Here’s the official word on the long-rumored layoffs at Microsoft, courtesy Todd Bishop at TechFlash:
Microsoft this morning announced earnings well below its previous estimates and said it will be cutting 5,000 jobs over the next 18 months to adjust to the new economic reality, including 1,400 positions today. The company isn’t saying how many of the cuts will come in the Seattle region.
The company said in a news release that the cuts will be made across research and development, marketing, sales, finance, legal, human resources and the information-technology department. As part of the announcement, the company took the unusual step of withdrawing its previous earnings forecast, saying it can’t predict results accurately because of market volatility.
For the record, 5,000 jobs would be roughly 5.5% of their latest-reported headcount of 91,259.
Update: Mike Simonsen of real estate research firm Altos Research has a brief post up on his blog about how he feels the MS layoffs will effect the Seattle real estate market.
You’re watching the last leg of the stool being kicked out. The tech industry held out longer than most this time around. In the first half of 2008 many of the highly compensated and generally well-financed people in the tech industry were keeping prices steady in the most desirable neighborhoods of the Bay Area and Seattle (notably waterfront properties). Then as the stock markets declined in the second half of the year, we lost a lot of down-payment money. Finally this crew is now worried about basic monthly income.
Good luck to those being downsized. There will be those saying that is not that big a percentage of their total employees but that is a lot of jobs cut from this area. The majority of these cuts will be in Seattle area as that is where the vast majority of their FTEs are located. This just mentions actual MS employees. How many contractors? I know of several already let go the past few weeks.
Here is what a blogger has to say as the reasons why this is happening. Claims to be inside MS:
From an MS IT guy, here is the issue:
1) Vista sucks.
2) Apple’s Kungfu is strong .. ie Mac’S OS and consumer products are drawing in programmers.
3) Virtualization is reducing MS licenses as coporations reuse licenses as virtual machines.
4) Wii is beating XBox.
5) MS announced Windows 7 and so corporations are waiting for 7 and will not move from XP to Vista.
6) Balmer is not a visionary person but a salesguy. Not the person to lead new development.
7) Corporate is holding off on IT spending except on replacement and storage costs.
8) MS is getting their lunch taking in search by Google.
I assume Mag44 will respond to post number 1 with some words of wisdom.
What effect will this have on rents? on real estate prices in Redmond?
1. Have you used Vista? I have and it works.
2. In the business world, where sales matter, Windows still rules.
3. The point of VMs is to save money on hardware, not licensing.
4. Xbox 360 has sold 17 million units or so, hardly making it a failure.
5. True.
6. Seems reasonable to me.
7. Also believable, though all tech cos are facing this.
8. Search is negligible to Microsoft in terms of profit; their cash cows are still Windows and Office, both of which still have over 1 billion users worldwide.
The decline in Microsoft’s sales has very little to do with the loss of market share and everything to do with the decline in the economy. Companies like Apple and Google are even more vulnerable in many respects. Apple is focused on high-end premium products, which will get creamed as consumers retrench spending, and Google’s advertising dollars are going to dry up (and already have been) as spending crashes.
As I’ve outlined in my podcasts, we are entering a phase of massive deflation, and global economic contraction, and this is just the tip of the iceberg.
http://msurkan.podbean.com
Jason,
8. The buggy maker was happy until people started driving cars, I don’t think MS wants to ( or is ) looking to rest on their laurels.
Sniglet, for once I have to disagree Apple to date including today is kicking butt now going forward who knows.
The Apple store and the LEGO store were the only ones *really* hopping at Bellevue Square during the holiday shopping season.
Oh, and count us among the consumers who have recently switched from PC to Mac — and we’ll never, ever go back.
Is it true that MS has 65,000 contractors? Are they trying to google thing of not renewing their contracts?
Sniglet- Once again, you’re right on.
AAPL is nothing more than a high end retailer. I put it in the Nordstrom basket of companies. They are going to get creamed moving forward.
