Microsoft to discontinue Nokia Asha and S40 feature phones

Microsoft to discontinue Nokia Asha and S40 feature phones

Summary: Microsoft isn't discontinuing only the Android-based Nokia X line. It also is phasing out the Nokia Asha and S40 feature phones as part of its further focus on Windows Phone.

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Just a couple of days ago, I wondered whether Microsoft would focus on the high-volume, low cost market with its products, or the lower-volume, higher cost one.

ashaphones

On the mobile phone front, it looks like we now have an answer: Both. But running the Windows Phone OS only.

As part of its layoffs of 18,000 people, announced on July 17, Microsoft is cutting 12,500 of those it acquired as part of its deal to buy Nokia's handset and services division. Among those employees are both professionals and those involved in manufacturing, as well as those who've been working on the Nokia X Android-based phones.

The Verge's Tom Warren reported that employees working on the Nokia Asha and S40 feature phones look to be among the layoff casualties, as well, as will those involved with Nokia's MixRadio offering, which may possibly be spun off as a third-party service. According to Warren, those cuts were detailed in a July 17 e-mail from phone chief Jo Harlow.

BGR India has excerpts said to be from the Harlow memo that indicate all "Mobile Phones" (non Windows Phone) services and "enablers" are moving into maintenance mode immediately. That means no new features or updates to Asha, S40 or Nokia X Android phones or app-development programs for those phones as they are phased out over the next 18 months.

The MixRadio decision isn't too surprising given Microsoft has a substantial investment in its own music service, Xbox Music. Update: A MixRadio spokesperson said MixRadio will be spun out as a separate company, but that the application will continue to be preloaded on Windows Phones and other Windows devices. "We are not closing down or ceasing to develop the service," the spokesperson said. "We are being spun out as a separate company, although we will continue to be preloaded to Microsoft devices."

The Asha and S40 phase-out may catch some by surprise, given Microsoft had been talking up those phones as a possible gateway to get to users in the developing world. Microsoft officials never said if or when they planned to put the Windows Phone operating system on those phones, or whether they planned to use them as a way to expose more users to Microsoft software and services.

Microsoft's new plan going forward with its phones is to focus on both the low and high end of the market with Windows Phones from both Microsoft itself and third-party phone OEMs.

"To align with Microsoft’s strategy, we plan to focus our efforts. Given the wide range of device experiences, we must concentrate on the areas where we can add the most value," said Microsoft Executive Vice President of Devices, Stephen Elop, in a July 17 e-mail to employees about the layoffs.

Hanoi, Vietnam is now the new center of Windows Phone production, according to a July 17 e-mail about today's layoffs from Microsoft Executive Vice President Stephen Elop. ("Some production" will continue in Beijing and Dongguan, Elop noted.)

On the engineering side, high-end phone work will be concentrated in Salo, Finland. Tampere, Finland will be the home for "more affordable devices." Engineering work in Oulu, Finland will be ramping down, Elop noted (and was expected earlier this week, following a Finnish daily's report claiming R&D jobs would be lost in Oulu.)

"While we plan to reduce the engineering in Beijing and San Diego, both sites will continue to have supporting roles, including affordable devices in Beijing and supporting specific US requirements in San Diego. Espoo and Lund are planned to continue to be focused on application software development," Elop added.

Microsoft also will shut down the Nokia plant in Komarom (in Northwest Hungary), which employs about 1,800 people, according to a Budapest news agency report. (Thanks to @vhunor for the information and translation.) Elop's mail confirms the start of a "phased exit" from Komarom. The Komarom plant previously incurred layoffs of thousands in 2012 before Microsoft acquired Nokia's handset business. Komarom is where the Nokia X phones allegedly were being manufactured.

Topics: Mobility, Android, Microsoft, Mobile OS, Nokia, Windows Phone

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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28 comments
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  • Stupid: Asha Phones popular in Africa and Third world

    I really do not understand laying off Asha and S40 Phone employees. These cheap feature hones last more than a week on a single charge, which is why they are so much more practical and reliable than Smart Phones. SmartPhones make little sense when you have limited and reliable access to electricity and high bandwidth comms. Microsoft is doop headed with its First World only mentality. Surely Bill Gates morality would have stepped in and suggested selling these Asha and S40 divisions off to some company that is prepared to serve the third worl market.

