Linux jobs in the United States are booming, up 6 percent since January, according to data from Dice.com. This will come as small consolation to Novell employees, however, which weathered another round of layoffs at the Waltham, Mass.-based company.
According to several sources within the company, and confirmed by Novell's public-relations director, Ian Bruce, Novell last week laid off 100 to 130 people of its roughly 3,900 global employees.
While my sources indicated that the Workgroup division was particularly hard-hit, Bruce told me that the cuts came "across the company, both geographically and productwise."
Novell appears to be doing its best in caring for these employees, offering several months of severance pay, apparently based on the number of years with the company, among other factors.
For those remaining employed there, Novell announced this week that it would be suspending 401(k) matching contributions, which followed on the heels of its formal filing on Monday, to that effect, with the U.S. Securities and Exchange Commission.
Novell has spent the past few years attempting to reinvent itself as a Linux company, and it has managed to string together several quarters with strong earnings in its Linux business on the back of its controversial partnership with Microsoft. The company has struggled to compete effectively with Linux-leader Red Hat.
On November 2, a Novell PR representative contacted me to arrange a conversation with CEO Ron Hovsepian about Novell's "new focus in its strategic direction."
Whether this means more or less open source is not yet clear. It is clear, however, that Novell needs to focus more on top-line revenue growth, and not merely ways to cut costs. Until Novell learns to grow business, and not simply reduce expenses, its employees are going to remain all-too-familiar with layoffs.
Silicon Valley was late to the recession "party," but the global financial crisis is causing companies to tighten their belts, leaving a stretch of Highway 101 relatively traffic-free and out-of-work entrepreneurs with some difficult choices.
A new report from the Joint Venture Silicon Valley and the Silicon Valley Community Foundation, as The New York Times details, indicates a 1.3 percent drop in Silicon Valley employment. That may not sound like much, but if you've driven in Silicon Valley lately in rush-hour traffic, you can see a real difference.
Not everyone, however, is being hit equally:
The report also showed that the gap between the wealthiest and the poorest residents continued to grow. The percentage of households earning more than $100,000 a year rose to 42 percent in 2008, from 35 percent in 2002, while the number of households earning $35,000 or less rose to 20 percent, from 19 percent in the same period.
In other words, venture capitalists and successful technology executives are likely to weather the recession in comparative style, but the fire fighters, janitors, and rank-and-file technology workers are going to feel significant pain.
Importantly, such people really have nowhere to go: many live at a considerable distance from Santa Clara and other primary places of employment, commuting an hour or more to get to work each day. There are few alternative industries in Silicon Valley to absorb technology's outcasts.
This has always been a problem with Silicon Valley's technology-fixated economy, and it's about to get worse. Hope springs eternal in Silicon Valley, however, and clean technology and other cutting-edge technologies will almost certainly spur investment and, hence, jobs. In the long term, Silicon Valley will also benefit from a trend toward the creative class congregating in urban centers.
But that's later. For now, Silicon Valley won't be the land of opportunity for too many that support, but don't commensurately profit from, the technology economy. Move on, Tom Joad. Move on.
Follow me on Twitter at mjasay.
Correction at 1:31 p.m. PST January 31: A much lower figure for the layoffs has been added. My apologies to Novell, though I am glad to hear that the layoffs are much less severe than my source told me).
An inside source at Novell just informed me that Novell laid off a considerable percentage of its workforce on Friday. (That source, as noted above, was wrong. He has been a good source of information in the past, but he got this 100 percent wrong, and I was wrong to post that original number without waiting for comment from Novell.)
The news came in too late to seek comment from Novell on Friday.
On Saturday, Ian Bruce, Novell's public relations director, contacted me to let me know that fewer than 100 people have been laid off worldwide, which represents less than 3 percent of the total workforce.
These Novell layoffs add to the mounting woes of the already enfeebled technology industry, which has seen tens of thousands of employees lose their jobs.
