Microsoft layoffs: Operating systems group chief Myerson's memo to the troops

Microsoft layoffs: Operating systems group chief Myerson's memo to the troops

Summary: The day after Microsoft's announcement that it will lay off 18,000 employees, more specifics are coming into focus, including information about what's happening in the Operating Systems Group.


A day after Microsoft execs announced plans to lay off 18,000 employees, tidbits about what's happening behind the scenes continue to trickle in.

The largest number of people cut are former employees of Nokia who joined Microsoft as part of the company's acquisition of its handset business. But, as I blogged yesterday, a number of other teams and business groups are being hit by the cuts, as well.

The unified Operating Systems Group (OSG), under Terry Myerson, is cutting a substantial number of testers, as well as the Xbox Entertainment Studios team, charged with creating original TV content for Xbox. I've heard rumors some in Windows marketing are being cut, too.

Here's the memo Myerson e-mailed to the OSG team on July 17 announcing the refocusing of the team:

Re: Focusing our team

As Satya shared last week, and we’ve been discussing for almost a year, we are making broad changes in how we engineer products. Thus, today we are restructuring some parts of our team in three areas: consolidating some of our geographically distributed teams, cancelling some projects to increase investment on higher priorities, and changing the ratio of people working across disciplines as part of our new engineering process. For individuals in Redmond whose jobs are impacted, a leader within their organization will have reached out by 11:30 AM PDT today; timing outside of Redmond will vary.

This change is so incredibly hard. People whose jobs are impacted by these changes are our colleagues and friends. The company is offering support, services and assistance during this transition in a number of ways. For those of you whose jobs are impacted by this, I want to thank you for your contribution to Microsoft and our customers, and wish you the best.

It will take time for all of us to adjust to today's announcement, but we can now move forward knowing that we have completed the OSG-wide restructuring in the US today; the process outside the US will be completed according to local law and practices.


The reference to the cancelled projects is partly in reference to Xbox Entertainment Studios, I hear from one of my sources. There are likely other cancelled projects, too, but I don't have information (so far) on what these are. 

The organizational changes Myerson mentions as being completed in the U.S. yesterday are focused largely around decreasing the number of testers as compared to the number of developers, resulting in layoffs of a number of those testers. This "combined engineering" plan, meant to undo the functional management structure that has been in place at Microsoft for the past few years, is new to OSG, but not new to other parts of Microsoft, including the Applications and Systems Group and the Cloud and Enterprise Group.

The changes around test were not completely sudden, I hear. A few months ago, Microsoft changed the job of the OSG test organization, renaming it "Quality," and refocusing the team from writing tests to "measuring quality." That meant the job of writing tests was already moved to the dev team, leaving many of those in the Quality team with less to do -- and clearing the way for the tester cuts.

The other group in OSG that seemingly was hit by some unknown number of cuts were "individual contributors," not product managers, I hear. There also may have been cuts of some in the OSG build team, resulting from redundancies created by the merging of the Xbox operating system, Windows Phone operating system and Windows operating system build teams, some are claiming.

Under CEO Satya Nadella -- who is very focused on "data and applied science" -- new internal development and testing tools are coming. At the same time, there are a number of Microsoft employees who have been working on fleshing out data science teams inside their respective organizations since last year. (I hear Dean Hachamovitch is no longer the Chief Data Scientist for the company, all-up, however; I am not sure who is.)

Of course, how these new processes and tools will affect Microsoft's Windows, Windows Phone and Xbox code and rollout schedules remains to be seen.

Topics: Mobile OS, Microsoft, Windows, Leadership, Windows Phone


Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • Impact on Microsoft marketing

    Hopefully they make deep cuts with the Sales & Marketing teams - they are all lousy! Their marketing simply stinks and I don't think these teams have had any kind of positive impact on Product. Their entire marketing and logistic strategy needs a serious reboot.
    • That's not a reason for layoffs

      It's a reason for firing people. MS needs to sell its product. Whether it has too many people for that purpose or not enough is a completely separate matter. In any case, any blame for ineffective efforts rests with the managers, not rank and file employees.

      But it seems to me that MS' marketing efforts have been hampered of late by management decisions in which the marketeers had no say.
      John L. Ries
  • Usually it's middle management

    Usually it's middle management that bloats over the years and needs pruning. Often executives are unwilling to do it because it's people that have been around a long time that they know.
    Buster Friendly
    • It's a consequence of no-fraternization policies

      People you know are a lot more human to you than people you don't. It's one of the reasons why I prefer small businesses to large ones (in a small business, the boss actually knows the people whose jobs he's abolishing, which forces him to think a lot harder about it than he would otherwise).
      John L. Ries
    • Not this time

      per the article, testers and "individual contributors" (not sure what that means, but a clear allusion to non-management personnel.)
      • Individual contributors have no direct reports

        When I last was at Microsoft:
        * Individual contributors - no direct reports
        * Managers - manage individual contributors
        * Managers of managers - needs no explanation

        The term "individual contributor" has had wide use in the last 10 years (I first heard it from customers, not from Microsoft)
        • Let me translate that for you

          Individual contributors = people who actually work
          Managers = people who work and on top of that are responsible when someone else screws up
          Managers of managers = people who don't and are not
      • yea unknown number of cuts, I hear. That's complete and total fluff.
        Buster Friendly
  • Hopefully, for Microsoft's sake, these cuts in testing, etc..

    will have a positive effect on product and service quality and not the reverse effect of that.
    • Fewer testers make for a better product?

