to better combat Apples iPhone and the growing family of Google Android devices. In return, Microsoft is paying Nokia hundreds of millions of dollars per quarter in platform-support payments.
However, that firmly ties Nokias fortunes to that of the Windows Phone platformwhich has suffered from anemic sales in the year-plus since its launch. If a new generation of Windows Phone devices cant sway customers, then Microsoft will face some very hard questions about its future in the mobile segment.
Data from research firm Nielsen suggested that Microsoft owned 7.3 percent of the U.S. smartphone market in the third quarter of 2011, down from 9 percent earlier in the year; much of that decline was due to users abandoning the antiquated Windows Mobile platform, something Microsoft executives say they anticipated.
Nokias new smartphone strategy centers on Windows Phone devices targeted at both the midrange and high ends of the market. The Lumia 800 and 900 both feature premium hardware, paired with the latest Windows Phone software; meanwhile, the more midmarket Lumia 710 likewise boasts some strong specs.
By the end of 2011, Nokia had managed to sell some 1 million smartphones running Windows Phone. From this beachhead of more than 1 million Lumia devices, you will see us push forward with the sales, marketing and successive product introductions necessary to be successful, Elop wrote in a statement accompanying the companys most recent earnings. We also plan to bring the Lumia series to additional markets, including China and Latin America, in the first half of 2012.
Thats a solid start for Nokia. But as its most recent factory move suggests, the company still has a steep uphill battle in front of it.