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Microsoft Laying Off 18,000 Employees

Xbox Entertainment Studios, meant to drive original content to Xbox Live, is already dead.

"The first step to building the right organization for our ambitions is to realign our workforce."

No good news can follow a statement like that. Microsoft CEO Satya Nadella announced plans today for the company to lay off up to 18,000 employees.

Most of those layoffs are coming from the recently acquired Nokia, which Microsoft picked up for $7.2 billion just earlier this year. The Nokia division will account for roughly 12,500 of the planned layoffs.

The first 13,000 layoffs will be determined in the next six months. That seems like an unusually cruel amount of time to wonder if your job is going to be around the next day, but so it goes at big companies.

The Xbox division will not be unaffected, either. Deadline reports Xbox Entertainment Studios, tasked with developing original content for Xbox Live, has been shut down before it even really got off the ground. The Halo-related projects, Halo: Nightfall and a planned TV series, are expected to continue.

"Change is never easy, but I believe the changes announced today help us better align with our long-term goals," said head of Xbox Phil Spencer in a memo to employees. "We have an incredible opportunity ahead of us to define what the next generation of gaming looks like for the growing Xbox community. I have a great deal of confidence in this team and know that with clarity of focus on our mission and our customers we can accomplish great things together. We already have."

The first production from the studio, the soccer-themed Every Street United, launched last month.

You can read the entirety of Nadella's announcement below:

From: Satya Nadella

To: All Employees

Date: July 17, 2014 at 5:00 a.m. PT

Subject: Starting to Evolve Our Organization and Culture

Last week in my email to you I synthesized our strategic direction as a productivity and platform company. Having a clear focus is the start of the journey, not the end. The more difficult steps are creating the organization and culture to bring our ambitions to life. Today I’ll share more on how we’re moving forward. On July 22, during our public earnings call, I’ll share further specifics on where we are focusing our innovation investments.

The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year. Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months. It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible. We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company.

Later today your Senior Leadership Team member will share more on what to expect in your organization. Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment.

First, we will simplify the way we work to drive greater accountability, become more agile and move faster. As part of modernizing our engineering processes the expectations we have from each of our disciplines will change. In addition, we plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers. In addition, our business processes and support models will be more lean and efficient with greater trust between teams. The overall result of these changes will be more productive, impactful teams across Microsoft. These changes will affect both the Microsoft workforce and our vendor staff. Each organization is starting at different points and moving at different paces.

Second, we are working to integrate the Nokia Devices and Services teams into Microsoft. We will realize the synergies to which we committed when we announced the acquisition last September. The first-party phone portfolio will align to Microsoft’s strategic direction. To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsoft’s digital work and digital life experiences. In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows Universal Apps.

Making these decisions to change are difficult, but necessary. I want to invite you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will ask any question that’s on your mind. Thank you for your support as we start to take steps forward in evolving our organization and culture.

Satya

Patrick Klepek on Google+
213 Comments
Posted by nophilip

I don't know that we've ever seen a company this big backpedal this hard before. They seem to have abandoned just about everything that was in their original vision for the system at this point.

Posted by JonKrag

Does that mean that the whole ET Cartridges in the desert thing is dead too or was that another production company?

Edited by jimmyfenix

@patrickklepek

Do you think the Quantum break TV thing is dead as well? Game informer said MS were declining to comment on it.

Posted by patrickklepek

@patrickklepek

Do you think the Quantum break TV thing is dead as well? Game informer said MS were declining to comment on it.

I wouldn't be surprised if, at the very least, it was being significantly scaled back.

Staff
Posted by Fitzgerald

Have NPD numbers for June come out yet?

Posted by Baillie

That's a lot of people getting fired. Horrible news.

Posted by jimmyfenix
Posted by Corvak

@fitzgerald: Not yet but what i've heard (from Microsoft itself) is that Xbox One numbers have doubled compared to the May. But people might have held off on purchasing then as soon as the kinectless One was announced.

Edited by mrburger
Posted by joshwent

@jimmyfenix said:

@patrickklepek

Do you think the Quantum break TV thing is dead as well? Game informer said MS were declining to comment on it.

I wouldn't be surprised if, at the very least, it was being significantly scaled back.

Wait... not to get too off-topic, but I was under the impression that the Quantum Break "show" was actually an on disk addition to the game. No?

Posted by SefaRed

...and the vast majority of employees whose jobs will be eliminated will be notified over the next six months.

That's a hell of a way to put it...jeez. I wouldn't want someone to tell me my job is being eliminated.

