Microsoft to lay off thousands of sales staff, again.

I've been wondering, in print, for months, just how long Microsoft were going to be able to keep up appearances even as their flagship products failed to thrive. With Windows 10 languishing below 27% usage share for yet another month, and the Universal Windows Platform, Edge, Bing, and mobile along with it, it seemed like only a matter of time before the cracks would show. The question wasn't so much "if?" as "when?" And the answer seems to be "soon."

From TechCrunch, via Slashdot:

Microsoft is poised to layoff thousands of employees worldwide in a move to reorganize its salesforce.

A source with knowledge of the planned downsizing told TechCrunch that the U.S. firm would lay off “thousands” of staff across the world. The restructuring is set to include an organizational merger that involves its enterprise customer unit and one or more of its SME-focused divisions. The changes are set to be announced this coming week, we understand.

Microsoft declined to comment.

Earlier this weekend, the Puget Sound Business Journal, Bloomberg and The Seattle Times all reported ‘major’ layoffs related to a move to increase the emphasis on cloud services within Microsoft’s sales teams worldwide. Bloomberg said the redundancies would be “some of the most significant in the sales force in years.”

Microsoft have made something of a habit of July layoffs, but one shouldn't mistake regularity for normality. Laying off thousands of staff every year is not normal, something which becomes immediately evident once you start looking at the reasons behind Microsoft's massive layoffs of the last two years.

Last year, Microsoft announced that it would cut 2,850 jobs — including at least 900 from its sales group, according to The Seattle Times — having two months earlier said it would let go of 1,850 staff related to its smartphone business. In July 2015, it made 7,800 job cuts and wrote down $7.6 billion of its Nokia acquisition.

Assuming that this year's round of layoffs happens as expected, this will be the third time in three years that Microsoft have responded to failure (first, their smartphone struggles; second, their smartphone division's ultimate failure; and now, their lack of an effective strategic focus) with massive layoffs. This is why layoffs normally happen in troubled organizations: to reassure shareholders that the troubles are only temporary, that the organization is committed to "controlling costs," as part of their drive to "return to profitability," which always strikes me as odd. It's as if they're tacitly admitting that they can't actually grow, and can only realize profits by cutting costs.

I really can't stress enough how unusual it is for a corporation of Microsoft's size to feel the need for massive layoffs in multiple consecutive years. Successful firms do not do this, or need to do this -- their successes speak eloquently of potential profits, all on their own.

Also, Azure seems to be thriving, in exactly the way that Windows 10 isn't. From The Stack:

Azure has been performing well, with revenue growth almost doubling during the third quarter and 93% sales growth. However, as the service continues to face strong competition from the likes of Amazon Web Services (AWS), Microsoft is eager to channel its efforts into the booming cloud market.

Microsoft still trails AWS, which generated $3.7 billion in revenue in 2016 – placing it far ahead of the next five big cloud players.

In a recent research note, analyst Brent Bracelin forecasted that Microsoft Azure could overtake AWS in revenue this year, which would see it take the lead position for the first time. Bracelin commended Microsoft for ‘unmatched product depth and breadth.’

While I think that forecast is overly optimistic, the point remains that Microsoft's shift of sales focus to Azure makes sense, since Azure is the one Microsoft product that's arguably succeeding. That doesn't necessarily mean that they should downsize their sales efforts in other areas, though... unless their efforts in those areas were not yielding returns commensurate to their expense. And it's at this point that one must remember that the main focus of their sales and marketing efforts for the last two years has been Windows 10 and its by-products, almost exclusively.

Shifting their corporate message from "all Windows 10, all the time" to one that's more focused on a push to catch up to Amazon Web Services could be a smart move, but only if Microsoft as a whole shift strategy from one that relies on leveraging a nonexistent Windows 10 desktop monopoly into dominance in other areas. If their overall strategy doesn't change, then it's tough to see how much it will mean for them to catch Amazon in the cloud computing space.