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Microsoft may have just killed its Lumia line. Good riddance

The shedding of its basic phone business is the latest ripple from Microsoft's disastrous deal to buy Nokia's mobile operations. Redmond should get out of phones altogether.

Sarah Tew/CNET
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The latest Lumia phones didn't resonate with customers.

Sarah Tew/CNET

For Microsoft, the phone woes just keep coming.

On Wednesday, the software titan said it would unload its low-end phone operations for $350 million to a Finnish startup and a unit of Chinese manufacturing giant Foxconn, which aims to revive the once popular Nokia consumer brand. Remember, Microsoft bought Nokia's mobile devices business for $7.2 billion (yes, billion) in 2014.

The most intriguing bit of Microsoft's announcement is its language about Lumia phones. The company said it would continue to support existing Lumia phones, the Windows Mobile 10 software and its partner devices. But there was no word on future devices, suggesting an end to the Lumia line, which started as a Nokia showpiece. A spokeswoman declined to elaborate beyond the statement.

Given the long history of failure stretching back to Nokia, letting go may be the smart bet. Microsoft has its own troubled history with phones, not least of it the disastrous Nokia deal turning into billions of dollars in write-offs and thousands of jobs lost. With only 1.1 percent of the world's phones running on Windows 10, according to Gartner, the company might better off getting out of the phone hardware business.

"It's hard to see the acquisition as anything but a complete failure at this point," said Jan Dawson, an analyst at Jackdaw Research.

In other areas, Microsoft has a lot to get excited about. Its HoloLens is an intriguing foray into augmented reality and one of the few jaw-droppers in tech today. The Surface Pro hybrid tablet line is a success, and the company's work with artificial intelligence and chatbots has promise. And they're all safely outside a brutally competitive phone business.

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"When it comes to devices, Microsoft needs to look forward to [augmented reality and virtual reality] and get into the next big thing early so they can drive it and not play catch-up," said Carolina Milanesi, an analyst at Creative Strategies.

There remain rumblings that Microsoft is readying a premium-level Surface phone to match its tablet and PC lineup. The company has already indicated that no such device will appear this year. Truthfully, though, what can a Surface phone bring to really move the needle on the phone business? The branding could help it draft off its well-regarded Surface Pro and Surface Book lines, but it's hard to see what features would get consumers to turn away from their Android phones and Apple iPhones.

The flagship Lumia 950 and Lumia 950 XL both offer the ability to work as a full Windows 10 PC when hooked up to a monitor, yet that marquee ability hasn't done much to win over new customers. At Microsoft's flagship stores, the phones are tucked away at the side, allowing the Surface line and the HoloLens to take center stage.

It doesn't help that Microsoft has offered only vague messaging and hasn't said much about its plans.

"It's certainly the latest indicator of how Microsoft's commitment to its smartphone business has waned over the last couple of years," Dawson said.

Phones are supposed to the gateway to the consumer. But with Microsoft building a wide array of apps for iPhones and Android phones, clearly it doesn't have to be the one making them.