Nokia's announcement Thursday that it will lay off 10,000 workers by the end of next year to cut annual operating costs by an additional €1.6 billion (US$2 billion) doesn't surprise analysts.

"It is definitely a move where Nokia is facing up to reality. The size of its business needs to reflect the market opportunity the company has today, and that is very different from Nokia in its heydey," said Ben Wood, director of research at CCS Insight.

Richard Windsor, global technology marketing analyst at Nomura International, agrees: "The company needed to announce something fairly drastic in order to realign itself with the reality it faces."

Earlier this year, Nokia announced that it would be and move some manufacturing capability to Asia to be more efficient.

For Nokia, a combination of factors have put the company in an increasingly difficult situation. Nokia's strategy simply isn't playing out as well as it had hoped, according Wood. Sales of its Windows Phone-based Lumia smartphones haven't taken off to the extent it needs, the appetite for Symbian-based smartphones has disappeared very quickly and Nokia has also struggled in the feature-phone sector.