Phonemaker Nokia had a huge share of the global mobile market up until 2007, when the iPhone was launched. Now in 2011, the company is experiencing the backlash of its failure to adapt to the market trends in time at its fullest. Nokia nevertheless initiated a recovery process, and layoffs are a part of that.
In the second wave of layoffs this year, Nokia closed a factory in Romania that employed 3,500 (six percent of its total workforce) which will be replaced by facilities in China and Korea in order to cut cost Earlier this year the company announced plans to cut 12 percent of its workforce by the end of 2011.
“We are seeing solid progress against our strategy, and with these planned change we will emerge as a more dynamic, nimble and efficient challenger,” says Nokia CEO Stephen Elop. “We must take painful, yet necessary, steps to align our work force and operations with our path forward.”
Another motive behind this latest move is that in addition to being more economical, the new Asia plans will be able to ship more devices. It’s something Nokia, as well as Microsoft, will be counting on after the first Windows Phone 7-powered devices come out, reportedly on October 26.
Back in April the two companies announced a partnership (which cost Nokia $2 billion) to combine Nokia’s hardware with Microsoft’s mobile OS. Nokia hopes that this agreement will help the company get back on its feet, though snatching back market share from Android and Apple will undoubtedly prove to be a challenge.
Nokia is in a tough position right now, yet it’s not the only one. Cisco, also a dominant player in its space, has suffered a big setback due to among other things an overly complicated decision-making mechanism, and laid off a total of 11,500 employees so far.