Microsoft has made one of the largest job cuts in its 39-year history by laying off 18,000 people.

CEO Satya Nadella said the painful cuts were needed to restore Microsoft's competitiveness in an increasingly hostile market.

Nadella issued an email memo saying the company aims to focus on a more active software development. This move is a clear change of strategy from making Microsoft’s own smartphones and tablets.

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The layoffs will be completed by June 30, 2015 and will reduce Microsoft's total headcount to 109,000 employees worldwide.

“The overall result of these changes will be more productive, impactful teams across Microsoft," Nadella said in his memo.

Although layoffs were expected since Microsoft's acquisition of Nokia’s mobile-device unit, the number was twice what analysts projected. Microsoft will cut 12,500 jobs from its Nokia unit out of the 28,000 employees acquired from Nokia.

Microsoft wants to concentrate on its Windows Phone operating systems and will consequently phase out its low-priced Nokia Asha phones that run on non-Windows operating systems.

Aside from changes to its Nokia unit, Microsoft will close its Xbox Entertainment Studios that it sees as not in line with its core business.

Microsoft foresees charges of US$1.1 billion to US$1.6 billion for the next four quarters, especially for severance payments.

TagsMicrosoft Lay Off, Nokia, Satya Nadella, Nokia X, Nokia Asha