Posted January 2, 2009 10:41 am by with 47 comments

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The big question isn’t, is Microsoft planning to cut 15,000 employees from its workforce? Nope, the big question is, why is everyone so shocked?

Yahoo just gave pink-slips as Christmas presents and even Google had to scale back on its staff, so why is there so much shock at the prospect of Microsoft following suit?

All you have to do is consider the facts:

  1. Windows Vista was a bust, and MSFT is moving quickly to get Windows 7 to the market.
  2. Windows Live Search still can’t catch Google–and failed attempts to buy Yahoo cost the company time and money.
  3. Who really needs Microsoft Office, when we can either download free alternatives or, in my opinion even better, move to the cloud?
  4. XBox 360, while doing better than the Playstation 3, was "pwnd" by Nintendo’s Wii gaming system.
  5. The Zune? Yeah, folks just loved it when their iPod alternative froze recently–that’ll help sales.

I could go on, but you get the point. We’re in a recession and companies are having to make drastic cuts and, unfortunately, Microsoft is not immune from this.

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  • It was always going to happen. These companies employed thousands when the times where good but now its all going belly up emplyees are always the first to go.

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  • I posed the question about Google in my questions for 2009 post over on my blog.

    As far as the 360 being “PWND” by the Wii, I don’t agree. They are 2 different systems. I’ll play Wii bowling with my son, wife, mother-in-law, etc, but then sit down and play my PS3 when I play NHL 09 (not even out for the WII), Fallout 3 (again, not out for the Wii). The Wii is a great second system for “hardcore” gamers or as the only option for a casual gamer. The Wii goes after a different audience than the 360/PS3. The EA sports WII version of Madden didn’t sell very well and they might be scrapping their Wii family focused “all-play” line of games.

    Dan London’s last blog post..My Questions for 2009

  • Can you please help a non-techie little league coach hear and educate me on what “the cloud” is. I am aware of but that is it. I apologize to all those that know, but I am at a loss. Thanks in advance.

    Rick McBride’s last blog post..The Little League Coach’s Top Articles of 2008

  • @Rick – “the cloud” basically means software that is hosted on the web and not installed on your computer. Google’s Gmail is an example of a “cloud” application, while Microsoft’s Outlook is a desktop application. I hope that helps. πŸ™‚

  • PS3

    I agree with four of the five points but not the comparison to the Xbox. I am no fanyboy but you just aren’t comparing like to like in my humble opinion, they are totally different animals.

  • Not exactly shocked. I’m just waiting for Google now.

    Utah SEO Pro’s last blog post..An Interview with Utah SEO Pro (Jordan Kasteler) by Martin Bowling

  • @Dan & PS3 – you guys are welcome to your opinions, but I stand by my comment. Whether the machines are equal in performance, I do believe that the Wii has eaten into the success of the Xbox and 360. I, for one, just almost bought an Xbox 360, but instead went with the Wii–I’m sure I’m not the only one.

  • Andy, I hear you. I just thought of this perspective. As a guy who is around kids just about every day and a slightly more than recreational gamer myself I thought of it this way.

    Hardcore gamers or those that are a little above average like me tend to have an xbox OR a PS3 AND a WII.

    So you choose between the PS3 and the xbox, but everyone has a WII. This would explain the dent in the sales as well I think.

    A little different perspective for you.

    Rick McBride’s last blog post..The Little League Coach’s Top Articles of 2008

  • Can’t believe I’m having a videogame discussion here…

    anyway, my point was that the audience that plays Wii games is not necessarily the same that plays PS360 games.

    Top Wii racing game=Mario Kart
    Top PS3 racing game=Gran Turismo

    The target market is different for those system as the catalogs differ. The 360/PS3 have more games that are released for both. Not many games come out for all 3 systems.

    Here is some good sales data

    and as for Microsoft….Where are the layoffs going to occur? search? software?

    Dan London’s last blog post..Winter Classic 2009 Highlights

  • Big companies as a whole need to scale back if they want to survive the recession. The company I work for is now realizing this as well and are reluctantly cutting this week.

    As for the gaming system part, I agree with Dan that the target markets are very different. I’m a Wii guy. I do like Xbox and PS3 but the wii is something my kids and I can play together. It’s more active and just fun to play.


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  • Andy,
    Your point is well taken, no one is immune to this recession. Unless you are doing something Remarkable, you simply will not stay at the top. That doesn’t mean the world is stopping, but is is NOT business as usual.

    The bigger question, Where is the opportunity hiding. There is ALWAYS opportunity, it is just wrapped differently

  • Haha. Poor microsoft. But yes, they were so YESTERDAY. lol.

    They have made some pretty bad missteps which have landed them in this predicament.

