Microsoft could lay off ‘thousands’ as it focuses more on cloud services

Microsoft reorganized its global sales force today to heighten its focus on selling cloud services instead of standalone pieces of software, according to The Wall Street Journal. The reorganization, just the latest in a series of structural changes the company has undergone since former CEO Steve Ballmer resigned and Satya Nadella took over in 2014, won’t immediately result in layoffs. Yet the WSJ reports that thousands of jobs could be cut down the line as a result of the sales shuffle.

This doesn’t appear like it will have a huge impact on how Microsoft does business on a day-to-day basis. Since the appointment of Nadella, the former head of Microsoft’s cloud division, the company has put more and more resources toward building out its Azure cloud computing platform and selling software subscriptions to businesses. This is all part of a steady shift away from one-time software licenses for products like Windows and Office. Microsoft is still playing catch up against Amazon, with the massive success of its AWS business, and now trying to stave off competition from Google and its growing cloud division.

Microsoft says it will now focus on two distinct areas: big enterprise customers, and then small to medium-sized businesses. It’s not exactly clear what changes are in the pipeline, but an email from Judson Althoff, Microsoft’s executive vice president of worldwide commercial business, says sales reorganization is designed to “align the right resources for the right customer at the right time.” The magnitude of the potential layoffs is unclear, but the WSJ says they will likely occur in offices all around the globe.

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Stock price has been down a bit the past month, but I didn’t think Microsoft were needing to let go of talent. Shame.

The stock is up 200% over the last 5 years, and up 11% since the start of the year.

You actually think they re-organize their sales staff over minor weekly variations in stock price lol that’s a busy HR department

Seriously, I just hope they step away from the hardware side of things soon as well. They haven’t had ANY meaningful success in the space aside from Xbox & making pretty looking products.

Meh. I like my surface book a lot lol. If they stop making hardware I’ll hold on to it for a collectors item.

Totally not talking about your individual personal preference but that’s nice to know. The jist of it is they haven’t had ANY meaningful success in making their own hardware outside of Xbox. Meaningful success being akin to breaking into the mass market & selling units comparable to their top 5 competition. The fact is they’ve failed as a hardware company (in comparison to their direct competition) & despite the fact that I like the design of their products or that you like your surface book & will have it as a keepsake, it doesn’t make sense for them to continue down this hardware route. The mass market clearly has little interest in purchasing Microsoft hardware.

Not all products need to have mass market appeal in order to be successful. Look at how "cool" the surface devices are making Microsoft again. They’re not devices everybody needs to buy, they’re supposed to be aspirational and to show that you don’t need to buy apple in order to have great devices.
Given how people are fawning over some of the most expensive surface devices (even though they barely sell) I think that’s working pretty great.

I don’t buy that Microsoft is gunning for aspirational, at all. They’re trying to make a device that succeeds in the mass market. They aren’t some smaller company trying to stand out & be cool. They are a HUGE company trying to stand out & be cool. I highly doubt they are content with the numbers Surface devices are pulling & that the goal wasn’t/isn’t much higher.

I think the ideas/excuses people come up with to dampen the lack of success they’ve been having is akin to exactly what you said, however. Because it’s far more appealing to think of it as them just creating an aspirational device than it is to say/embrace that Microsoft has failed to have any major success in the hardware industry, outside of Xbox.

I’m not making excuses. I’m a huge Apple fanboy, have been using nothing but Apple products in over fifteen years. But the new Surface hardware is there to lure me in. They make me excited. I won’t switch, but it’s clear what they’re doing.
The price of the Surface devices also maken it clear that they are not suppoosten to be mass-market but aspirational. Apple gets away with those prices because you can’t buy another machine with the same OS. Windows is on every crappy sub-$999 machine.

Again, I don’t buy it. I simply think they are piss poor decision makers & have the wrong vision for their company. Time will prove me right/wrong.

I mean, have you tried their keyboards? They’re pretty dang nice…

I think they just had to make their own premium laptops and tablets because OEMs are making crap. Apple always made their own hardware and that is a huge part of their success, imo. Google also starting to do this.
Maybe if they made something like Surface Book when they have introduced Windows 8, it would not fail that hard.

This Microsoft Natural keyboard is mega nice, though.

I love my SP4 too, but I see MS on a path to being pretty much enterprise only.

They have no mobile footprint and the world is going mobile. They’ll still make Windows for desktops/laptops for the people that need them, but that will be a much smaller number and a market with slim profit margins – mostly in enterprise. They’ve put a lot into augmented reality, but Apple is stepping up to enter that world with an army of developers ready to support whatever they put out there. MS doesn’t have a chance to be relevant there either without developers on a companion mobile platform ready to extend into AR.

Cloud, Office, Active Directory, SQL Server, etc will still be good money makers, but I don’t see MS ever catching Amazon on the cloud front.

I would not buy MS stock right now. They are still doing well, but I don’t see a strong future for them. I honestly hope they prove me wrong, but I don’t see it.

Stock price is massively up not down. This move will probably move stock prices up not down (layoffs make prices go up). This reorg only affects sales people or 99% sales people (not sure if you would consider sales people talent).

Sales force != talent…

Yet the WSJ reports that thousands of jobs could be cut down the line as a result of the sales shuffle.

i.e. not just sales…

Microsoft has many thousands of sales jobs, it could just be sales/marketing changes.

It’s been reported elsewhere in internal memos that it’s basically just sales. TBC, I don’t think most people know this but MSFT has like 45k engineers, PMs, and designers .. . and like 60k-70k sales + hr + finance + legal etc.

The gigantic sales force was built up during the Ballmer era and Kevin Turner era. This is just a continuation of Satya trying to steer the ship towards product innovation and not sales people selling things to large enterprises.

No point having good products if you have no-one to sell them…

Never a good sign.

Good thing you’re not running a major company!
Sounds very much like Nadella trying to make more wholesale changes to move away from the "old" ways at MS – much needed.

It’s a shift away from selling individual pieces of software to selling cloud subscriptions. I don’t think it’s a good or bad sign, just a shift.

The concerning part is not the shift to cloud – its the fact that they expect to need a LOT less people selling it.

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