Why Nokia laid off 1,000 workers today

Why Nokia laid off 1,000 workers today

Summary: Nokia lays off 1,000 workers in Finland as it moves to slim down and muscle up on its way to mobile competitiveness. Here's how it fits into the plan.

TOPICS: Nokia, CXO, IT Employment

They're beginning anew in Espoo.

Finnish mobile company Nokia took another step toward its realignment today as it laid off 1,000 factory workers in Salo, Finland, according to various news reports.

The reason? Scale and proximity. As high-tech hardware manufacturing has shifted almost entirely to Asia, Nokia found itself standing flat-footed, with smaller factories in Hungary, Mexico, Romania and Finland still part of the manufacturing equation. The mobile device has gone global, but Nokia is still positioned on the ground like it's 2000.

The far-flung factories will remain, of course. But instead of hardware, they'll be reborn as hives of market-specific software. Whether that's a savvy decision or not remains to be seen -- having locals work on the local portions of products certainly feels right -- but what is smart is that Nokia is finally beginning to take steps that make sense to the outside observer.

When chief executive Stephen Elop arrived from Microsoft, it was very clear that Nokia could not continue on the same path. Sure, it worked brilliantly at one point in the company's not-so-distant history, but the industry environment in which it operated changed rapidly and dramatically -- and Nokia kept on walking in the same direction anyway.

These layoffs show Elop executing on his announced plans: simply, it's time to move on. (Or as he put more eloquently in an internal memo in early 2011: "We are standing on a burning platform." Not a good location to generate jobs or profits, unless you're in the business of selling fire extinguishers.)

But it won't be moving on with its customers; rather, it will be trying to convince them that the company can be relevant again. Elop is hitching Nokia's future success to his former company in Redmond, which has an equally long list of reasons to unseat Google and Apple in the mobile space. If Nokia can get its existing operations sorted, it can subsequently concentrate on how to act with them.

Easier said than done, of course. In 2010, ZDNet editor-in-chief Larry Dignan listed six things Elop needed to do to succeed. Among them: ditch poorly-performing ventures; move mobile devices faster; direct R&D spend more effectively; get U.S. traction. With these layoffs, it's that second point we're watching Elop address.

Topics: Nokia, CXO, IT Employment

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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  • Tough move in protectionist Europe

    I dare say, no European-born CEO would have made that tough, but necessary, call that Elop made.
    Your Non Advocate
    • Microsoft told them to

      Why did they lay them off?

      Because Microsoft told them to, that's why. This is the beginning of the end for Nokia.

  • Shame that the weakest link in this plan will be Windows

    Maybe they can use Microsoft resources to get a good physical product then switch to Android or something else later so that people won't have to sell out to MS to get a device. But it's still a deal with the devil no matter how you look at it.
  • no FOSS = no sales

    that's the real reason!
    The Linux Geek
  • Looking forward to the 900 hitting ATT in the US.

    The 710 is rocking tmo already. Hopefully Nokia will start offering WP8 models will Intel chips soon. That's when smartphones will really get interesting.
    Johnny Vegas
  • Nokia will succeed.

    Slowly but surely Nokia will make a comeback. With WP8 arriving this year-end, Nokia has nothing to worry, it will have the most powerful and elegant Smartphone platform powering its high quality products.
    • Funny joke.

      • You're just a bit of a troll aren't you 404?

        I guess if I were an apple-fanboy I'd be scared too.
        nokia lumia 710 emerges as third best seller in t-mobile usa
      • 3rd while competing against crappy Android phones is not an achievement

        T-Moblie is the one mayor carrier WITHOUT the iPhone.
      • Luke

        Being the number 3 selling device on the number 4 carrier, is like coming in second in a Special Olympics race. you may get a prize, but you're still challenged.
        Jumpin Jack Flash
    • Yep they will!

      I can't wait to trade in my crusty old Droid for a shiny new Lumia 900!
      I think what I like best is having the same interface on my Phone, XBox, and PC. (I'm already running Windows 8 Preview and love it.)
  • Fat cats

    So the fat cats can have 6 figure checks while they cannot balance the budget.
    Same story different day.
    • Up from Boston Chicken

      Do what Stephen Elop did: become a fat cat. It's not like he was born into the ruling family of Nokia. He's not even a Finn, he's Canadian.
      Robert Hahn
      • Stephen Elop

        Worked at Microsift in the Windows mobile division. He went from being a VP in the WP 7 division to the CEO of Nokia.
        Jumpin Jack Flash
  • That's what happens when you're bribed by Microsoft

    Pretty pathetic.
  • This is seems like one of the few good decisions Elop has made...

    If they want to drive Windows Phone adoption, they need to aggressively cut prices and cannibalize their Asha feature phone portfolio, if not, Android manufacturers are going to do it for them. My hunch is that Elop realizes this way too late. His track record has been spotty as best. How you start off your CEO career by combining the "Osbourne Effect" and the "Ratner Effect" is beyond me!

    Detailed analysis here - http://www.tech-thoughts.net/
  • Can see why...

    Last week my WP7 Samsung Focus was stolen, went to the shop and got the new Nokia Lumia 800. A great looking phone and was expecting it to be quite high end, what a dissapointment. With the battery lasting 14 hours with next to no usage and issues with the sound - all of these Nokia knows about, I was incredibly dissapointed and perplexed at this sinking ship (Nokia) not even seeming to test this phone before putting it to market.

    Got rid of the phone by selling it and got a used Samsung Focus from eBay. The buyer of the Lumia text me the other day saying, "Was the camera unable to focus when you had it?" Had a look on Google and this is another known issue.

    How can they expect to compete when they make shoddy phones, or at least bad batches. Dissapointing for WP7 and Nokia at the same time, I want WP7 to be popular as it is excellent, give us some decent hardware please.
    • That's impossible

      I have heard the Lumia 800 was the best phone available. Certainly those person's can't be lying. After three years of hearing how bad the iPhone sucked because the lack of a user replaceable battery, no SD card slot. These things certainly can't have issues when Nokia makes a phone. Or is this yet another case of bash Apple, and give Microsoft/Nokia a pass.
      Jumpin Jack Flash
      • Oh yeah, doubt someone who owned one...

        How is this giving Nokia a pass? This was a big criticism of Nokia not seeming to release a product that restores trust with their falling brand. I've owned four Samsung smartphones in my time and NONE of them have had anything wrong with them, if Nokia wishes to succeed with the WP7 and go ahead at clawing its share back then don't release phones that have dismal battery life, bad focusing cameras, audio issues, flickering issues with the display and a dissapearing keyboard. While Nokia is aware of these problems now, why weren't they aware of them before? Phones for me, unlike other tech, MUST work perfectly, otherwise I won't bother, and I thought Nokia would excel in this dept. as they're trying to make a comeback.

        I don't have too much of a problem with the battery being fixed or it missing an SD card, but they could have at least given it a 32gb onboard memory, the claimed 16gb onboard only have me 12gbs after all the reserved space etc.
      • custserv@

        Some of the discrepancy i based on actual method of how the storage is counted. Then you have to take out memory for the OS, Contact information (Including pictures), and other unsundry OS/ phone bits (GPS software, camera software). So none og the 16 GB phones actually give you 16 GB, they typically range between 12 and 14 GB.
        Jumpin Jack Flash