MICROSOFT MESMERIZATION
Hey, I know you bloggers that depend on MSFT’s profitability criticized me for predicting the layoffs last fall, called me Dr. Doom….but let’s be pragmatic for once. VISTA is a failure. I know, you pink pony MSFT enthusiats will say I’m wrong; but the American consumers basically all agree with me anyway and they’re the only one that matters when it comes to buying something that’s useful and necessary….hype is just hype.
In my humble opinion, ever since Windows 98, the gas got let out of MSFT. My neighbor [he works for MSFT HR] tells me MSFT won’t hire U of W engineers, they’re “subpar” he tells me…..lol
But all those cheap H-1Bs replacements insourced into Seattle from India, etc; since the Windows 98 peak aren’t subpar? Give me a break. Its time MSFT hired a real vice president with technical credentials; no they hired a foreign social science degree…lol
Sounds like their HR department needs to layoff, they seem to be the root cause reason the company’s stock nose-dived 50% [hey, this sounds a lot like Enron if you work for MSFT and your stock based retirement is becoming more and more worthless as time goes on].
“1. Have you used Vista? I have and it works.”
I think we are talking about corporate IT adoption here and Vista is categorically a failure in this space.
Yesterday Apple posted $1.6Billion profit for last quarter with ~5% growth. Not saying they’re bulletproof, but they’re fairing better than most thus far.
Vista: Blech. I bought a new laptop recently, a Thinkpad with 3GB of RAM. It came with Vista Home Basic. I gave it a chance for as long as I could, but I only lasted about a month before I finally got fed up with it, wiped the system, and installed XP. So much better now.
If you read the announcement, the official tally is 5,000 layoffs in the next 18 months but only a net loss of 2-3,000 jobs given there will be some rehiring
I think the net number is a more fair assessment of what will be happening.
As for apple’s 6% growth – I don’t think it is much of an either/or with Microsoft (really they only compete substantively in laptops – and every one of those that buys office makes MS a ton of money) – and that growth compares to a previous YoY growth trajectory of 24% and 25% for 07 and 08 – so I would say their growth is slowing precipitously. One can probably expect it will only take a couple quarters before they are shrinking.
Not trying to be a hater, it’s just that the trend is pretty obvious
Tim –
Install Windows 7 beta on a partition w/dual boot. You’ll be glad you did. It’s quite solid, much faster, and much less of a resource hog. Everything seems to run on it that I have tried thus far.
5,000 or 2-3,000? The significance is that it’s a start.
The door many though would never open has been opened. The river has
shifted in its banks, and is beginning to wash away the foundation.
We had Vista on my wife’s laptop… while it doesn’t give us blue screens of death (so technically, yea, it works)… it takes perfectly good hardware and drags it into the mud.
I guess it’s not so much that Vista doesn’t work….
It’s that Ubuntu and XP work so much better… on the same hardware…
And for the life of me, I’ve not been able to find any “new” feature that Vista provides that is valuable enough to keep it on a machine over the other choices.
The eastside real estate market is going to take a hit for sure. It’s not just the 5000 jobs lost, it’s the trickle down effect of all of the businesses that support Microsoft, their employees, their $250 salon visits, their kids’ piano lessons, and lets not forget restaurants and retailers.
People will undoubtedly do whatever they can to save their homes, but without steady income, will hand over the keys to the bank and the overall housing market will decline. Rents on the eastside are already cheap in comparison to housing values, so I wouldn’t expect much of a dip in rents, maybe 10-20%. As I said in an interview in this week’s Puget Sound Business Journal ( http://twurl.cc/dcw ), house prices could go back to 1999 levels, dropping 50%.
softwareengineer. The HR person is not very well informed on the U of W. Microsoft actually hires (or did) 75% of all technical people that come out of northwest schools.
softwareengineer. The HR person is not very well informed on the U of W. Microsoft actually hires (or did) 75% of all technical people that come out of northwest schools.
—–
I’ve heard from two HR people at MS (one recruiter and one in HR) that Microsoft places a lot of value on school pedigree. I don’t know if it’s to the extent that they don’t hire from certain schools, but both people have told me MS goes to great lengths to attract those from brand name schools.