    Btw, thanks for adding that new word “pwn” to my vocabulary. Now when I go around spouting my technical jargon, interspersed with internet slang, my friends will really think I’m cool. πŸ™‚

    Shirley’s last blog post..Most Annoying Website Features Revisited

  • @Shirley – haha! Happy to help! πŸ™‚

  • #2 re: msft can’t catch goog on search may be the understatement of all ’09! Layoffs suck, but hey, that’s what you gotta do when you’re not dominating the game like you used to.

  • The unemployment is a visible sign of the recession in all countries of Europe and America in big and small firms. For sure it is true. I think the people will be able to solve their problems as far as our life is still going on.

  • You sure stirred up a hornet’s nest with this post Andy! It was inevitable that this was going to happen, as open source is killing their business model. Linux is also becoming a very viable alternative, and by the time people finally let go of their beloved XP, the latest Linux incarnation (got to love their quirky names) will surely be ready to almost seamlessly take over. Microsoft’s business model is rapidly becoming obsolete, and I hope they can adapt……

  • Xbox 360s sales were up last year (08). I would’ve thought that they wouldn’t need to lay off people as the sales for xbox 360 are predicted to be much higher this year

  • shocked a little bit, but hopefully they can rock the market with touchscreen windows 7 to come this year

    schooliz’s last blog post..MOTOYUVA EM325 for music lover

  • It’s not surprising and it’s really about time that they cut some staff there. They should also revamp their product line, thin it down and concentrate on that which really is great within their collection of products…oh wait! This is MICROSOFT! Should make it 30,000 the entire VISTA Crew and thin the product line by about 50 of them and focus on creating a more stable Operating System.

    But that’s a pipe dream. That’d be like Yahoo hiring me to be CEO of the company. A great idea, but things have not frozen over downstairs yet.

    Michael Murdock

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  • Justin


    Your number 3 amazes me. You must be a single man business as I know of no real major organisations that will publish their office documents to the cloud. It will go completely against SOX, ruin disaster recovery processes/procedures and will allow “sensitive” data outside the office without even trying. MAJOR security risk, but maybe that’s why you write about technology and not implement it πŸ˜‰

  • Yeah, it was only a matter of time. I tell ya xbox 360 has its problems, the three rings of death is all I have to say with that machine!

  • I think some of the fallout we will see from all of these pink slips will be laid off employees starting their own online tech companies…the startup costs are low, and once you get in the lifestyle habit at a company like GOOGLE it’s hard to go back to a normal 9-5.

    Pinny Cohen’s last blog post..Shopping Cart Abandonment And Another E-commerce Website Metric You Should Be Aware Of

  • Troy

    For more insider info on what’s going on inside Microsoft with these rumored layoffs talk, have a read on this blog.
    This is from an anonymous employee that would love nothing more than to see reductions in size along with a few execs cut. The quoated area should tell it like it is.
    It still amazes me at how many people would love to see Microsoft fail. Apple is far more closed of an OS with bugs in their junk as well. Oh and Yes..the free linux! Let that go mainstream and see the 50ft holes hackers dig up..and let me hold my breath for timely released patches. Like a fortune 1000 company would trust their treasures on untest enterprise ready OS’s. If we lose the Microsoft brand, then all these spring ups of OS’s come..which for a developer is nuts. Besides, with cloud and virtualization on the rise, we may all have machines that run all OS’s side by side. Curious what the sheep would complain about then!

  • Microsoft is still doing ‘ok’ because of their market share in the software business (windows+ office). So unless a strong competitor (e.g. Google) can come and totally knock them over…Microsoft will somehow survive….

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  • Microsoft will survive for sure, it goes without saying. If someone faces the problems that doesn’t mean he is going to die.

  • I tend to agree with those who question number 3 … Microsoft’s biggest markets are business and education, and on an enterprise level I don’t see organizations moving to cloud computing.

    Maybe they should, but they won’t … too hard to sell to upper management.

    Ami Ohayon’s last blog post..Winter Waterland – Not

  • @Schooliz, I doubt it
    Have you seen how bloody expensive that thing is? nobody is going to buy it, especially with the credit crunch. Frankly, I think it’s stupid to release that now, when nobody has anybody money!

  • I think your closing statement said it best, we are in a recession and with a recession comes cutbacks and job losses. One thing that does worry me is the preemptive layoffs – companies who are anticipating reduced earnings – as I feel this just adds to an already bad situation. If absolutely necessary, than yes layoff workers… but on the same note, if not absolutely necessary, let them keep their jobs!!

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  • The xbox 360 isn’t a major cause as it’s starting to turn a profit for Microsoft. But really, it’s not surprise. The way the economy is, layoffs are coming from everyone. Your closing line says it all.