Novell is by no means the only open-source company to resort to layoffs. Sun Microsystems has announced a staff reduction of up to 18 percent, while several of the most prominent open-source start-ups have more quietly laid off significant percentages of their own employees in an effort to achieve profitability more quickly than originally planned.
The leading open-source company, Red Hat, has yet to announce any layoffs.
While it's exceptionally painful and I hate unemployment (from terrible personal experience within my extended family), one thing is clear for Novell: it can and should be doing more with less. I've been saying for years that the company operates with far too much overhead. Novell has long been a meeting culture where some people exist solely to attend meetings.
These layoffs, horrible as they are for the individuals and families involved, position Novell to become a much more agile and tough competitor (and, frankly, Novell will likely need to cut more at some point, in my opinion). Those who have lost their jobs will slowly feed into the various economies in which these people live, including Omniture, Infor, Symantec, and other companies with strong Utah presences (as well as companies in Waltham, India, and elsewhere that experienced the layoffs), and they and these companies will be the better for their presence.
But for Novell, it needed to pare back and force itself to compete lean and hungry.
Why does Google's spate of disclosures in the last 24 hours constitute a positive development? Now we get to see what Google is really made of. You don't earn your corporate chops in a boom. Let's face it. When the profits are flowing, Google could burp, and people would fawn over it. A stock price north of $700 makes everyone look like a genius, and you can go on engineering benders. In a downturn, companies show what they are about.
For me, the clearest indication of this at Google is the shuttering of a range of products, including Google Video (or, at least, the ability to upload new content there), Google Notebook, Google Catalogs, Dodgeball, and others. Google understands that products have to be profitable to persist. Closing out the clunkers is a very good sign for Google's product vision.
At the same time, Google becomes ever more aggressive in its use of open source, most recently releasing an open-source site map generator.
Why does this matter? I think it demonstrates that Google understands that it needs to replenish the "commons" from which it has derived so much value, so as to ensure that open source is a renewable resource. This is a grown-up attribute: thought for the future, not merely the present.
Google already has 69.5 percent of the search market. As it prudently manages growth through the downturn, companies such as Microsoft won't be able to pretend to be unconcerned with data points like Gmail's 43 percent growth in 2008, as TechCrunch reports.
Google, in short, has long won by default. Now it's winning because it's managing its business prudently, not simply throwing ideas at the wall and hoping that a few stick.
I've been competing with Microsoft for years--at Lineo, Novell, and now Alfresco. But I can't get even remotely excited by the prospect of a big layoff at the software giant, with some speculation suggesting it could go as deep as 10 percent of Microsoft's 91,000 full-time employees.
Another 9,100 people out of work is not a good thing, no matter how much you may dislike Microsoft.
I, for one, do not dislike Microsoft, and have profound respect for the company's execution and many of its products. I want to see Microsoft giving Google real competition on the Web, just as I'm glad to see Google forcing Microsoft to innovate on the desktop again. It may well be that Microsoft will be a stronger competitor for pruning its workforce, and I'm a big enough believer in the free market to think that in the long term, the people affected will be better off, too.
But I still don't want to see Microsoft layoffs. Not this Christmas. Not when the market can't absorb the displaced employees. Microsofties have families, too.
Update (November 6, 2008 at 5:10 AM PDT): A Novell spokesman contacted me to indicate the the Google translation is wrong. In fact, no employees were laid off. Offices were closed and employees have been asked to work from home.
Novell laid off employees close to its SUSE home in Germany and Austria, as reported in Silicon.de (Translation here), shuttering sales offices in Vienna, Munich, and Berlin. The number of employees laid off has not yet been made public.
Such layoffs, however, shouldn't necessarily be read as part of a broader cost-cutting move on Novell's part. The layoffs are consistent with Novell's renewed focus on its partner channel, as well as a recognition that empty offices aren't conducive to corporate profits.
In sum, this is very bad news for the employees who will lose their jobs, but it sounds like the right thing for Novell to do.
Several sites are tallying up lists of start-ups that are undergoing significant layoffs. (Interestingly, not much noise on that front is coming out of Europe.)
