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back to article Microsoft cuts 5,000 jobs - but Ballmer's hiring

Microsoft just announced the first job cuts in its history. You know things are bad. But how bad? Thanks to the tanking PC market, Redmond undershot its own expectations for the normally lucrative second-quarter by nearly $1bn. With Windows revenue dipping eight per cent to $4bn, Microsoft blamed consumers for not buying a …

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Yo can bet...

that the people shown the door will be the workers while management will still collect bonuses for "saving" the company money.

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Paris Hilton

Bad news...

Microsoft Lays off 5000 workers

Good, news, they were the Vista Dev team.

Paris, I prefer her UI

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Joke

If I don't say it, someone else will...

"there will also be cuts in research and development - an interesting step for a company so invested in R&D."

I thought Apple was traditionally the R&D department of Microsoft ;)

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It's not the first time Microsoft has laid people off

Back in 2002 - Microsoft dumped many of their non-US development groups, including two in Cambridge in the UK and some in Scandinavia.

Of course, we weren't American so it didn't really count

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No time for scadenfreude

No-one's immune from the effects of incompetent politicos and rapacious bankers. Every layoff is a tragedy for the person involved. My sympathies to them - but maybe some of them might find a welcome in Cupertino, perhaps?

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Ballmer doesn't have a clue

Either that or he's very biased. He said yesterday that people won't be buying computers when there's a downturn.

So how come Apple are selling large quantities of them and posting record quarter earnings?

Maybe he means people aren't buying Windows computers.

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Coat

Is it too cruel...

... to hope that some of those that inflicted the Office2007 ribbon "interface" or Vista upon us are those going down the road with their pink slips?

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Linux

It's the begining of the end for MS

Now squeal, just like my wallet had to all these years paying the MS tax

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Black Helicopters

Taking the opportunity

I think many companies are taking the opportunity to slim down parts of the workforce that they have wanted rid of for a while, but large redundancies during 'good times' would be harder to sell. During the current climate they can get away with it.

I also wouldn't be surprised of organisations are taking the opportunity to bring any shady 'off balance sheet' debts onto the balance sheet, and then declaring the resulting loss as the fault of the 'economic climate'

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End of the Beginning?

MS business model works on the assumption uses will always upgrade. They can release a new version of whatever every few years and the revenue will pour in. They have managed to keep this going far longer than it should have done by putting out flawed products that can be 'improved' with later versions.

Knowing this was going to fail someday they have used the cash to fund forays into other areas looking for a sustainable profit. They are yet to find one. They cannot leverage an OS monopoly any more and must therefore compete on price and functionality. MS doesn't work like that.

Even though they have enough cash to keep looking for quite a while yet they know they can't go one for ever. I think this is the admission that Vista signalled the end the automatic upgrade cycle and they need to work on sustainable income models that don't yet exist.

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History repeats

IBM was pretty bloated in the eighties and the industry momentum was then going elsewhere. So it posted some large losses, shed many of its staff, massively restructured and concentrated on developing core strengths.

The desktop computer is becoming a cheap commodity and those selling software into this market are competing against free. Free software is getting better each year and has more engineers actively working on it and getting paid to do so through different revenue models.

So we are going to see much harder downwards pressure on prices than Microsoft is used to. They still have much goodwill from their core customer locked in base, which won't evaporate overnight, but in markets where customers have a choice, the software won't sell for much if anything, and a growing number of new customers with choice are going for better quality software available elsewhere.

In the late eighties people did start getting sacked for buying IBM. The money now isn't on the commodity desktop, it's in web advertising where Microsoft is in third place and servers where Microsoft is in second place.

But when things started going bad at IBM, IBM shares were not organised as a pyramid scheme through employee salaries being paid in share options. Bill Parish claims that at Microsoft these options are not being accounted as a cost or liability:

http://www.billparish.com/msftfraudfacts.html

So how much longer can Microsoft pay its serfs in funny money before this becomes worthless paper and they leave in droves ?