    And so much for the Microsoft services everywhere. The Asia market is crying out for Nokia Android phones. The Nokia X is selling well in the Philippines.

    Microsoft US only centric approach is what is what is going to kill them off as a global presence. Google has worldwide ambitions for its devices and services, and so succeeds.
    JulesVerny
    • Nokia X "selling well"

      Hi. I am curious if you have any data or links to something showing it was selling well. I can't find anything beyond vague claims and unsourced reports. THanks if you can. MJ
      Mary Jo Foley
      • I don't have data

        But I doubt they are selling "well", obviously like everything in life "well" is relative.
        My wild guess - less than 1 million a quarter... maybe a bit better during the 1st quarter.
        AleMartin
      • Nokia X Selling well in China [Possibly]

        Just an impression, rather than facts:

        http://gadgets.ndtv.com/mobiles/news/nokia-x-sold-out-within-four-minutes-at-chinese-retailer-499888

        Also lots of references to "Nokia X One Mission Pre Orders in China" -

        China better than India, where the Nokia X had to be further discounted.
        JulesVerny
      • Nokia in the middle east

        Read D Radcliffe's piece for zdnet on middle east market share. Non smart is 50% and it's all Nokia. MS have just handed China the non-smart market. Lenovo must be laughing their a**es off.
        MrBeck
    • Actually Elops letter does not say Asha being discontinued

      Mary
      I have just read Elops memo, on Paul Thurotts page, and I cannot parse any statement about the Asha line being discontinued. Less emphasis on Feature phones maybe, but Tampere, Finland will still be in the business of Asha phone development.

      So good news for African states and the Asha S40 Market. Keep those consumers happy, and encourage them into Microsoft services, and then onto cheap Lumia Phones, when their infrastructure improves.
      JulesVerny
      • Internal memo

        Tom Warren's report said the statement came from an internal memo by Jo Harlow at MS.
        John Selden
    • Yet that's not the trend, even in the Third World

      I am from Brazil, which, in spite of many problems, is one of the better-off developing countries - certainly not nearly as developed as the US or Europe, but also nowhere near the squalor of many countries in the boondocks of Africa and Asia. It's a highly urbanized country with reliable and virtually universal access to electricity, virtually universal mobile coverage (although quality varies and services are expensive, especially data rates), and one of the world's hottest markets for mobile communications.

      According to data from the Brazilian Internet Steering Committee, 85% of Brazilians aged 10 and over own a mobile phone - a rate comparable to most developed countries. Brazil also has more active mobile lines than inhabitants (280 million lines vs. 200 million people), due to phone locking by carriers being illegal here and the wild popularity of prepaid multiple-SIM phones, allowing one to use the deals of more than one carrier at a time.

      Ashas are flops here (even though Nokia used to be extremely popular until some years ago), and the iPhone is too expensive for most (and frowned upon by many for its perceived bad cost/benefit ratio, as in Brazil subsidized phones only get attractive prices with scandalously expensive contract plans, and an unsubsidized iPhone can cost up to $1,200 USD).

      So, Samsung is now the absolute king of the Brazilian mobile market. I don't own a Samsung phone *yet*, but when I go out, nearly everybody has one, from modest entry-level models to shiny high-end Galaxies. And I can't remember the last time I saw anybody, even very low-income menial workers, with a feature phone.

      These empirical observations of mine have just been confirmed by data from the Brazilian industry group for electronics, as reported by a ZDnet article by Angélica Mari in the Brazil Tech blog (look for it). 76% of Brazilian mobile phones are smartphones now, up from 53% in ONLY A YEAR. It seems that in one more year, feature phones will have gone the way of the T. rex and the dodo. That in a country where 3G and especially 4G coverage are spotty, slow, and outrageously expensive.