Do people not learn. It was obvious microsoft was gonna have layoffs to protect its bottom line for investors. But people were in denial. Now people have just shifted their denial to Apple.
Microsoft’s biggest mistake is that they are operating in the midst of a recession. and soon that will also be Apple’s biggest mistake. If your even gonna try to compare microsoft to apple, I’d argue microsoft has a much larger base of manufactured necessities (business product licensing) than Apple, so I’m guessing Apple is going to fall much further than MS during this recession. Name me one product by apple that has a large base of users/companies that consider the product a necessity for survival?
I think this is on the optimistic side. I am looking for a greater than 80% price decline in Puget Sound median prices by the time we hit bottom. This is a flat-out global deflationary depression we are headed into, and our region is going to be hit just as bad as everywhere else.
As I’ve mentioned earlier, I’ve outlined why deflation is unavoidable in my podcast.
http://msurkan.podbean.com
I’ve been running Ubuntu since 07 and XP in a VM only when I really really need it, which is rarely. Ubuntu has not missed a beat since I’ve been using it.
I’m even more bearish on Microsoft than I am on Seattle home prices.
MSFT:
- makes buggy software
- ignores or responds poorly to huge trends like Software as a Service/Cloud Computing that will eat into its margins and market share
- innovates slowly, when at all
- has a brand perception not much better/different than the PC guy in the Apple ads (main difference is the brand perception is much more arrogant than PC guy)
- doesn’t “get it” — is culturally too big/entrenched to realistically see itself and its market position
Microsoft has probably done more to drive up real estate values in recent decades than any other factor. The “Microsoft millionaires” aren’t going anywhere, but there aren’t going to be many new ones.
I have little sympathy for people who bught more home than they could afford or helocd themselves into the same situation. I have huge sympathy for people being laid off. It’s a tragedy in a good economy, it’s a disaster in a recession. A sincere good luck to the unfortunate.
That said, from a housing price perspective this will for sure speed-up and deepen the decline and prick many person bubbles on the immunity status of WA state. Add up the announced layoffs by MS, Boeing and WaMu and you have the opposite of what the realtors in WA has been touted as the reason to why we have the extreme prices we have and why they will continue to rise. By this I think everyone of the bullish factors have been erased and proven wrong. Not that we at the Bubble didn’t already know but now it’s common knowledge as well.
I think people will look back in 10 years and say the Vista debacle was what killed Microsoft. It had all of the hallmarks of dysfunctional software development, five years, tens of thousands of developers and staff, initial huge feature creep then panicked feature removal, poor quality initial release, bad press and sales flop. Their problem is being trapped by their own success earlier in life. Apple is able to innovate much better in the OS space because they are willing to tell legacy users to go to hell every once and a while. MSFT won’t/can’t make clean breaks and it shows in their awful architecture at this point. The registry should have been removed years ago, last I checked they had not solved DLL hell (but it was getting better), every API has about 5 flavors which branch on the OS and sometimes service pack revision, etc. Its a nightmare of tangled garbage and its amazing it works as well as it does (which is not that well).
Eh, I doubt Vista will “kill” MS any more than Windows ME did.
WHat goes up,
Apple is kicking butt? 4% web desktop users are apple. WOWOW!!!! what market share.
I will give one thing to apple they only have 800 people working on Mac OS, in the meanwhile MS has a huge number.
Ive always used Windows until a couple months ago when I decided to replace my personal PC with an Apple Macbook pro. I was tired of my Windows machine crashing and since I already had an iPod and everything loaded into iTunes anyway I decided to switch to Apple.
I’ve been VERY happy with my Apple computer! The hardware is far better than any computer I’ve seen from Dell or any other manufacturer. It seems since Apple controls the hardware as well as the software the functionality of the product is much better!
One of the best things also is that I don’t have to worry about Microsoft’s security issues!
The computers may cost more but in my opinion, they’re worth it!
DJ is right on with windows 7, even though the 5 second boot hasn’t been observed yet on the machine that I tried it on with quad core, but its faster, and less resource hog then Vista.
