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Microsoft Corporation (NASDAQ:MSFT) to Focus on Creating Volume in Lower-Cost Devices, Introduce More Lumia Products

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By on Technology & Software

Microsoft Corporation (NASDAQ:MSFT) plans to focus on the Windows Phone and seeks to boost volume by targeting lower cost smartphones, including introducing more low-end Lumia devices, executive director Stephen Elop said in an email to employees outlining the company’s reorganization plans.

Microsoft is making the changes to cut overlap after the April purchase of phone maker Nokia’s devices and services business. The company, which is shedding 18,000 jobs in the restructuring, will shift select future Nokia X designs and products to Windows Phone devices. It expects to make this shift immediately while continuing to sell and support existing Nokia X products.

“In short, we will focus on driving Lumia volume in the areas where we are already successful today in order to make the market for Windows Phone,” Elop said. “With more speed, we will build on our success in the affordable smartphone space with new products offering more differentiation.”

In the higher price segments, the company plans on “delivering great breakthrough products” and will use innovations from the Windows team, like Universal Windows Apps. As part of the plan, the former Smart Devices and Mobile Phones business units will be merged into one phone business unit, to be led by Jo Harlow. In terms of locations, Elop said phone engineering efforts are expected to be concentrated in Salo, Finland and Tampere, Finland. It plans to ramp down engineering work in Oulu Beijing and San Diego.

“We expect to focus phone production mainly in Hanoi, with some production to continue in Beijing and Dongguan. We plan to shift other Microsoft manufacturing and repair operations to Manaus and Reynosa respectively, and start a phased exit from Komaron, Hungary,” he said.

The planned changes will have a limited impact on the Surface, Xbox hardware, PPI/meetings or next generation teams.

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