When Microsoft CEO Satya Nadella announced some 18,000 job cuts on Thursday, he noted in a memo to employees that most of them (between 12,000 and 13,000) would come from the former Nokia.
That leaves 5,000 cuts on the table, all of which have to come from various parts of Microsoft. When queried about targets, one Microsoft representative said they would come “across functions and geographies.” That could mean anyone and anything within the Microsoft sphere.
The reality, though, turned out to be somewhat more specific.
By Thursday afternoon, Xbox head Phil Spencer sent his team an internal memo (obtained byThe Verge) that announced the shuttering of the still-new Xbox Entertainment Studios. Recodeestimated that will be a cut of nearly 200 jobs, meaning that Microsoft will outsource all TV-style entertainment content scheduled to run on Xbox in the coming months.
Spencer’s memo notes that the Steven Spielberg-produced Halo Television series is still on, as is any interactive third-party content like “NFL on Xbox.”
The cut, though, is a clear indication that while Nadella wants to flatten the giant company by cutting some middle management, there will be cuts that target specific departments, projects and teams.
The question remains, which departments and why.
While I suspect that virtually every department in Microsoft will see staff reductions, some will be much deeper than others — and, in cases like Xbox Entertainment Studios, will result in departmental death.
The Surface RT team is one such example. While Surface Pro 3 has been well received and could be Microsoft’s most successful tablet, the slab that kicked off Microsoft’s tablet hybrid strategy is likely dead.
It’s true that Microsoft recently introduced a cellular version of Surface 2, but that may well be the last significant update the RT models will see.
For those who do not remember, Surface RT is a Windows tablet running an ARM chip (popular in mobile phones) and something called Windows RT. It’s the only tablet version of Windows that can run on an ARM chip. The company built so it could have a relatively high-performance, low-energy tablet solution that could still handle specially build versions of Windows and Windows-friendly applications like Office 2013.
Surface Pro 3, though, proves that Microsoft can finally have it all. It’s light, thin, has 10 hours of battery life and runs on an Intel CPU. As a result, it’s a full-blown Windows PC – and a tablet, too.
Many of the people who built Surface RT also built Surface Pro 3, but anyone who works on RT hardware, the RT OS and the promotion of the platform is surely at risk.
Skype should be safe, though I do wonder if Microsoft will finally make deeper cuts in the company. It had roughly 500 employees in 2010. When Microsoft acquired it in 2011, it cut a handful of executives. Will Microsoft cut deeper now?
In 2009, Steve Ballmer laid off 5,000 Microsoft employees. HR, IT, sales, finance and marketing took hits. He even cut into research and development. Today Microsoft Research has at least 850 employees (most Ph.D’s), and they’re responsible for the development of cutting-edge products like Xbox Kinect. I don’t see Nadella gutting the group, but some trimming for projects that may never see the light of day as consumer products is likely.
Those other departments, sales, IT and HR will probably get hit again, too. A smaller workforce needs fewer support personnel, though I suspect the cuts won’t be deep since Microsoft is probably killing all three groups in Nokia and using Microsoft’s teams to support the remaining Nokia employees.
I do wonder if any of Microsoft’s hardware team, not the people who produce Xbox or Surface, but the ones churning out mice and keyboards might come under the knife. With the rise of tablets and even laptops, the demand for standalone keyboard mice is falling and demand for add-ons like tablet keyboards is being met by companies like Logitech.
A larger target, though, might be the Internet Explorer team. The browser's share has steadily fallen over the last decade, even as Microsoft sought to streamline and strengthen it. The team’s steely lead Dean Hachamovitch left late last year and its new head, Sam George, held out hope at the Build conference for a reinvigorated IE, by broaching the possibility of cross-platform support. Put another way: Internet Explorer on an iPhone.
With the introduction of Office for the iPad, this sounds like a distinct possibility, but the reality is that Office makes Microsoft money and Internet Explorer does not, so why make that kind of sweat equity investment? I expect deep cuts in the IE team.
Untouchables (in a relative sense) include the Windows team, Windows Phone Team, Bing (yes, Bing), Outlook and OneDrive.
I’m certain I got a least some of these wrong, but we’ll know the painful facts in due course.
Tags: APPS AND SOFTWARE, DEV - DESIGN, DEV & DESIGN, GADGETS, Microsoft, MOBILE, NOKIA, SATYA NADELLA, Tech