Despite public statements to the contrary, Apple did lay off around 50 enterprise salespeople last week, CNET News has learned.
Sources who wished to remain anonymous for fear of reprisal confirmed reports by Valleywag and 9to5Mac.com that roughly 50 salespeople were let go by the company for "business and economic reasons," according to one source. An entire sales group based in Austin, Texas, was let go as well as workers in Cupertino, Calif., where Apple is headquartered. Those affected were given severance packages and the opportunity to apply for other jobs inside Apple.
Apple spokesman Steve Dowling, when asked Tuesday about Valleywag's report regarding the layoffs in the sales group, declined to comment. An unnamed Apple spokesman then told Silicon Alley Insider on Wednesday that the Valleywag report was not true, the same language Dowling used on Friday in a brief interview with CNET News to describe another report that Apple had laid 50 people off in its Mac Hardware and Pro Applications groups as well as the original report involving the sales group.
Reached on Monday, Dowling declined to comment on the situation beyond the statements provided last week.
However, the layoffs in the sales group did happen, according to several sources who were brought into conference rooms in Austin and Cupertino last Tuesday and given white manila envelopes informing them that they had been laid off, amid plainclothes security officers. It's still not clear whether the Mac Hardware layoffs occurred on Friday.
The seeds for the layoffs began last year, when Apple began de-emphasizing its direct enterprise sales force in favor of a sales strategy that embraced resellers and channel partners as ways of getting its products into the hands of businesses. That shift, believed to come directly from Apple COO Tim Cook, started when former the Apple senior vice president of enterprise sales, Al Shipp, left the company. Shipp, now the CEO of software start-up 3VR, did not return a call seeking comment.
John Brandon, formerly the head of Apple's sales for the Americas resellers like Best Buy and Wal-Mart, assumed control of the group when Shipp left and began making changes. Under Brandon, Apple began to shift away from a sales strategy where representatives built personal relationships with business customers in favor of a channel business that will depend on resellers like Ingram Micro and possibly CompUSA to sell Apple products to business customers.
The decision does not seem to have been prompted by falling sales or poor performance within the group, rather a change in philosophy embraced by Brandon and Cook. But the enterprise group has never been the hot group inside Apple, famous for its consumer retail empire and led by Steve Jobs, a man who disdains much of the entrenched corporate IT mindset.
Apple's shift in its enterprise sales strategy isn't all that remarkable, but Apple's willingness to publicly deny that layoffs took place is another blow to its credibility, already having taken a hit this year over its handling of disclosures involving the health of its CEO, currently on a medical leave of absence until June.
Confirming that a few dozen enterprise salespeople had been laid off as part of a strategic shift--and not a downturn in business--probably would not have made that much of a ripple in the tech media, currently more interested in Apple-related topics such as Netbook rumors and Apple co-founder Steve Wozniak's debut on ABC's "Dancing With the Stars" later on Monday.
Although Apple has been considered one of the more resilient companies in tech after posting strong earnings in January, the continued economic decline is believed to be affecting Mac sales and has prompted some analysts to reduce their expectations for Apple's current quarter. Perhaps the company felt that anything that might be perceived as bad news could hurt its stock price, and since it didn't have to report the layoffs to the Securities and Exchange Commission because they made up a small fraction of Apple's workforce, it didn't have to acknowledge them, period.