Microsoft Gravy Train Grinds to a Halt - 19 Dec 2000

According to a report in The Wall Street Journal, Microsoft President Steve Ballmer has asked his employees to "significantly reduce" expenses and return to the "cost-conscious culture that marked Microsoft's early years." The message, which was delivered via a seven-page memo last week, stated that the company was facing economic pressures and would see slowing growth. Ballmer also offered up a list of the seven top priorities for the company, which include Windows, non-PC devices, wireless, the Enterprise, Office, MSN consumer services, and the .NET platform. The goal, he says, is to transition to a wider range of revenue-providing software and services; the company's Windows and Office products currently provide the bulk of Microsoft's revenues. Ballmer says that expanding on the market for Windows and Office is a futile battle against the "law of large numbers." Ballmer was quick to dispel one rumor. "To be clear," he wrote, "resource reductions don't translate into employee layoffs." But, Ballmer noted, Microsoft will "reduce unfilled head count," which translates to about 5000 unfilled jobs at this time. A Microsoft spokesperson told The Wall Street Journal that the memo is "just a candid conversation between Steve and our employees about goals and priorities for the next year. It's not a reorganization; it's not a strategic shift." And though "reality has set in here," Ballmer is bullish on the future. Products such as Whistler (the next version of Windows) and Office 10 are exciting, he says, and the next version of SQL Server--code-named Yukon--will finally provide the long-awaited database file system, as reported previously in WinInfo. But Yukon will also provide the basis for Microsoft's "next-generation ... email and user interface work," a curious addition, suggesting that the Jet-based Exchange system will give way to a data store based on SQL Server. The reference to user-interface work is unclear.