June 10, 2016

Microsoft About to Sell its Cell Phone Business

It is confirmed now; Microsoft is about to sell its entire mobile phone business to Foxconn Technologies, a Taiwanese company and HMD Global. Microsoft announced that it signed a deal to transfer all of its feature phone assets to FIH Mobile, a subsidiary of Foxconn Technology. Microsoft is selling its feature phone business in $350 million.

Around 4,500 employees will be transferred to or will have the opportunity to join either FIH technology or HMD Global. The deal also encases that FIH technologies will also purchase Microsoft’s mobile facility in Vietnam.

Microsoft will continue to make Windows 10 mobile and will also extend the support for windows phone including Lumia smartphones and Windows Phones from other manufacturers such as Acer, HP, Alcatel, and VAIO.

This deal is expected to close in second half of July 2016 subject to different regulatory and operating conditions.

The sale of feature phone business by Microsoft shows its pullback from mobile sector. Mobile division is the struggling area of Microsoft since it purchased mobile division from Nokia in 2014 for $7.2 billion. The market share of Windows Phone has declined to only 2.2% in 2015. This forced Microsoft to sell its cell phone division to narrow its losses.

In an attempt to this, Microsoft wrote off its entire purchase of Nokia causing 7,800 job losses mostly in the area of mobile division. After selling its mobile business, Microsoft is focusing on other sectors such as cloud storages and Windows 10 OS.

The sale of Microsoft’s cell phone division to Foxconn and HMD Global indicates a return of Nokia in the cell phone market as Nokia has agreed to license HMD Global to use the name of Nokia for the cell phones. HMD Global is a new company which is owned by a former executive of Nokia Corp. HMD Global will have full access and control over the marketing, distribution and sales of Nokia branded cell phones. HMD Global will also have access to FIH’s mobile technology and manufacturing capabilities.

In some other news, Microsoft announced to layoff 1850 employees and $950 million charges to streamline its smartphone business. Microsoft said that they were streamlining to focus on enterprises and niche areas.

“We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability, and our Continuum capability, and consumers who value the same,” said Satya Nadella, chief executive officer of Microsoft, in a statement.

“We will continue to innovate across devices and on our cloud services across all mobile platforms.”

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