January 5th, 2009
It takes a lot to dismantle an Empire
Despite lots of wishful thinking by Microsoft haters, Microsoft won’t be destroyed in a day.
When I read analysts, customers, bloggers, partners and others prematurely dancing on Microsoft’s grave because of a loss of a half percent of market share here or a customer loss there, I want to remind them that there is a long legacy — and lots of layers of fat — protecting Microsoft from annihilation. This isn’t a Microsoft apologist talking; it’s a Microsoft realist.
Take the rumor of 15,000-person layoffs that first percolated on Mini-Microsoft’s blog before Christmas. (And keeps re-percolating, thanks to a number of sites like Fudzilla.)
It’s not far-fetched to think the Softies will be doing some belt-tightening and cost-cutting in these harsh economic times; in fact, in late 2008, the company already was putting the squeeze on new hires in a number of business units.
Microsoft is trying to present itself to customers as a solid bet in uncertain times… as the lower-cost, higher-volume producer which can withstand turbulent market conditions. Laying off thousands of people might make Wall Street watchers happy, but it would send some very negative signals to Microsoft’s partners and customers.
Think this through. Microsoft has a LOT of ways it can trim expenses without actually laying off any of its 90,000+ employees. I’m not advocating that the company do any of these things, but technically, CEO Steve Ballmer & Co. could:
- Cut loose the hundreds of contractors who work across the various divisions at the company
- Consolidate product groups, phasing out less successful projects
- Allow natural attrition to take its course
- Slow hiring, especially in divisions that have been growing like wildfire
- Tighten up the company’s traditionally liberal travel policies
If these cost-cutting measures didn’t go far enough to appease the scorecard-happy bean counters and Wall Street analysts, Microsoft could institute a myriad of other unpopular measures before having to conduct mass layoffs. Again, I am not suggesting the company do any of these things, but it could eliminate Pro healthclub membership benefits; require employees to chip in for their healthcare costs; raise cafeteria prices; and maybe even charge for those wifi-enabled Connector bus rides. (If you think the Softies screamed bloody murder over losing their free towels a couple years ago, think what they’d do if any of these changes were instituted!)
Acknowledging that Microsoft has built some high walls and deep moats around the Redmond fortress doesn’t mean I think the company can’t and won’t ever be toppled. Microsoft has made and is still making a lot of mistakes. It is subject to the same economic forces as every company in the tech sector. But it’s going to take a lot longer to dismantle a company that $60 billion in revenues last year and that has insulated itself with tens of thousands of surrounding partners and customers, than it will to wipe out the whole Web 2.0 playing field.
So might Microsoft announce layoffs this month before the company unveils its second quarter FY 2009 earnings on January 22? Anything’s possible. But if it happens, I’ll be very surprised. What about you?
Mary Jo has covered the tech industry for more than 20 years. Don't miss a single post. Subscribe via Email or
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