Microsoft is ditching Android from its smartphone range. It’s part of a strategy on streamlining its phone operations, which will be a key part of the company’s biggest ever round of job cuts.

When Microsoft took over Nokia’s handset division, it certainly appeared that continuing to produce both Windows Phone and Android handsets was an inefficent set-up. However, given Windows Phone has failed to make any significant impact (its market share is actually falling and is now below four percent) most speculation was that Microsoft would ditch the system altogether and concentrate on Android, taking advantage of the developer support for apps.

Stephen Elop, the former Nokia chief who now heads up Microsoft’s devices division, announced the change in a jargon-filled e-mail to employees. He explained that unlike when Nokia was completely self-contained, hardware is no longer the end goal. Instead “all our devices are intended to embody the finest of Microsoft’s digital work and digital life experiences, while accruing value to Microsoft’s overall strategy.”

He added that this strategy must be “accomplished within an appropriate financial envelope” which is business talk for “here come the cuts.” The gist of this strategy is the Microsoft will concentrate on making cheap smartphones running Windows Phone and will market them only in countries where Microsoft’s other offerings are already popular. That’ll mean carrying on making Lumia phones right now, while adapting the plans for future Nokia X models so they use Windows Phone.

It’s also going to shift production to countries where labor is cheaper than in some former Nokia production bases. That’s going to lead to 12,500 job cuts, part of an overall reduction of 18,000 across all of Microsoft.

Switching to only using one system certainly makes financial and logistical sense, but plumping for Windows Phone is something of a gamble. Elop says “we’ll continue building momentum around applications” though the existence of such momentum will certainly be news to many in the mobile industry. Based on Elop’s other comments in the email, it appears Microsoft is putting its money on more and more developers deciding to produce universal apps that automatically scale up and down between Windows 8 computers and tablets and Windows Phone handsets.

(Image credit: Luca Sartoni via Creative Commons licence)