Last year, when Microsoft announced it was partnering with Nokia in Windows Phone development, it was widely expected to result in significant staff cutbacks in Nokia's research and development department. In fact, it was part of the agreement. Both Nokia and Microsoft said there would be an R&D handoff. Finland's Minister for Economic Affairs, Mauri Pekkarinen went so far as to say it would result in the biggest structural change that Finland has ever seen in the new technology sector.
Yesterday, Nokia CEO Steven Elop announced major R&D cutbacks...these 10,000 layoffs should have surprised no one.
Yet, stock prices took a nosedive on Thursday, and ratings agency Moody's on Friday downgraded Nokia's debt grade to junk status, and the tech public wrapped its sweaty palms around the cord to toll the bells of doom for Nokia (a favorite pastime in this business.)
The bad news that everyone has focused on:
The closure of Nokia R&D facilities in Ulm, Germany and Burnaby, Canada.
The closure of Nokia's manufacturing facility in Salo, Finland.
The "streamlining" of IT, corporate and support functions.
Reductions related to non-core assets, which could include divestments similar to the long-expected sale of luxury phone brand Vertu.
Firstly, we've heard from some inside sources that all of Nokia's research and development in the EU that is being closed down is being relocated to a new center somewhere on the West coast of the US. The higher-ups in Nokia's research enterprise will relocate to the United States, and other EU-based research jobs will be terminated...Statistically speaking, this is a net benefit for the United States.
Secondly, Nokia actually tried to tie in a positive announcement into yesterday's outlook reassessment, but it was largely lost. In short, Nokia has made a significant investment in its imaging and camera tech by acquiring both talent and intellectual property from Swedish company Scalado AB.
Scalado's facility in the Swedish city of Lund is going to become a key site for Nokia's imaging software for smartphones, in addition to those in Espoo and Tampere, Finland. So Nokia's research facilities in Germany and Canada are being closed down, but facilities in Sweden and the United States where Nokia did not have a presence previously will see increased action in the near future.
It's far from a push, and Nokia is undoubtedly shaving off a huge chunk of its workforce. However, when viewed in light of Nokia's impressive new product launches, and the recent restructuring plans from competitor Research in Motion and PC market leader Hewlett-Packard, there is clearly an evolution going on, and not some out-of-control death spiral.