    Vista was a bust though and hopefully Microsoft will get their act together with their next line of OS.

  • i dont think thats possible. microsoft is a big company

    thewutzupphilippines’s last blog post..No marriage plans yet for Rachelle Ann Go, Gab Valenciano

  • Badly there will be some cut in the background and in the front they will declare no staff cut, so many bluechips started doing the refine this way. And I hope microsoft will also follow this way without exception.

    Steve’s last blog post..Dish Network is getting better and better now

  • Quite right. There can be no organization of any size and in any business that will not be looking at reducing costs and streamlining operations to effectively pass through the bad times till the situation improves.

    Nicole Price’s last blog post..New Year Resolutions to Help You Save Money

  • The word layoffs sounds like nightmare, I got layoff but I got my severance payoff, so it’s a win-win solutions.I got lay off not because I am not performing, I didn’t get along with my bos marketing plans, so he cut me loose, no big deal.As for Microsoft I hope everyone there can survive the turmoil so and happy ending

  • I think this had to happen sooner or later. Its been many years of steady growth and what goes up must come down, atleast a little bit.

  • Yes Nick I couldn’t agree more than you do, if we remember our study of economics duringUniversity the slope is up and down, when your down on zero ground definitely the social structure of society will embarked and will rebounce again as long as people keep on buying thing to keep the economic stimulus in life circle.

  • @Shirley
    Trust me, it will make you look more of a wally then make you look cool πŸ˜‰

  • Almost all the major companies are cutting back on personnel. Why should it be any different with the “big guys”? I totally agree with this post’s 1st parragraph.

  • The word structurize is a little bit harsh, maybe we have to think new platform for global economic in order the balance is elsewhere avoiding superpower image…

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  • I feel sad to hear this kind of news. Those who work in private sectors are facing this problem. Alternative work like blogging could be the best choice for many. That is why many blogs can be seen in 09.

    Atniz’s last blog post..Message To Work At Home Bloggers

  • Quantum Flux

    You might want to base your “demise predictions” on someting more *objective* like earnings forecasts and earnings reports. Is MSFT failing to deliver in a way out of line with the broader economy?

    “Pro bloggers”? How long before the recession hits THAT BS job?! Any second, I think, people will realize that paying someone to spot their unsubstantiated opinion is a luxury we cant really afford anymore. Good riddance!

    But anyhow… I think “pro bloggers” and the lunatic fringe technophiles that pollute all of the tech blogs these days with their religious extremist “views” and “predictions” must be living in an alternate universe. Wholesale moves to Linux and Open Office? Massive enterprises moving into the cloud? MSFT “done for sure”? The schadenfrued runs WILD among the hystrionic “MSFT MUST DIE!” crowd.

    The reality is that the landscape and the paradigm are shifting again as they always do. Combined with a rough global economy, this means that ALL tech giants must hunker down and revisit their strategy. MSFT has taken some lumps, but so have Apple and Google (religious extremists just cant and wont see that which makes their opinion less than worthless)

    And as for the Wii, Im glad you love yours, but thats the problem with you and most bloggers. You feel that whatever YOU do and YOU like defines the universe and so now you’re an expert on the gaming industry. Take a look at sales numbers for attach rates, take a look at real sell through, take a look at services attach revenue streams, take a look at real growth projections, and then get back to me before declaring to the world that you have a victor in the console space in the form of the 10 year old Game Cube with a new controller. I have one and enjoy it to, but the insane hyperbole around the Wii and Nintendos success is reaching Apple level of stupidity. I mean why even bother with these blogs when they’re so predictable? Open Source, Apple, Google and Nintendo rule the world and Sony and MSFT are DEAD as a DEAD DOG! Ok, we got it… Nothing more to see here. Ah yep…

    Im waiting for the “blogosphere” just ONCE to post “wow! I guess Im a moron” when one of these genius “predictions” fails to come true (which happens WEEKLY) Never see that though… Just more “well, I still think I MAY be right” What a waste…

  • @Quantum – do you feel better after that? πŸ˜‰

    You’re criticisms are misplaced, I didn’t make a single prediction in this post. Neither did I suggest the demise of MSFT, instead I pointed out why the company might make cutbacks in staff.

  • where will those 15K+ employees go now with all of this economic problems.

    John’s last blog post..Busby SEO Test the hard way

  • Totally correct. They are doing mistakes over mistakes. It would be better for them to calm down and restructure their plan and strategy. It seems that every time they are in some rush and in hurry they are making bad moves which hurt their business.

  • Ultimately, Microsoft and Google will always be safe and a viable company – Yahoo has more risk because they don’t have a monopolized market (in my opinion)