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Nokia CEO Stephen Elop

Nokia this morning announced a major shakeup, acknowledging that “competitive industry dynamics” in the smartphone market are hurting its business more than previously expected.

The company scaled back its financial forecasts, announced the departure of three top executives, and said it plans to reduce its workforce by up to 10,000 people, or 8 percent, by the end of 2013.

Nokia is Microsoft’s key partner in the Redmond company’s Windows Phone turnaround effort. Their partnership faces steep competition from the likes of Apple’s iPhone and Android phones.

As part of the news today, Nokia signaled plans to press ahead with its Windows Phone strategy, and announced a deal to buy smartphone imaging assets from Scalado, a Swedish company.

“We are increasing our focus on the products and services that our consumers value most while continuing to invest in the innovation that has always defined Nokia,” said Stephen Elop, Nokia president and CEO, in the news release announcing the changes. “We intend to pursue an even more focused effort on Lumia, continued innovation around our feature phones, while placing increased emphasis on our location-based services. However, we must re-shape our operating model and ensure that we create a structure that can support our competitive ambitions.”

Elop was president of Microsoft’s Business Division before taking the top job at Nokia in 2010.

Departing the company are Jerri DeVard, chief marketing officer; Mary McDowell, executive vice president of Mobile Phones; and Niklas Savander, executive vice president of Markets. Nokia announced a series of new executive promotions to effectively fill those roles.

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