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Only 90,000?

Just been reading that Apple employs 134,000 (didn't know it was that high). Telling times indeed. Maybe people are finally getting wise - heck BBC Watchdog this week had two old pensioners who knew they were being approached by a conman rather than a legitimate businessman because he was using a hotmail address :)

Microsoft is already a shadow of it's former self... does Moore's Law apply in reverse too?

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Go

5,000 down, 84,000 to go

Hopefully this is the beginning of the end for a company that is similar to its products. Bloated and oversized. Severe downsizing, to approximately nil is just what the world needs. No more Windows, Office, Hotmail and all the other guff.

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Not buying 2nd and 3rd PCs eh?

Since Microsoft are not in the business of selling PCs, what Stevie boy means is people are not buying 2nd or 3rd copies of the utterly shit Vista. Never mind the crappy "no circulation" advertising systems they offer. I mean, who the fuck uses msn to search of stuff anyway?

GOOD!

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Re: Taking the opportunity

True that hard times are a good opportunity for pruning unwanted excess or individuals, but you can't make staff redundant purely on the basis of the outside economy - there has to be an accountable impact on your business, whether concurrent or an immediate-term forecast.

For a large entity to shed 5% of it's workforce, that's more than just trimming a few loose branches, it's a real attention grabbed - not all of it desirable I should imagine.

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Anonymous Coward

Oh you predictors of doom...

I say unto you that your predictions of Microsoft going down yon gurgler are all wishful thinking.

Their products are so endemic that they will be around for ages to come. They may get a bit battered during the current manufactured crisis, but they'll be back.

I agree with those who said that Vista marked the end of the 'automatic upgrade cycle' but the reason for this was not so much Vista as the products that preceded it. There's nowt much wrong with XP for most people, so why would they go through the hassle of changing?

I feel for the people getting laid off.

BTW, getting paid in 'funny money' (stock options) is not uncommon and is not in any way limited to MS - Googlers are often recompensed in this way, for example. The value of the stock is always going to be volatile, and the issuing of stock options does in itself dilute the value of the stock. So, it's generally paid for bonuses and doesn't normally vest for a while. And you generally have to pay some amount for it. It's not 'funny money' but you do have to look carefully at it. For example when I worked at an unnamed consultancy (with four letters beginning with K and ending with PMG) they offered stock as a bonus scheme. I turned it down knowing that the stock was at a high and that I would lose mucho cash. I was right and happy, others got really peed off.

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Gates Halo

M$ may have released som shoddy products recently but...

I'd have to agree with comments relating to the office 2007 ribbon, the dreadfully over-bloated Aero interface, and the countless other meaningless updates to the consumer-level products which have demonstrated a lack of vision and understanding toward their target audience.

What most users can't comprehend is what's going on under the bonnet within a corporate network. Since the release of server 2003 SP1, there isn't a single OS distro out there that could hold a candle to the power and flexability of MSs centrally managed desktop environment.

Even in the vanilla standard edition, Group Policy Management had a truly liberating impact on the day-to-day running of small to mid-sized orgs. re-packages your apps into unattended MSI, ditch Ghost for RIS, and a couple of carefully crafted GPOs will completely automate the deployment of new machines. I single-handedly unpacked, set up, and installed (blank HDDs) 120 new workstations in a single day!

That only scratches the surfaces of all the features bundled into 2003.

Samba looks very poor by comparison.

It's improved even further with server 2008. I'm currently implementing SCCM 2007 which uses intels AMT tech to enable BIOS level control and diags. Talk about a megalomaniacs wet dream!

Then there's .net, for which I've heard only praise from the miriad of engineers and developers I've spoken to.

Yes, MS make bloody huge mistakes, and no, Word still can't insert a simple picture without getting every default setting wrong, but when MS get it right, they get it RIGHT.

Don't write them off yet - a little fat trimming will only improve things!

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Boffin

Where now?

