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Recap: On Thursday, Microsoft announced its first layoffs ever. Working for Microsoft has been an assured lifetime job, and many employees treat their work there as a lifetime career. Microsoft has got many thousands of long-time employees—at least 10 years. Culturally, with its employees or outside partners, Microsoft rewards loyalty. So layoffs are out of character for Microsoft. This shows in the number of layoffs. Coming into the new year, Microsoft employed about 96,000 people. While the company announced 5,000 layoffs, the initial number was a mere 1,400. On Friday, the "my last day" posts started popping up on Microsoft blogs. It was quite obvious to me, listening to Thursday's earnings conference call that Microsoft CEO Steve Ballmer really didn't want to fire anybody. He went out of his way to emphasize that the company would hire several thousand new people in areas like search. When asked by a financial analyst about what divisions Microsoft might cut, Steve responded: "I like our portfolio." After a long pause, he added that "The board likes our portfolio." Steve doesn't want to let anybody or anything go. The number of layoffs, which I see as a mere bloodletting for Wall Street, shows how much reluctance there is to fire anybody. It's cultural. Microsoft treats loyalty with loyalty. Anonymous employee blogger Mini-Microsoft has long complained about swelling middle management. "I support reducing the company size. Big time," he blogged yesterday. "Back when I wrote the above in 2004 I felt we were already too big and encumbered with mismanagement due to our size." Instead: now we get the achievement-ignorant crash diet of this past week and we'll try to keep on that diet for the next 18 months, with the occasional binge. Yeah, good luck with your corporate ketosis level. I believe we need to smartly right-size downwards at least another 10,000 globally and lock down hiring. Emphasis on smartly. Going forward, we risk going through spurts of layoffs now given that we over-reached and will continue to over-reach. It's a quandary I would like you to help resolve. Who would you layoff from Microsoft? Who would you promote? What divisions should Microsoft reduce or shutter altogether? Which divisions should get more prominent role or investment?Last week, before layoffs, TechFlash's Todd Bishop opined, "What should Microsoft Cut. Five things we wouldn't really miss?" His list included Razorfish, search, Soapbox and Zune. I wouldn't cut any of the four: * Razorfish seems out of place, but the advertising agency has a good track record and provides services that could make better Microsoft's display advertising, search advertising and partner marketing initiatives. I would invest more in Razorfish, rather than sell it off. * Search requires no answer. Last week, Steve said this would be an area where Microsoft would hire more people. Microsoft has lost the desktop browser search wars to Google, but the mobile phone—a much larger market—is up for grabs. Google has mobile search high market share off a low base. Microsoft should invest more in mobile search. * Soapbox would be easy to kill. YouTube smokes everybody. But online video is a sizzling hot market. Microsoft should invest more, starting with better integration with other Live services and Windows 7. Then Microsoft should buy up other major video startups, like Vimeo, for their technology and users. Video is a big driver of search traffic and soon revenue. YouTube dominates, but Microsoft can still compete and win. But that requires commitment and investment, which Microsoft must make wholeheartedly. Otherwise, yes, Soapbox should be shuttered. * Zune is ailing. Revenue plummeted more than 50 percent during Microsoft's fiscal second quarter. In its quarterly 10-Q filing, Microsoft cited weak device sales as major reason. But Zune is a platform, and one with loads of potential. Zune's problem is one of investment. Microsoft needs to make more. Half-hearted efforts won't gain anything against iTunes, iPod or iPhone.
and the grimlin laden xbox 360....