Interloper, the comments about cloud computing btw are incorrect, there are a ton of start ups right now working with MS cloud computing and are doing great, one company I am on the board of is going hard with MS into it as well.
MS still has 90%+ desktop OS share and will still have it for the foreseeable future.
Now I hope layoffs brings down the house prices a bit…
Maybe MS should try to fee the free sodas and pro club rather than firing all these people..It seems they are spending $20million for free sodas a year.. Budgeting above 20 million a year just in Seattle for pro club admissions and spending around $27 million a year for shuttle service and green connectors.. Unbeleivable!!!
“What effect will this have on rents? on real estate prices in Redmond?”
I don’t think that Redmond will be hit harder than anyother area of Puget Sound. MS employees have always seem pretty spread out across of the region.
Here’s one point.
Over the years I’ve met people who move to the Northwest thinking that one day they’ll get their turn at MS or Boeing. They take any job they can get even if it’s out side their field of study and wait.
Now with lay offs at both, I wonder how long before people who have moved here over the last five years will begin to leave. The job prospects may not be that good in (fill in the blank) but at least back home they have family.
The employee situation is bad for those impacted, but with the rehiring is not as bad as it could have been (net 2,000 to 3,000 worldwide over 18 months).
Contractors are being hit harder.
“That’s on top of the numbers we’re talking about, and that could be down up to 15 percent.”
http://www.techflash.com/Microsoft_planning_deeper_cuts_in_contract_work_force38142829.html
one more thing,
I hope MS lay offs gets a good run on the 24 hour cable news along with the major broadcast. Maybe we’ll start to see a decline in populatin growth sooner than later.
Someone emailed rental agents to suggest that they lower rent prices on townhouses and houses in Queen Anne. She posted the responses on Craigslist:
http://seattle.craigslist.org/forums/?act=Q&ID=113939095
MSFT could of course be a lot better, but they do a lot right. They’ll likely continue to do very well in a diminished capacity. I’ve been looking forward to their layoffs, to put further downward pressure on Eastside house prices. In the meantime I hope I don’t have to spend all my savings just to survive. I’m interested to see how they will circumvent the rule that says they have to get rid of H1-B workers first; anyone know?
That’s bean counter thinking. Consider the possibility that they make a profit off those bennies.
Let me preface this by saying, no, I don’t work for Microsoft….
I’ve been reading about the demise of Microsoft so long that if I wasn’t keeping track I’d have to believe they’ve gone out of business dozens of times by now. Let’s see, first it was Unix, then Apple, then Linux, then Apple, then internet PCs, then Apple, then netbooks, then Apple, then connected home game consoles, then Apple, then Google apps, then Apple, then….
It was news today that their profits fell to only 4.17B for the quarter. In these days of trillion dollars this and trillion dollars that a few billion sounds like chump change, but it isn’t.
Microsoft is doing just fine, thank you, and based on their history betting that we’ll look back on today as the death knell of them is like buying a Puget Sound house at peak: seemed like a good idea at the time.
“the rule that says they have to get rid of H1-B workers first” Is this law or an MS policy? Policies are only used against employees when it serves the company. If it doesn’t serve the company the policy is worth zero but if it’s law it needs to be adhered to.
The immdiate cuts of 1500 today hurts. But the remaining 3500 cuts to come will cause a far greater number of employees to hold off on major purchases.
Law, AFAIK. One thing that’s been hammered home the last 8 years, however, is that for every law there’s a loophole. Surely MSFT has found a way to keep the lower-cost H1-B workers.
“Surely MSFT has found a way to keep the lower-cost H1-B workers.” Is it state or federal law? With the new government in place many of those loop holes might be closing.
“Oh, and count us among the consumers who have recently switched from PC to Mac — and we’ll never, ever go back.”
The Mac stuff is overpriced. Moving forward, I think they’re going to have to lower prices, or lose market share. Luxury items are getting hammered, and Apple is the luxury model- at least when it comes to laptop computers. I had wanted a MacBook, but the price proved too expensive (at least in terms of what I was willing to pay), so I went with another PC. It was like half the price.
