What you need to know
- Microsoft was recently impacted by another round of layoffs affecting its HoloLens 2 and Azure departments.
- This is despite the tech giant's impressive earnings and rise to become the world's most valuable company, with $3 trillion in market capitalization.
- A leaked email memo suggests that Microsoft is making changes (layoffs) in its Azure department to pave the way for its AI advances and efforts.
Microsoft has been hit by layoffs, cutting across virtually all its departments. At the beginning of 2023, the company CEO Satya Nadella announced that it would cut 10,000 jobs by the end of FY23 Q3. The bloodbath continues with the most recent round of layoffs affecting the company's gaming department. 1900 people lose their jobs across Activision Blizzard, Xbox Game Studios, and ZeniMax Media.
The Redmond giant is in top form and is now the world's most valuable company, ahead of Apple with over $3 trillion in market capitalization. Market analysts predict Microsoft is on the verge of hitting its iPhone moment with AI, consistent with its latest earnings call report.
With the vast increase in revenue, operating income, net income, and more, you'd suppose Microsoft would dial down on the massive layoffs. But this isn't the case. Earlier this week, Microsoft announced another round of layoffs. This time, affecting 1,000 employees in its HoloLens 2 and Azure departments (via CNBC).
Interestingly, a Microsoft Spokesman confirmed that the company isn't pulling the plug on the production of the augmented reality headset and intends to stay the course while speaking to The Verge:
"We remain fully committed to the Department of Defense’s IVAS program and will continue to deliver cutting-edge technology to support our soldiers. In addition, we will continue to invest in W365 to reach the broader Mixed Reality hardware ecosystem. We will continue to sell HoloLens 2 while supporting existing HoloLens 2 customers and partners."
Microsoft's big push for AI might be the problem
As it turns out, Microsoft is seemingly making these changes and layoffs to pave the way for its AI advances and efforts. In a leaked memo seen by Business Insider, executive Jason Zander indicated:
"Our clear focus as a company is to define the AI wave and empower all our customers to succeed in the adoption of this transformative technology. Along the way, we make decisions that align with our long-term vision and strategy while ensuring the sustainability and growth of Microsoft."
For context, Zander used to lead Azure and now runs the Strategic Missions and Technologies (SMT) team. SMT runs point on Microsoft's cutting-edge projects like quantum computing and more. However, the company has seemingly shifted its focus to AI.
RELATED: Ex-Microsoft HR VP reveals why most executives don't take pay cuts to prevent massive layoffs
Consequently, Zander stated that Microsoft intends to halt services in preview, including Azure Operator 5G Core (AO5GC) and Azure Operator Call Protection. Interestingly, Azure's Operator Nexus team will transition to the Cloud + AI organizations' Azure Edge and Platform product line. This isn't exactly new in Microsoft's AI playbook. A few days after the EU antitrust watchdog forced Microsoft to unbundle Teams from Office 365 globally, we learned that the company had transitioned some of its staffers from the Teams Chat app to help with Copilot AI-themed projects.
In a separate report, Microsoft insiders have openly aired their concerns regarding Microsoft's complicated relationship with OpenAI, citing it has turned into an overnight "glorified IT department for the hot startup."
Insiders further indicated that the complicated relationship has negatively impacted Microsoft's AI Platform team, which is central to homegrown AI advances and development.
Unfortunately, this contributed to the loss of one of Microsoft's top executives. Microsoft is reportedly overreliant on OpenAI for most of its AI advances, which has led to the death of products like Azure Cognitive Search, Azure AI Bot Service, and Kinect DK.
