Nokia Trims Workforce In Anticipation of Phone 7 Shift

As it prepares to load its phones with Microsoft 's Windows Phone 7 operating system, Finnish cell-phone giant Nokia is ditching control of its Symbian platform and cutting 7,000 jobs in a major restructuring.

Accenture, a global technology consulting and outsourcing firm, will take over development of the Symbian platform, which hasn't gained traction in the important U.S. market as Apple's iOS and Google's Android have captured consumers.

While no employees will lose their jobs this year, the job cuts will affect workers next year in Finland, Denmark and Britain.

Losing Ground

The 12 percent reduction in its phone-division workforce is part of an effort to trim nearly $1.5 billion by the end of the year. The company's new CEO, former Microsoft executive Stephen Elop, recently signed a deal with his former bosses reputed to be worth $1 billion to put the struggling Windows Phone 7 on Nokia devices. Though still the world's top cell-phone maker, Nokia's smartphones have lost ground to Apple's iPhone in the global market.

Market-research firm Strategy Analytics said Nokia sold 24 million smartphones in the first quarter, up 13 percent from the same period in 2010, but global market share fell from 39 to 24 percent.

Symbian is still alive. Two weeks ago, Nokia announced an update for the operating system as well as two new Symbian-based phones. The update is designed for the N8, E7, C7 and C6-01 phones, with improvements to icons, scrolling, touchscreen keyboards. and browsing. The upcoming X7 and E6 handsets will ship with the new version, code-named Anna.

Elop has said new Nokia devices running Phone 7 may arrive within the year. That can't be soon enough for Microsoft, which has been struggling to gain market share after the OS launched late last year. Phone 7 saw a small boost to seven percent of new smartphone buyers during March, up from five percent in the previous quarter, according to Nielsen.

Windows Phone 7 currently powers a handful of phones made by HTC, Samsung, LG and Dell.

Move Was Expected

Charles King, principal analyst of Pund-IT, said the changes at Nokia are "unsurprising. It's fairly normal for a new CEO to make some sort of sweeping change six months or so after he/she was hired."

He said the hiring of Elop was a clear indication that Symbian's days are numbered. "Shifting 3,000 workers to Accenture should take away a bit of the sting, but cutting loose 4,000 others is still painful," he said. "The question remains whether aligning itself with Microsoft can be a winning strategy for Nokia, especially against formidable competitors like Apple and vendors leveraging Android. I expect that's a question we'll be asking ourselves for the next year or so."
 

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