Posted by leebmx

Christ, the first sentence of that email. They should definitely fire who ever wrote that. Who the fuck 'synthesises' things to other people. What's wrong with 'explained.' or just 'told you.'

Business language is the most horrible, soul-sucking way of speaking, second only to the language of the military.

Edited by HammondofTexas

Microsoft seems like the most bi-polar company in existence.

Edited by Franstone

Buddy of mine that works in the games division got laid off.
Sons of bitches...
That's a shit-ton of people to get rid of.
Was worried for him until it was said that the Nokia division would be most of it.
Just heard the news from him like 10 mins ago.

Boooo

Posted by AlexGBRO

@patrickklepek: i think it should be fine considering that the project was in development for some time, we will get some information at gamescon from ms/remedy

Posted by bored_and_agitated

@leebmx: at least military talk is in the interest of efficiency and clarity, business talk is just to obfuscate and lie

Posted by hohosaregood

They absorbed 25,000 jobs from Nokia. This was on top of about 100k employees they already had. That is a lot of overlap to begin with and they're finally getting around to cleaning it up. This isn't really outside the realm of normal business life. It sucks but it's just the way things go.

Posted by Pie

@joshwent said:

@patrickklepek said:

@jimmyfenix said:

@patrickklepek

Do you think the Quantum break TV thing is dead as well? Game informer said MS were declining to comment on it.

I wouldn't be surprised if, at the very least, it was being significantly scaled back.

Wait... not to get too off-topic, but I was under the impression that the Quantum Break "show" was actually an on disk addition to the game. No?

That's what I thought too. That whole thing is a confusing mess

Edited by bigjeffrey

@joshwent said:

@patrickklepek said:

@jimmyfenix said:

@patrickklepek

Do you think the Quantum break TV thing is dead as well? Game informer said MS were declining to comment on it.

I wouldn't be surprised if, at the very least, it was being significantly scaled back.

Wait... not to get too off-topic, but I was under the impression that the Quantum Break "show" was actually an on disk addition to the game. No?

yeah the show is on disk. Xbox Entertainment Studio was helping out with that portion but seen this tweet from months ago. Very possible that the show portion could be finished. Who knows gamescom next month.

Edited by me3639

A friend and i were discussing MS the other night and i said they were the absolute dumbest company in games. Seriously, why they continue to ignore PC is beyond me. Note to MS, people make all games ON PC. i really thought they were going to introduce a sort of cross play(like Sony) with PC-Xbox one(possible new gfwl store) when announced but instead they wasted their time with kinect(see ya) and this so called entertainment(bye bye). A lot of wasted time and money they will now retrack from lost jobs, but its astonishing how a company,(not really now a days), on how oblivious they are with their products or user base. As Dave Lang said you have to listen to your audience, that would be a good place for MS to start.

Posted by dr_mantas

Somehow I don't care.

Posted by Dreamscythe

Its crazy to me how much money Microsoft wasted on trying to get into the smartphone market

7.2 billion dollars that went practically nowhere, just astonishing.

The first 13,000 layoffs will be determined in the next six months. That seems like an unusually cruel amount of time to wonder if your job is going to be around the next day, but so it goes at big companies.

Its pretty rare to have that much advance notice. Hopefully it will be plenty of time for them to find another job!

Posted by DrDarkStryfe

It is terrible when anyone loses their job, but Microsoft has been running with a terribly bloated workforce for some time. The cuts, in which 12,500 of them will come from Nokia, will still be less than 10% of their global workforce. They are at least giving notice to those affected so that they can start looking for future employment. Too many times do we see people handed a pink slip on a Friday, and that is the end of it.

I am not surprised that Xbox Entertainment got the cut. That was always a Don Mattrick project that was a bullet point in his vision for the Xbox brand. The type of content that they were to create can be outsourced to actual studios for a much smaller cost than running an internal studio.

Posted by RE_Player1

Everyone go back and watch that initial reveal event for the Xbox One. Almost every one of their initiatives has changed.

Sorry to those effected by the layoffs but investing in original programming for Xbox was a dumb idea. Games sell gaming consoles.

Posted by Dark_Lord_Spam

Somehow I don't care.

About Microsoft's bottom line, or about the eighteen-thousand people who now have to struggle to find a way to feed themselves and their families?

Posted by fargofallout

...our work toward synergies and strategic alignment on Nokia Devices...

That has to be one of the most nonsensical phrases I've ever read.