      I can't say how things are in much poorer countries like Nigeria, Kenya, Burkina Faso, Sudan or Nepal, but it's reasonable to assume that they will just be late-comers to this trend - just like Brazil eventually takes up trends from developed countries, even if it's after some delay. Such countries may take longer, but feature phones are probably as doomed there as they are in Brazil and in developed countries. If this is correct, Microsoft's decision makes perfect sense.
      goyta
    • Why have all these different OSes?

      They can make a Windows Phone that they can sell for profit for $50 and have a single OS to use. A customer can start out with just using the phone and decide if they want to get into the smart-phone end without ever needing to upgrade from the basic intro phone. Asha is very limiting and the phones are no less cheap to make than a discount Windows phone now.

      The X project would be too distracting to the company. Focusing the company on fewer product lines should generate more revenue per line as well as remove over head (such as marketing, different sales lines, etc.)

      Overall, these are all good moves as far as I see.
      A Gray
  • I'm sure all Nokia features phones will go away with MS

    They don't have much interest on them, they are losing steam since long time and competition is just too big to worth the trouble... and 10000 employers.

    I understand that MS wants to simplify and address the higher cost market, but as it was recently reported, 5xx serie is responsible for half of the lumia sales - smartphones that cost around $100. Higher cost smartphones from Nokia are very rare.

    Before trying to sell flagships, MS needs to gain market share, and I don't think MS can currently do that without cheap devices sold at very low (or even lower) profit margins.
    AleMartin
    • Selling it

      Nokia X could compete with Microsoft in some ways - so kill it was natural, but I think they should sell the feature phone parts of Nokia as soon as possible.
      AleMartin
      • Nokia dumped it on MS

        They knew they were in trouble and rather than take the hit at home where they are extremely popular they pushed it all to MS and took the cowards way out. Hey we didn't lay anyone off it was all Microsoft. These phones have been on the decline for a long time, the writing was on the wall.
        greywolf7
    • My reading of the memo says that low cost smartphones are here to stay

      But they will be, like the 5xx phones, Lumia-branded, not X-branded (and not Android-powered)
      Flydog57
  • Disappointing...

    ...but not surprising. So maybe Stephen Elop really did do this on his own, or Satya Nadella reversed a decision previously made by Steve Ballmer. I would have given it a shot (a year at least) just to see how well it sold; after all, the R&D money had already been spent; so why not try to recoup the investment?
    John L. Ries
  • Sorry to hear about MS employees

    What a blood bath! I'm sorry for all those from who just came over from Nokia and will lose their jobs. I've been through a company take over, and it was very demoralizing.

    Still, Android is in this mad race to the bottom. I don't think it would have been worth the trouble for MS compete in the ensuing market. MS is right for going after the value markets, giving it and its partners reasonable opportunities to make money.
    P. Douglas
    • If you can't do better for people...

      ...than what they could do for themselves, then you don't deserve to be in business at all. And if the only way you can make a profit is by restricting competition, then you don't deserve to be in business. The other way I have historically put this is that professionals who can't successfully compete with amateurs don't deserve to be professionals.

      Open source is out there and is produced by people who want to distribute their code that way (or agreed to do so as part of the price of using someone else's code as a base). The job of proprietary developers is to make software that's worth paying for.
      John L. Ries
      • Sorry ...

        ... I'd like to respond to your message, but I'm being blocked by Zdnet spam filters.
        P. Douglas
  • Windows Phone works wondefully.

    But so did the Zune. Good things come and go, as do bad ones. Consumers are fickle, no rhyme or reason behind some of the mass decisions.
    I just know I like my Nokia 920 since it came out.
    Foreseen
    • Zune's issue was price and marketing

      Zune was too expensive and the device was blocky and hard to navigate compare to the original iPod. When selling anything en masse, its better to be simple and elegant than feature-rich. That's where the revenue is. People will look past every extra feature if the basic product feels premium.
      A Gray
  • Smart move

    Dumping the legacy feature phones and the ill-conceived Android race-to-the-bottom X phones is a smart move. In particular, the X phones were a boneheaded thing to have in the first place. Now, MS can focus completely on WP and further merging WP/Windows. WP is already the best smartphone OS, this will just allow it go forward without baggage.
    Sir Name