When Microsoft bought Nokia's phone unit, then-Chief Executive Steve Ballmer touted the deal as a move that "strengthens us as a company in so many ways."
Instead, the acquisition seems destined to be remembered as one of the company's largest strategic missteps, a costly failure to boost Microsoft's weak standing in mobile computing.
Since the $7.9 billion purchase of Nokia handset business was sealed in April 2014, Microsoft has laid off thousands of employees at manufacturing plants and research facilities from Redmond to Finland to China.
October 2010: Microsoft releases Windows Phone 7, with a unique tile-based interface designed to compete with Apple and Google's Android.
Late 2011: Nokia surpasses Taiwanese phone maker HTC as the largest seller of phones using Microsoft Windows.
October 2012: Microsoft releases Windows Phone 8.
September 2013: Microsoft signs a deal to buy Nokia's handset business, a transaction ultimately valued at $7.9 billion.
April 2014: After regulatory clearances, Nokia purchase is finalized.
July 2014: New Microsoft CEO Satya Nadella announces 18,000 layoffs, 12,500 from units acquired from Nokia, and restructuring charges of at least $1.1 billion.
June 2015: Microsoft announces that Stephen Elop, chief of Microsoft's devices group, will leave the company in an executive shake-up.
July 2015: Microsoft writes down essentially the entire value of the Nokia unit and announces 7,800 layoffs.
November 2015: Windows 10 mobile is released, four months later than the operating system's personal computer variant.
May 2016: Microsoft sells its feature-phone business to a Taiwanese hardware maker and a private equity-backed company using the Nokia name for $350 million. The next week, the company announces 1,850 layoffs, primarily in ex-Nokia units. The latest restructuring charges will total $950 million.
The company's financial losses, including soured bets on Nokia's brand name and customer relationships, as well as the cost of cutting ties with facilities and personnel, total more than $10 billion in restructuring charges and writedowns.
The latest cuts, announced Wednesday, include 1,850 layoffs, primarily in Finland, Nokia's home base — a move that marked the shuttering of the last major piece of the acquisition. The reorganization will cost $950 million, Microsoft says.
Microsoft's retreat from smartphone hardware signals defeat in the company's nearly decadelong effort to challenge Apple and Google's Android in the smartphone market.
"It marks the end of what they wanted to do with phones — which was create a third ecosystem within the smartphone business," said Carolina Milanesi, an analyst with Creative Strategies.
But the company says it's not pulling out of the mobile market. Microsoft CEO Satya Nadella said the company will narrow the focus of its smartphone hardware business to areas "where we have differentiation," highlighting sales to companies and individual users who value business-phone features.
Microsoft had a different set of ambitions when Ballmer received permission from Microsoft's board to negotiate with Nokia in the summer of 2013.
The company was doubling down on devices in an effort to respond to the growth in tablets and smartphones that, unlike personal computers, rarely involved Microsoft's Windows.
Apple, with its iPhone and iPad, set an example of a model that integrated designing both hardware and the software that made it tick.
Google's Android, a free-to-use phone operating system, was growing fast among other hardware builders.
Nokia, a titan of the early mobile-phone business and a big user of Windows, was then selling more than 200 million basic feature phones and smartphones a year.
"Nokia had a choice to make; it was either Microsoft or Android," Milanesi said.
Nokia, led by ex-Microsoft executive Stephen Elop, went with Microsoft. After the acquisition, Elop rejoined Microsoft to lead the company's new devices group.
In a conference call announcing the deal, Ballmer touted Windows as an alternative to Google and Apple, highlighting the 34 markets in which Windows was then beating BlackBerry in sales.
"Number 1 and most importantly, we are trying to accelerate our phone market share," Ballmer said.
That quarter, Windows devices accounted for 3.6 percent of smartphone sales, according to researcher Gartner.
Microsoft never reached that figure again. Mostly, it has declined. During the first three months of this year, Windows reached a new low, powering just 0.7 percent of the smartphones sold worldwide.
Windows was a victim of the same trends that hobbled BlackBerry, a company that, like Microsoft, had success in the early days of smartphones that were popular among business and corporate users.
Google and Apple had captured the attention of consumers. Developers followed, and saw little reason to create interesting software programs for the No. 3 choice. Microsoft never found a way to break that cycle.
In 2015, Microsoft wrote down nearly the entire value of the Nokia assets and laid off 7,800 employees.
Last week, Microsoft sold the feature-phone business it had acquired from Nokia to Taiwanese hardware maker Foxconn and a private equity-backed firm leasing the Nokia brand name.
Combined with Wednesday's cuts, that means the only piece of the Nokia business Microsoft will continue to operate is a limited research-and-development facility in Espoo, Finland, a spokesman said.
The bulk of the latest job cuts, 1,350, will fall on Microsoft Mobile Oy in Finland, the core of the old Nokia Devices & Services business. The decline of the Nokia business had already taken a toll on Finland's economy.
As for Microsoft's future in the phone business, "we're scaling back, but we're not out," Terry Myerson, the executive vice president of Microsoft's Windows and Devices group, said in a memo to employees. "We've done hard work and had great ideas, but have not always had the alignment needed across the company to make an impact."
Myerson said the company will "be pragmatic and embrace other mobile platforms" with its software. The company under Nadella has dropped its longstanding preference of giving priority to software for Windows smartphones by releasing free versions of Office applications and other programs for Android and iOS.
Microsoft's mobile presence today is primarily as a software maker for devices running those operating systems, but Myerson said Microsoft will continue to support its own Windows software, including the Windows 10 mobile variant.
Myerson said Microsoft will also develop new smartphone hardware.
It won't build it in its own factories, though.
The closure or sale of Nokia's manufacturing facilities around the world means the end of Microsoft's brief tenure as a builder of its own hardware.
The company relies on contract manufacturing to put together its Xbox video-game consoles and Surface tablets. Analysts say future Microsoft smartphones will likely follow that pattern.
Patrick Moorhead, president of independent research firm Moor Insights & Strategy, said Microsoft would likely follow the Surface business model, which has had some success, with its future phones.
The Surface tablets are seen as high-end, business-focused devices designed to highlight Windows to other manufacturers.
"Consumers may buy it," Moorhead said of future Microsoft phones. "But it's targeted to commercial users."
Source: Phone deal with Nokia became Microsoft's $10 billion mistake
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