A nice Dell is half the price of the low end Apple….its a no brainer for middle america.
Lets do some math. Out of the 1,400 cuts today, 872 are from the PS region so that’s about 62%. The net job cuts are supposed to be 2 – 3,000 so the net loss to the region, assuming the same percentage from today applies over the next 18 months, will be 1,246 – 1,869 jobs.
I don’t think anyone would argue that this climate would drag down home prices in NORMAL market. This should indicate that not only will the bubble part of the prices be wiped out, prices will likely go below the historic norm. Perhaps far below.
If PC’s that cost half of a decent Apple product are such a great bargain, then why do all the PC users always complain about their computers. As we all should know, there is a wide gap between “cost” and “value”. Although Apple commands a higher price, more and more people are willing to pay it as they deem a Mac to have more value than a PC.
Its official. Seattle is no longer special anymore. The recession/depression has come home to roost. Many many people were holding on to bubble era prices thinking something, anything just might turn the economy around. The govt bought out fannie and freddie dumped billions on the banking system and lowered interest rates to almost zero.
Guess what people. That might have helped from taking us down into a full blown depression (Sniglet would disagree, i think the jury is still out on that). However, we are in the middle of the worst recession worldwide since 1930. Housing prices are going to crash locally back to 1999/2000 when all this is said and done.
IF you really want/need to sell you house you better do it right now by pricing it right. In this economy, I don’t know many people who are willing to take on a 300K plus loan IF they can get the financing. As time goes on and the layoffs get deeper and houses start getting cheaper and cheaper, you can bet your last dollar, the competition will be extremely intense to sell fast.
I for one am extremely glad I am renting and don’t have an immovable leveraged asset that I might have to sell at a price where it wipes out all my life savings.
Even if we assume it is a better value, fewer and fewer are going to be able to pay the premium.
It basically the same reason home prices are going down. The average joe still thinks it would be great to buy a house and buying is way way better than renting and yet house prices are tanking. Willingness is irrelevant if there is no ability.
Dave @ 48: “why do all the PC users always complain about their computers”
Uh, that’s a bit of an overstatement.
“If PC’s that cost half of a decent Apple product are such a great bargain, then why do all the PC users always complain about their computers. As we all should know, there is a wide gap between “cost” and “value”. Although Apple commands a higher price, more and more people are willing to pay it as they deem a Mac to have more value than a PC.”
Baseless rhetoric. I’ve never once complained about my year old Toshiba. And, in fact, I haven’t heard anyone I know complaining about their PC’s. Of all my friends and acquaintances, more than 90% choose PC’s. I defy you to show where “all the PC users complain about their computers” and “more and more people are willing to pay as they deem a Mac to have more value than a PC”. You can’t, because as I said, it’s nothing more than baseless rhetoric. As Joel has accurately pointed out, it’s simple economics, and Apple is going to get burned if they don’t drop their prices. There aren’t enough wealthy individuals to sustain that market without the old handy HELOC.
Also worth noting is the fact that Microsoft employment in Washington State still pales in comparison to Boeing.
WA employees
Boeing: 74,026 (46% of total co. headcount)
Microsoft: 40,797 (43% of total co. headcount)
Heck, even throw in Amazon in there and it’s still 31% fewer total employees than Boeing.
Amazon: 10,250 (assumes 50% of 20,500 total co. headcount)
And don’t forget the massive number of smaller contractors and suppliers Boeing supports around the Sound. For better or worse, Seattle is still largely “Jet City.”
Apple has shown they can mass launch gorgeous products across a swath of prices from low to high,. So far, they haven’t released a customizable tower as to not cannibalize their own pricey Mac Pros. But if they do get into the cheap tower space, then MSFT will really have something to cry about, because the Mac OSX is growing. I know several people that work at PC-heavy firms but use Macbook Pros with emulators. They never want to go back.
