Microsoft said they were sacking 1,400 people across the entire company, yet a disproportionate number of those cuts fell upon the (relatively) small gaming group. What gives? Did somebody piss in Steve Ballmerâs coffee?
In the literal sense, no, but somebody looking at Micosoftâs research & development budget may well have exclaimed âoh man, the entertainment & services division is sure pissing in everybody elseâs coffeeâ.
Look at this graph. It shows the R&D spending across the entire company in the six months leading up to December 31, 2008. Now look at the far right. Look how much the entertainment & services division (the Xbox, Games for Windows, Zune & Windows Mobile guys) blew through.
They spent more than the Windows guys! Who were working on Windows 7! And nearly as much as the server & tools crew! This despite the fact the E&D team is small compared to those other two, and contributes bugger-all towards Microsoftâs overall bottom line (only $329 million of the companyâs $6.2 billion).
So if costs needed to be cut, and you were doing the cutting, and you looked at that expenditure, youâd know a good place to start.
Before you all go blaming some mysterious Xbox portable, the rumoured 360 waggle or even the Zune, itâs worth noting a fair whack of that increase in spending was due to Microsoftâs acquisition of the guys behind T-Mobileâs Sidekick. That meant more people working on more R&D, which increased the spending proportionately.
So, there you have it. One good reason (one out of a few) why the axe fell on the E&D group. All that spending with so little return made them the first, and most obvious target for some enforced belt-tightening.
Before cutbacks, R&D soared in Microsoft Entertainment Division [TechFlash]
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