Nokia Corp. will cut 3,500 jobs worldwide by 2012 in an effort to reduce costs and better compete in the global smartphone market. Rivalry from Apple, Research In Motion and Google, as well as several Asian handset manufacturers, prompted the Finnish cell phone maker to attempt to slash operating expenses by €1 billion (US$1.5 billion) before 2013. years.
These new layoffs are on top of the 7,000 jobs already cut by Nokia earlier this year.
The mobile phone manufacturer will shutdown its plant in Cluj, Romania by the end of this year, deleting 2,200 jobs and touching related supply chain workers throughout Europe. Nokia CEO Stephen Elop told the Associated Press that Europe would remain “core to Nokia’s future,” but that the company planned to shut down the Romanian plant because “high-volume Asian factories provide greater scale and proximity benefits.”
Nokia also plans to close down plants in Germany and Pennsylvania, and said operations in Finland, Hungary and Mexico were under review, with possible job cuts next year.
An additional 1,300 jobs will be cut worldwide in the Finnish mobile phone maker’s location and commerce sector across navigational services, digital mapping and location platforms. “We are seeing solid progress against our strategy, and with these planned changes we will emerge as a more dynamic, nimble and efficient challenger,” Elop said.
Earlier this summer, Nokia reported a $485 million loss in the second quarter. These results are not promising when in the first quarter of 2011, Apple made more money on iPhone sales than Nokia did on overall smartphones sales, including the N8, which features a 12-megapixel camera.
Symbian Jobs Transferred
The new layoffs are not the first step the smartphone maker has taken towards being more competitive: in February, Elop announced that Nokia would phase out its smartphone platform, Symbian, to move forward in partnership with Microsoft.
In partnering with Microsoft and employing the Windows Phone operating system into its handsets, Nokia hopes to gain a competitive edge over Apple’s iPhone and Google’s Android operating system.
The announcement stated that Nokia would cut 4,000 jobs and outsource roughly 3,000 Symbian developers. Days after the most recent layoffs were announced, Nokia confirmed the transfer of Symbian developers was complete and engineers would continue to develop software for Nokia for another five years.
NFC in India
Despite its cut backs, Nokia is forging ahead with innovation, recently launching three Symbian Belle “Just Tap” smartphones with Near Field Communications capabilities in India.
The app, which runs on a Symbian Belle smartphone, allows users to steer a vehicle using WiFi from anywhere in the world by tilting the handset. The vehicle is fitted with a camera that streams live video back to the Nokia smartphone.
Regional General Manager for Nokia India T.S. Sridhar told news publication The Hindu that the Indian smartphone market is evolving quickly: “Consumers are looking beyond basic functionality, seeking innovative technology in all smartphone. We believe our latest range will push the boundaries for future devices in this segment.”
Time will tell if Nokia makes the most of this potential market opportunity.
Key Statistics – Global Smartphone Market
- Smartphone sales were up 74% this year over last year, and accounted for 25% of sales in the second quarter of 2011, which is an increase of 17% over 2010’s second quarter. (source: Gartner)
- Some 40% of American mobile phone users over 18 now have smartphones. (source: Neilsen)
- In the second quarter of 2011, more than 107.7 million units were shipped. (source: Canalys)