Microsoft's Muglia: IT budgets are 'cramped'
For more quarters than I can remember now, Microsoft's server and tools unit has been the company's shining star. While desktop Windows and Office still provide the bulk of revenue and profits, it's the server business that has been the fastest growing of Microsoft's big businesses.
That may continue to be the case, but in an interview on Tuesday, Microsoft's server and tools boss, Bob Muglia, said that the business is definitely feeling the heat from the global economic slowdown.
"Servers are probably growing flat, 1 (percent), 2 percent sorts of numbers," Muglia said, referring to recently lowered industry forecasts. "IT budgets are cramped. It's not like IT is going to dramatically contract, but it is certainly slowing pretty dramatically."
Muglia said the server and tools business will add employees overall during the current fiscal year, which runs through June. But, he noted, the company had been hiring ahead of its targets, so most of that growth comes from folks already hired during the July-to-September time frame.
"Certainly there is no question, Microsoft is not immune to circumstance," Muglia said. "We have slowed our growth."
He still has 150 open positions in his unit, but Muglia noted that is down from more than 900 at one point.
Muglia said the company as a whole and his unit have been looking at where their priorities lie. Among the things he said the company decided to scrap was its paid Windows Live OneCare antivirus software. Instead, he said, the company opted to offer a much more limited (and less costly to develop) free service, currently code-named Morro.
In addition to talking about the economy, Muglia talked a lot about Windows Azure, Windows 7, and virtualization. I'll have more on those topics in a later post.
In the meantime, check out the video interview we shot on Tuesday.
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
I also know for fact that Intel has had multiple layoffs in just the past five years, and several 'mini-layoffs' (in which they simply let huge swaths of contractors' terms expire w/o renewal for the slot) over the past two years. The one in 2007 axed something like 11,000 blue-badges (full-timers), and the one in 2008 (earlier this year) killed 1500 IT positions. Does this make Intel suddenly a worthless corp to work for? 'course not; their internal structure is built for this sort of thing.
Microsoft has likely done the same things, only that (assuming they did) they've managed to keep their attrition to the contractor side of things. Dan would likely know more about that than I.
Apple had its blood-in-the-streets layoffs back in the 1990s, before they shifted gears and went to OSX and ever-increasing marketshare.
Guess it all depends on a lot of things, really.
And last I checked this was an article mentioning the hiring level of Microsoft and in my opinion the current state of its peers in the industry is relevant.
...and yet Intel has none of these problems in spite of near-systemic layoff habits - which is why I mentioned them by name.
So what was your point again? ;)
- by jtjt145 December 11, 2008 1:08 PM PST
- "IT budgets are cramped. " ... Naturally a lot of people will more readily deploying more secure and more powerful Linux servers instead. Did I mention the LAMP-stack is cheaper too? Linux ... the Nemesis of Micro$oft.
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- by MMC Racing December 11, 2008 1:57 PM PST
- Oh, is this finally the decade that Linux takes over?
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