Posted by Draxyle

So the entirety of Microsoft's staff are going to spend the next six months wondering if they're one of the ones destined to be axed? How could anyone work in such an environment?

And business lingo continues to be terrible.

Posted by DrDarkStryfe

@draxyle: They will know relatively soon if their job will be phased out within the next six months; not sit on the edge of their seat until a date six months from now to know they are safe.

Posted by Baltimore

It's the second time I've read that letter from the MS CEO and it sounds like I'm reading the lyrics from Weird Al's new song 'Mission Statement'.

Posted by BD_Mr_Bubbles

@baillie said:

That's a lot of people getting fired. Horrible news.

Posted by Ltwood12

Who the hell says 'I synthesized'?!

Posted by DoctorDonkey

Jesus.

Posted by DrDarkStryfe

I also feel bad for anyone who is trying to get a job or career in tech fields. The job market is now about to get a ton more crowded.

Posted by dr_mantas

@dark_lord_spam: Of course it sucks they lost their job. But Microsoft has been shooting themselves in the foot for the last couple of years, wasting Nokia's potential(they were fucking huge at one point). Maybe just bad luck.

Posted by DeadpanCakes

18,000 is a lot of people. Far more than I can begin to comprehend...

It's kinda crazy.

Edited by TehPickle

I synthesized our strategic direction as a productivity and platform company.

God, and I thought the corporate bullshit speak at my place of employment was heavy-handed...

Synthesized... Synthesized....!

Posted by LawGamer
@ltwood12 said:

Who the hell says 'I synthesized'?!

Microsoft management, apparently:

Edited by Efesell

I mean it would be cold comfort to be sure but at least have a human being write that statement.

Posted by leebmx

@leebmx: at least military talk is in the interest of efficiency and clarity, business talk is just to obfuscate and lie

I don't think that is the case at all.

'Collateral damage' for innocent civilians we killed by mistake.

'Liquidated' instead of murder.

'Neutralise' instead of kill

Friendly fire, surgical strike, 'projectile' instead of bullet or bomb....the list goes on.

The military uses language all the time to hide or mollify its meaning. I will grant you that there is a military code, for use between servicemen, which is about clear, fast communication on the battlefield. However, the majority of the language the military uses in public communication is all about lessening the realities behind their actions.

Posted by hohosaregood

@dr_mantas: Nokia wasted their own potential. They got comfortable when they were at the top and didn't change with the times. It's a story as old as business really.

Posted by Fuzz

@leebmx said:

Business language is the most horrible, soul-sucking way of speaking, second only to the language of the military.

I fucking love that line. It really is too true.

Edited by Sanj

I feel like that entire letter should be in all caps.

FIRST, WE WILL SIMPLIFY THE WAY WE WORK TO DRIVE GREATER ACCOUNTABILITY, BECOME MORE AGILE AND MOVE FASTER.

Anyway, this is awful news. Best of luck to those affected.

Posted by SJQPersonal

@nophilip: TV TV TV TV TV SPORTS TV TV OMG SONY HAS A CONSOLE THATS FOR GAMES WHAT DO WE DO THROW SOMETHING TOGETHER STALL STALL STALL TV TV TV TELEVISION STEPHEN SPEILBERG.

Posted by Quarters

That's like laying off a small city. Holy crap.

Posted by cthomer5000

I don't understand @patrickklepek 's apparent criticism of the 6 month limbo.

Anyone who is going to be among that 18,000 probably has a good idea if they are going to be among those laid off, so the six months to look elsewhere is hugely beneficial (not to mention things like "hey, maybe now isn't the time to buy a house or buy a new car").

No one who has ever been laid off before would say that having more time would have been a bad thing. A truly out-of-the-blue layoff is absolutely devastating, emotionally and financially. I've been there twice.

Posted by SomeJerk

Sucks for the now unemployed, but that's a good move, it shows that they have actual Thinkers in positions that can make these kind of moves.

But I'm not talking about the 12,500 jobs going from the Nokia parts, the company they planted one of their own into with the mission to drive the company into the ground so hard and so fast that they could buy it for a spittle. Get on it, EU investigatiors.

Edited by hollitz

I look forward to Ben Kuchera telling me that this is my fault.

Posted by TheManWithNoPlan

Man... the best of luck to all the people laid off.

Posted by Nime

Always a huge bummer, but absorbing 25k people from Nokia seemed entirely unneeded. Makes sense that the majority of the layoffs are coming from that pool.

Posted by LarryDavis

@jimmyfenix: Those are just live-action cutscenes for the game, I thought.