Helsinki: Nokia workers are bracing for what may be the steepest job cuts in almost two decades as the world's largest maker of mobile phones prepares to start a partnership with Microsoft Corp.
A reduction in research and development activities is set to be announced by the end of the month, with as many as 6,000 jobs under threat, said Antti Rinne of Pro, Finland's biggest private sector office-worker union.
That would be equivalent to 38 per cent of the Finnish company's global devices research and development workforce. Nokia declined to comment on the numbers.
CEO Stephen Elop said on February 11 that Nokia will adopt Microsoft's Windows Phone 7 as its main smartphone operating system over the next two years, a move triggering "substantial reductions in employment." As he phases out Nokia's home-grown Symbian and MeeGo systems, workers haven't been told who may hang onto their jobs.
"This doesn't make for very efficient or creative working conditions," said Kalle Kiili, an engineer in Tampere, a research site that employs 3,000 workers, and represents the YTN union. "This waiting is expensive and we've already had a reorganisation of R and D in 2009 and another reorganization of Symbian in the second half of 2010, just as the organization was starting to work properly again."
At €3 billion (Dh15.97 billion), Nokia's 2010 research budget for devices, which include products ranging from basic handsets to smartphones that can edit documents and show movies, is more than twice Apple Inc's entire $1.78 billion R and D budget.
Nokia has unveiled an updated version of the Symbian smartphone software and two new smartphones that will run it. The E6 business phone combines a Qwerty keyboard and a touchscreen.
The X7 entertainment phone has a large display to play games and an 8-megapixel camera for taking pictures and high-definition-quality videos. Both handsets will start shipping in the second quarter, Nokia said.
Since Apple shipped its first iPhone in 2007, Nokia's share of smartphone sales by volume has shrunk 20 percentage points to 30.8 per cent in the final quarter of 2010, according to researcher Gartner Inc. At the end of last year, Nokia employed 16,134 people in R&D for devices and services, a company filing showed.
"The reductions are likely to come gradually, over the next 12 months because they have some further development in the pipeline for Symbian," said Michael Schroeder, an analyst at FIM Bank in Helsinki. "The expectation is that after the transition period they would have cut a third of their device R and D spending compared to what it was in 2010, so that would mean €1 billion in total."
Nokia has said the transition would extend into 2012. Under Finnish laws, companies must start negotiations with unions when they announce job-cut plans.
Those talks typically last about six weeks. Nokia is scheduled to release earnings April 21 and hold its annual shareholder meeting May 3.
Nokia has about 21,000 workers in Finland, or 16 per cent of its global headcount including the networks venture with Siemens AG, according to filings. The figure also includes a smartphone factory in Salo with about 2,000 employees.
In November 2009, Nokia Siemens announced plans to eliminate 5,760 jobs. The venture cut as much as 15 per cent of 60,000 positions when it was created in 2007.
In 2008, Nokia closed a handset plant in Bochum, Germany, slashing about 2,300 jobs. Nokia announced reductions of 1,700 jobs in sales, marketing and management in March 2009 as consumer demand fell in the global recession.
Nokia's headcount declined by 31 per cent between 1990 and 1993, according to annual reports, as the company shed units making rubber products and computers.
The handsets organisation has more than doubled in size since 1999, to 58,642 people at the end of last year.
Nokia unveils updated Symbian smartphone
Nokia, the world's biggest maker of mobile phones, has introduced an updated version of its Symbian smartphone software and two new smartphones that will run it.
The E6 business phone, priced at about €340 (Dh1,809) before taxes and subsidies, combines a hard Qwerty keyboard and a touchscreen, the Finland-based company said. The X7 entertainment and gaming phone, with a base price of €380 from Nokia, will be offered by Three UK, the carrier said on its website.
The version, nicknamed Symbian Anna, includes features promised last year, such as a portrait-mode Qwerty keyboard and split-screen input. It will also be available for download to existing units of Nokia's latest smartphones "in the coming months," the company said.
"The new software shows the importance of Symbian in the transition to Windows Phone 7 and represents a crucial step in the effort to close the gap with rivals," Ben Wood, a London- based analyst with CCS Insight, said in a text message.
"The X7 is unremarkable given current competitors. The E6 is an attractive device that joins the growing list of BlackBerry rivals, which should worry Research In Motion."
Both handsets will start shipping in the second quarter, Nokia said on its website, adding that the E6 will be available in third quarter in North America.