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  • Microsoft’s Game Plan: Fire Lots of People and Then?

    July 18th, 2014

    This is not a very good time to be working at Microsoft. Typical of companies in trouble, Microsoft has announced plans to give some 18,000 employees pink slips over the next few months. Most of the lost jobs, some 12,500, will consist of professional and factory employees connected with the $7.2 billion purchase of Nokia. This is typical of what happens when a company is acquired. The theory goes that the newly acquired company has too many employees, or there are redundant positions. Or maybe the money saved will be used to help cover the costs of the purchase.

    Regardless, the rest of the 5,500 firings will come from other departments in Microsoft. With 127,000 total employees as of last month, this means that Microsoft is shedding some 14% of its global workforce. That has to sting, particularly if you or someone you know is going to be affected.

    Now the last time Microsoft did a layoff was in 2009, where some 5,800 people lost their jobs. That was during the early days of Microsoft's unexpected (to some) decline in relevance, which culminated in the decision last year to remove CEO Steve Ballmer. In recent years, Microsoft seems to have made all the wrong decisions, such as introducing Windows 8, which changed the rules and turned off lots of customers, and the Surface tablet, which has gone nowhere fast.

    With the arrival of a genuine tech nerd CEO, Satya Nadella, some might have hoped that Microsoft's sinking ship would be righted, but it's still early in the game and it's not certain where he'll go. It's not that he seems to have a clear vision that will fix what's wrong. Maybe it is no longer devices and services, but mobile, services and productivity, but how does that translate to making Microsoft relevant in the twilight of the PC era? How does that convince people to buy Surface tablets, and Windows Phones?

    Indeed, does the acquisition of Nokia's handset division really accomplish anything but put thousands of people on the unemployment lines? Indeed, the media is so immersed in numbers of abstracts, that the actual human tragedy of this maneuver is being given short shrift. When you think of employment rolls dropping by 18,000, it means that 18,000 people will no longer have paychecks to feed their families and pay the mortgage.

    Sure, you can suggest that the former Nokia and Microsoft employees may find new jobs, maybe at higher salaries, before the severance checks run out. But in the current shaky economy, that's by no means certain. I wouldn't want to be alarmist, but I wonder how many of these workers with pink slips will end up working at McDonalds or another fast food restaurant struggling to make ends meet.

    Sure, I realize that a company can't keep people on staff who aren't contributing to the overall growth of the company. More to the point, Microsoft is bloated and inefficient, and if these large knife cuts are designed to fine tune the remaining staff and focus them in a direction that will fix the problems, that may be the price of progress.

    In any case, Microsoft reports that the restructuring will be "substantially complete" as of the end of this year, and the entire process completed by June of next year.

    At a time where the media has focused heavily on Apple's alleged — and usually non-existent — problems, the real issue has been Microsoft's inability to adapt to the way the tech industry has changed. The myth of Windows everywhere may have been relevant in the 1990s, but Steve Ballmer clearly couldn't figure a way to move the company to the next level. At the same time, Apple realized that the PC, or the Mac, wouldn't last forever and it was time to embrace a new generation.

    So today's Apple earns far more money from the iPhone and the iPad than Macs, although with OS X Yosemite, personal computers aren't being abandoned. In the 1990s, Steve Jobs was once quoted, before he returned to Apple, as saying that Apple should market the hell out of the Mac and move on to the next great thing. Here in the 21st century, the next great thing still includes Macs, and it may be years before what we regard as a personal computer has fully morphed into something else, or been supplanted by tablets.

    Meanwhile, Microsoft has made a move that may seem perfectly logical to the bean counters who look at dollars and cents and efficiencies. It may well be that it was truly necessarily to cut 18,000 people from the payroll to get the company moving forward again. But if this decision is to make sense, it would have to be followed by a clear and cogent plan to set things right. Indeed, the one would hope that, if Microsoft can fix the damage caused by years of wrong decisions, maybe there will be a place for some of those who are now losing their jobs to return to the company. But that assumes they are willing to trust Microsoft one more time.



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    3 Responses to “Microsoft’s Game Plan: Fire Lots of People and Then?”

    1. DaveD says:

      Microsoft's previous CEO Steve Ballmer's last plan... be like Apple. Unlike Apple, Microsoft never knew where the puck was going to be.

      Apple moved forward with the graphical user interface for its operating system. Moved forward with a personal digital device with the Newton. Embraced the World Wide Web with the iMac. Moved forward with wireless Internet access on a mobile computer with the iBook. Embraced MP3 music enjoyment anywhere with the iPod, Moved forward on digital music sales with the iTunes Music Store and later embraced digital video sales. Moved forward with an Internet accessible computer in your pocket that can also be a cell phone with the iPhone. Embraced a smaller Internet accessible mobile computer in a tablet form with the iPad.

      Apple's primary focus was a product that is easy to use and enjoy.

      Thus, Microsoft can never be like Apple. It is mainly a follower. Where it leads the products were poorly conceived or badly executed. Such as pen and tablet computing and the SPOT watch. When it follows Apple or Sony, most likely a successful outcome, But not as successful following Google's web search. To be determined, following Google purchased and the unload of a cell phone manufacturer.

      So, where is Microsoft going today and more importantly, tomorrow?

    2. When job creators fail to create jobs people, big gub'mnt needs to reappropriate that company to teach it how to create jobs for The People because everyone is important, not just management and investors.

    3. dfs says:

      None the less, face it, cutting down on MS workforce is a good step forward, especially if it involves eliminating a lot of middle-management bloat. Maybe it signals that Nadella appreciates MS's internal corporate culture needs to be radically overhauled as a first step towards putting out better and more innovative products.

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