With Windows 3 MS had a new product (let's not get into the fight as to where the ideas came from) and as with Windows 95 and XP real improvement in ease of use and access to a miriad of devices. Where do you go as Vista basically offered nothing more than pretty windows and slowing your investment requiring you to upgrade for little real prodcutivity return. What are they going to do in Windows 7 that will make those who didn't upgrade to Vista cough up?

MS has clung on to the idea that PC's will be around for a while but they won't and as previously mentioned the new markets are a struggle. They lack real innovation (other than buying in someone elses ideas) and this is showing. Cutting on R&D will further impeded on their ability to come up with new technologies. Bill G one said in 100 years MS will no longer exist, I am sure he is right. The current financial crisis has made people question the value of their investments in new PC's and Windows Vista. The increased sale in Netbooks running Linux and XP has shown how out of touch and behind they are given that XP should not be available.

They were late on the Internet, Late on Virtualisation they have become a catch up Corporation and now the moneys drying up this will get harder and harder. I am not an MS basher but I see less and less VFM (Value From Microsoft)

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Linux

@Psymon

Hmmm all that wonderful leaky monoculture - hackers wet dream to

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Linux

@Not buying 2nd and 3rd PCs eh?

Not at full price, they can get stuffed. They need to do discount 3-5 licence packs as they do with home/student office ( or apple does with OSX) when they release w7. Otherwise one W7 box and all the rest Linux boxes

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@ AC 1037H

"I think many companies are taking the opportunity to slim down parts of the workforce that they have wanted rid of for a while, but large redundancies during 'good times' would be harder to sell. During the current climate they can get away with it."

Very true. And they'll all be whining when the inevitable upturn comes and they don't have enough staff left to compete with more forward-thinking competitors who had retained staff.

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Anonymous Coward

First I have heard of it

Laptots, sorry Netbooks (I'm not a yank), sales grew by 10 per cent to 80 per cent? Really! First I have heard of it. I was under the impression that they only had 70% of that market share and that was dubious to say the least, what with all the FUD about the Linux return rates and that.

Then again, Asus and MSI Wind did suddenly seem to drop the Linux versions fairly quickly (Asus on certain models) which, considering MS's history, does point to them being put under pressure by Microsoft.

If you read comments on MiniMicrosoft, by MS employees, even they say that there is more interest in the Linux version than the 'Tired old Windows version'.

Even if MS did gain 10% what does that amount to? Virtually nothing because at the end of the day they are illegally dumping stock on the market in a bid to kill a competitor. They have drastically reduced the price of XP to about $3 (£2 ish) just to enter that market, and what do you have to pay Dell to have XP installed instead of Vista? $150 (£100 ish)!

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Now is the ideal time to hire

Sure, fire all the expenses to do with services that are being Googled to oblivion. Throw these business units to the sharks. During downturns, Wall St expects some cost reduction and layoffs so dump the businesses that are a drag anyway.

Times will come right and as we all know, the lead time on significant software development is long. By the time TheNextBigThing is ready, the economic slump will be long gone.

If you have a fat poli-o-money, like MS does, then now is exactly the right time to hire up and develop for the next upswing. You can access staff like never before. You can afford to work on your projects while the competition run out of money and stall theirs (*). In short, it gives you a great opportunity to get ahead.

They need to hire for new projects. The skill sets are different. They can't just turn web programmers into OS developers or whatever.

(*) Of course right now MS's two biggest competitors (Google and Apple) also have fat piles of money so this effect might not be that strong.

btw: When Gates said that MS would not exist in 100 years, he was of course right. No company in these fast-paced times will last that long. But of course Bill was also being an arrogant sod. He saw, and probably still sees, Microsoft as an extension of himself that needs his vast technical brain to feed it with ideas and technical direction.. He'll be dead by then so expects Microsoft to shrivel up and die too.

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@Adam T

I'm assuming that includes all the staff of the Apple Stores too.

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