Every day, we're hearing about yet another start-up (or established technology vendor) laying off workers. This may mean that the companies are battening down the hatches in preparation for a nuclear economic winter, but it also likely means that these same companies haven't been prudently managing their VC investments.
It took Sequoia Capital to describe the obvious: we're in a tight, recessionary economy. But any CEO worth her salt should have seen this long ago. I wrote in February about a pending recession and its effects on open-source start-ups like SugarCRM, but I was no prophet: everyone was talking about a weakening economy.
I guess it took the collapse of a few financial institutions to convince us that we actually have to start treating our companies like businesses, not Monopoly games. Perhaps we were distracted by cutesy Web 2.0 names. More likely, we were distracted by the cutesy Web 2.0 revenue models that are long on marketing and short on substance.
At any rate, welcome to the real world. In the real world, CEOs get paid for vision and holding to a budget. In the real world, companies must be managed well to win. Sure, every so often, there's a Google that grows for years without any apparent adult supervision, but for every Google phenomenon, there's a Microsoft, Intel, or IBM that wins because it out-executes the competition.
The next IBM is likely to be born in this recession. You'll know it because it's the one pumping out profits, not press releases.
TechCrunch is reporting that Jive Software, an emerging collaboration leader, has cut one-third of its headcount. Sam Lawrence, Jive's chief marketing officer, has confirmed the news. Normally this wouldn't be inspiring news for Jive customers and prospects, but in this case I think it's actually a reason to be optimistic if you fall into one of these camps.
Jive is backed by Sequoia, the same firm that recently warned its portfolio companies to manage cash prudently through the downturn. Jive grew at a frenetic pace over the past year--this move is a way to return to prudent, more profitable growth. Jive has been profitable since its 2001 launch.
Jive, while not an open-source company, has dabbled in open source and makes good products. I'm glad to see the company managing its business to survive and thrive in the downturn. Had Jive made this announcement six months from today, it would probably portend bad news. But this strikes me as Jive getting its financial house in order in advance of potential problems.
The only open question for me is why Jive would can its vice president of Sales if things are going well. I've heard that Jive is doing well financially, but you don't fire your sales head when money is pouring in. Anyone have any insight into this?
Embedded in the news that Hewlett-Packard plans to cut 24,600 jobs from its roster in an effort to make its EDS acquisition work, was this interesting tidbit from its call with analysts, as ZDNet captured:
One of the things HP says it wants to offer with its portfolio of offerings--across the board in hardware, software and now services--is flexibility in meeting the customer's demand. CIOs today are dealing with...big issues (like) needing to flip that spending ratio to less on maintenance and more on innovation...And there are choices on how to do it: buy it from HP or let HP do it for you, executives said.
Very cheeky. Though HP makes quite a bit of money from software, its real business going forward is hardware and services. In HP's mind, this means "innovation," and the more of that innovation bought from HP, the better.
In the mind of the CTO and CIO, however, innovation may actually mean open source.
I agree that enterprises should spend less money on licensing and more on tailoring software to specific enterprise needs. Where perhaps I disagree with HP, however, is on the most efficient route to get there. Open source is tailor-made for this sort of value proposition, but HP has traditionally paid more lip service to open source (beyond Linux) than it has actually done anything.
If HP is truly interested in enterprise innovation, let it commit its significant resources to deploying services and hardware around open-source software. No more licensing waste with ever-increasing maintenance fees born of lock-in to a proprietary platform. Just pure value to the customer.
How about that, HP?
Silicon Alley Insider is reporting that Yahoo! is set to cut 1,500 to 2,500 jobs (up to 20% of its 12,500-strong workforce). A list of those to go has allegedly been compiled and turned into management:
The "list" is reportedly the product of a Q4 project in which all group heads were asked to look at redundancies and create their own lists of potential cuts. All the group-level lists have now been turned in to corporate.
Some are suggesting that the cuts will primarily hit Yahoo!'s European operations (arguably the most expensive place on the planet to cut jobs due to severance packages).
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