Microsoft will reduce the number of smartphones it produces in an acknowledgement that its past efforts to gain smartphone market share have failed.
The move comes after Microsoft confirmed on Wednesday that it will cut another 7,800 jobs from its phone hardware business, essentially the Nokia unit acquired in 2013.
Microsoft chief executive Satya Nadella sent an email to employees, which was published online, explaining why these changes were necessary.
"I am committed to our first-party devices including phones. However, we need to focus our phone efforts in the near term while driving reinvention," he said.
"We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family."
As part of this, Nadella said that the company will tighten its focus on the phone market into three segments focused on business users, budget buyers and top-end devices for fans.
"We’ll bring business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they’ll love," he said.
As part of the changes to the smartphone division, Microsoft is also taking a huge $7.6bn write off hit, more than the acquisition of Nokia cost.
The 7,800 job cuts are on top of the 18,000 announced last year, 12,500 of which were said to come from the Nokia division, taking the total number of jobs being shed from the division to 20,300.
Microsoft paid €5.44bn to acquire Nokia’s handset business in 2013, but has failed to make much headway in convincing buyers to move to the Windows Phone ecosystem.
The launch of Windows 10, which will include a mobile version of the platform, could change this when it launches later this year.
The job cuts also come at a time of structural change at Microsoft, after news last month that devices chief and former Nokia CEO Stephen Elop will leave as the company merges the hardware and software teams into one unit.
This will see Terry Myerson leading a new division called the Windows and Devices Group that will be formed from the Operating Systems Group and Microsoft Devices Group.
"We are aligning our engineering efforts and capabilities to deliver on our strategy and, in particular, our three core ambitions," Nadella said at the time.
"This change will enable us to deliver better products and services that our customers love at a more rapid pace."
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