Knocking Nokia

As expected, those rumored layoffs at Microsoft are coming mostly from the company’s doomed Nokia division:

Microsoft CEO Satya Nadella told employees in an email that the company will continue to make mobile phones, but will focus on three customer segments. They are Windows fans, value-phone buyers, and business customers who want phones optimized for security, [management and productivity.

Microsoft has faced stiff competition in smartphones from Apple’s iPhone and Google Android-based handsets. Apple and Google each have developed a critical mass of device users and software developers.

On Wednesday, Microsoft said it will record an impairment charge of $7.6 billion related to the Nokia assets it acquired last year. It also said it will cut up to 7,800 positions, mostly in the phone business, and incur a restructuring charge of $750 million to $850 million.

Microsoft is “postponing the inevitable,” says consumer technology analyst Jan Dawson, founder and chief analyst at Jackdaw Research.

A couple of years ago I theorized that Microsoft’s Surface tablets — another Ballmer Boondoggle — might be crushing the life out of Nokia’s Windows Phones. Maybe there really is room in the market for only two smartphone systems.

Whatever the case, buying Nokia was an expensive mistake — and the bleeding isn’t over.