      Really? I think it's true that the marginal value of each tester you add decreases (the law of diminishing returns), but I don't think it's ever the case that hiring fewer testers improves quality (as long as you're not choosing between hiring testers and hiring designers or programmers; and provided you're not underpaying people so you can have more of them). And it's always helpful to design testing procedures for maximum effectiveness.

      Windows is MS' flagship product and is the one it absolutely, positively *must* get right; and unlike things like XBox, it is *very* profitable. MS should therefore spend as much as it needs to do the job right; erring somewhat on the side of too much, rather than not enough.
      John L. Ries
      • Most of the cuts should come...

        ...from closing down the perennial money losers, and then MS should retrain and reassign as many as people from those businesses as it can to parts of the company that legitimately need more people. MS is still a highly profitable company (as far as we know), so it can afford to be loyal to its existing employees (provided they're willing and able to work).
        John L. Ries
        • John Thompson is the Chariman of Microsoft's Board of Directors

          He was an IBMer during the time when Lou Gerstner transformed IBM in the 90s. At IBM, there were both job cuts and elimination of perennial money losers.

          In addition, John Thompson has stated that he does not believe Microsoft is as down-and-out as IBM was in the early 90s. Perhaps that's why perennial money losers were not closed down at Microsoft.
          Rabid Howler Monkey
          • What good does it do...

   keep businesses alive that don't appear to ever be likely to be profitable? "Beating Google" doesn't really seem to be a good enough reason.

            I suppose I should thank Lou Gerstner for encouraging me to switch from OS/2 to Linux, but I've never really felt like it, as it appeared at the time that IBM's refusal to promote and in the end improve its own PC-OS was motivated by a desire to not offend MS.
            John L. Ries
      • More about structure

        I've seen that case but it's more about structure than head count. You can do better with one testing group that tests a wide range products rather than one group per product. With everything networked, you get a lot more problems where two products are working fine by themselves but the interaction has issues.
        Buster Friendly
  • What customers want is a poorly tested OS built by scared people

    I have to say.. I think the "do it cheap and worry about the costs after the contract is signed mentality" that one sees in India based outsourcing companies has come to Microsoft. The testers are not the ones that tried to force a touch system on PC users it was the very people who now are suppose to test their own work. Lets face it managers and programmers will not test the software WE WILL. Watch out IT departments. I would recommend upgrading to Windows 8.1, all the last versions of MS software (not the cloud stuff) that run on your computers and cancelling your contracts to get automatic new versions etc. You will not want to have your staff testing Microsoft tools, because they wanted to save money on doing it themselves. It may be years before we understand what this week will mean to the stability and security of Microsoft Products. If they are cutting costs in testing, the smart money is to save money in upgrading to buggy software. Who thought someone less customer oriented than Ballmer was possible.
    • How did you get THAT out of the article?

      Making a poorly tested OS built by scared people, do it cheap and worry about the costs after the contract is signed mentality?

      Or it could be that instead of having 20 testers working 10 days to get a product out, it's all around better to have 10 testers working 20 days, to get that product out.
      • And then get dinged for lack of results...

        What usually happens is that they are still expected to get the same output in 10 days... not 20.
        • What usually happens

          what usually happens = what I just made up for some pointless argument.
          Buster Friendly
  • We always think

    Everyone seems to have this belief that executives, middle managment, even down to the supervisor level really know who is effective within their teams and organizations and who isn't. Sadly, if your not close to each of these areas or have very poor middle management, the senior execs making these decisions have no clue! Your just a number to them at the very least. And as we all know middle management in any of these large companies is mostly ineffective and at times sadly incompetant. This means for the most part when layoffs occur, they simply cut numbers not knowing the skill, capability or value of the people they let go. Layoffs are managements lazy way of dealing with cost reduction. If any of these executives and managers were worth any of their bloated salaries they earn, they would recognize waste and inefficiency and could probably cut just as much off their budgets from all the wasteful practices that have been employed over the years. yes, labor is normally the highest cost, however they could all trim their bloated budgets first by addressing the waste and inefficiencies before they begin reducing the workforce. Sadly, again since most of these people (execs and middle management) are incompetant in their own right... you won't see this type of cost cutting happening - it takes to much knowledge and thought to get it done. Its easier to simply cut staff. Can't really complain if you are working for one of the larger companies because most if not all have this same scenario playing over and over again. I prefer small business where they have to streamline daily to stay competitive and the management is intimately knowledgable about the people working for them - their value and their contributions.
    • With any layoff, some of the good gets cut along with the bad

      The big problem is that the people making the cuts are usually those who belong to teams that aren't doing any of the real work. Rather, they are planners, analysts, and other scorekeepers who have a vested interest in keeping their little kingdoms intact.

      I would like to think things will change for the better at MS, but I have a feeling that the endless reporting and other busy work dumped on their engineers will remain as is.

      Likewise, the large and arrogant senior leadership team will continue to push on, thinking they are the greatest talent in the company.