Menu
Product needs, not profit, drove Microsoft layoffs, exec says

Product needs, not profit, drove Microsoft layoffs, exec says

CEO Nadella was determined to increase investments in new technologies like IoT

The biggest headcount reduction in Microsoft's history was driven by a need to invest in new technologies rather than the company's bottom line, according to an advisor to CEO Satya Nadella.

"Any student of the history of the tech industry will see that the mistake companies make from one generation to the next is not taking spend off of legacy products ... and putting it on new things fast enough," said Jeff Teper, Microsoft's head of corporate strategy, at a financial analyst conference.

He didn't mention Nadella's predecessor by name, but Steve Ballmer was often criticised during his tenure for failing to react quickly to opportunities in search, social networking and mobile. Those were mistakes Nadella wanted to avoid.

From the start, the new CEO said he wanted to "double down" on emerging trends like IoT and invest more in new technology than the company's financial models would allow, according to Teper, whose team supports Nadella and the rest of Microsoft's senior leadership.

Nadella and CFO Amy Hood then sat down to see how they could free up money to invest in promising new technologies, and the layoffs were one way to do that.

The job cuts "weren't really motivated by [earnings per share] optimisation," Teper said during a question-and-answer session at the UBS Global Technology Conference.

Nadella announced the plan to lay off 18,000 Microsoft employees, or 14 per cent of its workforce, at the start of the company's fiscal year in July. After three rounds of layoffs, most of the jobs have now been cut.

Teper also said Microsoft has a "broad pipeline of new mobile first experiences coming out", similar to its recent decision to unlock editing features for the free Office apps on iOS and Android.

In fact, a big part of Nadella's strategy to boost Windows Phone's dismal market share is to continually improve the company's applications across all platforms and devices, according to Teper.

In that sense, Microsoft now views mobility from a broader perspective, beyond the confines of Windows. If more people grow to love Office on other platforms, the theory goes, they'll be more likely to come back to Windows devices like the Surface Pro 3 and Nokia smartphones.

Teper recalled that Microsoft released the first version of Office for Apple's Macintosh computers in the early 1990s, and now Microsoft is turning back to that approach for mobile.

"Satya has emphasized the challenger mindset: let's get people to love our products and that will pull them back to our platform," he said.

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

Subscribe here for up-to-date channel news

Follow Us

Join the New Zealand Reseller News newsletter!

Error: Please check your email address.

Tags business issuesMicrosoftsoftwaremobileinvestmentsinternetrestructuringMergers and acquisitions

Featured

Slideshows

Tight lines as Hooked on Lenovo catches up at Great Barrier Island

Tight lines as Hooked on Lenovo catches up at Great Barrier Island

​Ingram Micro’s Hooked on Lenovo incentive programme recently rewarded 28 of New Zealand's top performing resellers with a full-on fishing trip at Great Barrier Island for the third year​ in a row.

Tight lines as Hooked on Lenovo catches up at Great Barrier Island
Inside the AWS Summit in Sydney

Inside the AWS Summit in Sydney

As the dust settles on the 2017 AWS Summit in Sydney, ARN looks back an action packed two-day event, covering global keynote presentations, 80 breakout sessions on the latest technology solutions, and channel focused tracks involving local cloud stories and insights.

Inside the AWS Summit in Sydney
Channel tees off on the North Shore as Ingram Micro hosts annual Cure Kids Charity golf day

Channel tees off on the North Shore as Ingram Micro hosts annual Cure Kids Charity golf day

Ingram Micro hosted its third annual Cure Kids Charity Golf Tournament at the North Shore Golf Club in Auckland. In total, 131 resellers, vendors and Ingram Micro suppliers enjoyed a round of golf consisting of challenges on each of the 18 sponsored holes, with Team Philips taking out the top honours.

Channel tees off on the North Shore as Ingram Micro hosts annual Cure Kids Charity golf day
Show Comments