Nokia plans to cut 3,500 jobs and close factories, as the struggling handset maker stays afloat while developing a new line of Windows phones.
The Finnish company said it will cut 2,200 employees from a feature phone factory in Cluj, Romania, as well as slash 1,300 jobs from its Location and Commerce division starting next year.
“The European market has shifted towards smartphones, whereas the feature phone market is predominant in Asia and we can get greater scale and proximity benefits by using our Asian factories in China and Korea,” a Nokia spokesperson explained.
The company also plans to “review the long-term role” of its manufacturing plants in Finland, Hungary and Mexico.
Nokia’s decision to embrace smartphones over feature phones may be necessary as the higher-end market ramps up in importance, but the change in strategy is costing the company its money, reputation and employees.
A few months later, Nokia slashed feature phone prices to retain consumer interest after suffering a $520 million loss in the second quarter. The company also ousted MeeGo around the time its CTO departed, bringing further losses to the foundering firm.
However, the changes are necessary if Nokia hopes to regain its competitiveness against rivals like Apple or Google, which gained dominance as consumers shifted to app-powered, touch screen high-end devices. Hoping to regain traction, Nokia entered into a partnership with Windows.
The Sea Ray handset, Nokia’s first Windows phone, debuted on August 2 to generally positive reviews, but the company stands to lose until it can market more than one such device and get them into the field.
But Nokia’s downward struggle, including pricing and personnel cuts, is likely to continue during its long and arduous transition to building Windows phones.
The company’s CEO Stephen Elop believes Microsoft’s partnership will save the handset manufacturer/a>.
Until then, however, Nokia may need to keep tightening its belt to keep its operations running and people employed.