Rumors of employee layoffs dominated Microsoft's week, along with discussion about the short life and brutal death of the company's Kin phone.
Microsoft officials declined to officially comment on rumors that the company is laying off a small number of employees, following the July 1 beginning of the new fiscal year, but online reports and blogs frequented by Microsoft employees both suggested that cuts were indeed under way.
On the blog Mini-Microsoft, a favorite online meeting place for company employees looking to vent their concerns, commenters have been calling out the cuts to various departments. "Like many others, I was not laid off due to performance (I am a strong performer)," one anonymous ex-employee wrote in response to a July 6 posting, "someone else decided to cut many marketing positions to save a little."
Sites such as TechFlash have reported through their anonymous sources that the cuts will be relatively small in number, especially compared with the 5,000-plus employees who were axed in 2009, when Microsoft's revenues sagged in the midst of a global recession. Microsoft currently has 88,180 employees.
However, Microsoft's declining to officially confirm the rumors also makes it difficult to determine the true scope of the cuts, if they are indeed systematic. A company spokesperson told eWEEK in a July 7 interview that Microsoft had added nearly 2,000 employees in the first quarter of this year, further suggesting that any current cuts are less out of economic need than an internal reorganization.
That contrasts somewhat with 2009, when a Microsoft spokesperson said that thousands of employees were being cut to "reduce costs and increase efficiencies" in order to "realign our resources [with] our top priorities." That reorientation also involved cutting many underperforming and legacy programs, along with increased corporate focus on flagship properties such as the Windows and Office franchises.
The subsequent success of Windows 7, paired with a somewhat healthier economy, helped reverse Microsoft's revenue declines. A July 6 article in The Wall Street Journal quoted an unnamed source familiar with the Microsoft layoffs as "consistent with small reductions in staff the company has done in the past."
Microsoft also continued to wrestle with the demise of the Kin, its social-networking phone discontinued on June 30 in the wake of anemic sales and lackluster reviews. Introduced on May 13, the Kin One and Kin Two featured hardware and applications tailored to deliver a constant stream of social-networking updates to the user's phone; however, the devices were criticized for their expensive carrier plans and lack of features, including an inability to download third-party applications and games.
"Microsoft has made the decision to focus on the Windows Phone 7 launch and will not ship Kin in Europe this fall as planned," reads a June 30 statement from Microsoft. "Additionally, we are integrating our Kin team with the Windows Phone 7 team, incorporating valuable ideas and technologies from Kin into future Windows Phone releases. We will continue to work with Verizon in the U.S. to sell current Kin phones."
With Kin dead, the autopsy by various tech-media outlets promptly began. For many, the first order of business was guessing how many Kin units had shipped before Microsoft pulled the plug; as pointed out by sites such as Pocketnow.com, there were 8,810 "monthly active users" of the Kin Facebook application, which can only be used by an actual Kin phone; however, at least a portion of those users could be Microsoft employees, meaning the number of devices actually sold at retail could be far lower.
Other pundits said that Kin's death hinted at a greater dysfunction within Microsoft's mobile unit. If that proves true, then the company could have a serious issue on its hands, as it plans on releasing Windows Phone 7, a total revamp of its smartphone operating-system franchise, later in 2010. Meant to regain Microsoft's market share in the mobile space against competitors such as the Apple iPhone and Google Android, Windows Phone 7's user interface features a series of "hubs" that aggregate Web content and applications into subject-specific categories, such as "Office" or "Games."
"Microsoft did not do an adequate job of differentiating itself from the other vendors and defining Kin's value proposition," Jack Gold, principal analyst of J. Gold Associates, wrote in a July 1 e-mail to eWEEK. "I think they now realize that Windows Phone 7 has to be a big success if they want to stay in the mobile game."