Its a lot easier to hang onto your ipod, itouch, or iphone through a depression than a house. Consumer tech will do fine. Mircosoft definitely has a vision problem, and has from the beginning. Gates stole the PC concept from Jobs, then they totally missed the internet, and knee-capped Netscape because of it. I know some cool people work there, and I also know some real suburban, uber-corporate dinosaurs there as well. That company is very anti-individual, and Ballmer at the top? Please. Chuck that guy. Half of Gates’ philosophy was overpowering your competitor, and had nothing to do with imagination. Buh-bye MSFT.
All The libs are gonna move to DC, and change will be East Coast driven.
California will get the most bailout money in the West. Seattle is gonna die a horrible death.
Glad to see market dynamics punishing imitators and rewarding innovators like Apple. That is how it SHOULD work.
Expect a LOT more MS layoffs in the next couple years.
MS has had their day…they are an empire in decline.
I looked further into this. Seems it is federal law that an employer cannot discriminate based on citizenship status. So a company that kept all H1-B workers while laying off a mass of US citizens (or vice versa) could be subject to a Justice Dept. investigation (e.g. search for “Layoffs at Sun prompt inquiry over H-1B visas”). They could just get a slap on the wrist too.
geez, the Mac huggers are sprouting out from all directions. To be honest I pretty much despise both Mac and MS; one word, linux. But if I had the choice to throw either MS or Mac into the great abyss, it would easily be Mac. And the only reason is the small annoying population of darn Mac huggers they’ve produced; just meaningless casualties.
Who here works/worked for Microsoft? I have. They ought to start by cutting 2/3’s of that MID-Level Management!! You know the ones who’s responsibilities include:
1. Carrying a laptop around to 4 semi-meaningless meetings a day
2. Shooting pool
3. Taking 2 hour lunches
4. Yelling at peons about virtually meaningless items (usually in the form of an email from their office to make it look like they are doing something important to justify why they have that office)
The 2nd group I would cut out are those H1-B visas. I don’t know what Obama’s stance is on that but unfortunately we all know where Bush stood and yes many Democrats as well. And not long ago (former)CEO Bill Gates was whining(lobbying) in Wash D.C. that we needed to have the H1-B Visas “uncapped”.
Finally, I would like to say I have a dual boot of Ubuntu and VIsta. Although Ubuntu is still a bit buggy, I use it more and seems more user friendly.
I think most PC consumers are/will be moving to OpenOffice because its FREE, eventhough it is not of the quality of MS Office.
Thats just my 3 cents.
Consumer tech already is already doing badly. Being able to keep an ipod is not very important because that business is based on teenagers and college students buying the latest and greatest every 6 months to a year. Just like the housing market was going up based on people moving up the housing ladder every few years.
I’m amazed at the people that can fully understand why housing is doing poorly, but cannot see the same principles at work in other industries. I guess if you’re a rabid fanboy then reason just does not apply.
“Mac is better than PC” – yeah, and I remember BETA being better than VHS.
One word – economics. As much as I like Apple, they are too much higher priced than competitors and in this environment they’ll announce much lower sales soon.
Of course, we will blame it on Job’s absence.
office live and msn live is merging. Some were cut from these groups including contractors.
“Who here works/worked for Microsoft? I have. They ought to start by cutting 2/3’s of that MID-Level Management!! You know the ones who’s responsibilities include:”
I’ve worked there as well. 100% agree about worthless layers of middle management. I found it to be appalling. Basically that is where people with no technical ability find their niche. Lots and lots and lots of dead weight there.
That’s half the staff! :)
One reason I never went “blue” was because then I’d have to attend 4 semi-meaningless meetings a day.
iPod and desktop revenue is down from last year, but MacBooks are up. And the iPhone is doing very well. The price gap between netbooks ans MacBooks is pretty big, so seems like Apple will have a problem there as people tighten their belts.
There are a lot of small cell phone development outfits in the Seattle area, iPhone and otherwise, so hopefully those can pick up some of the slack in Microsoft slowing down.
The day MS sends all H1s back to home is the day they will shut their technical facilities here and outsource it to China, India, Mexico MS branches. Just be careful with what you wish for..
I knew this would become a Mac vs Pc/MSFT thread. Having used Macs exclusively since ‘87, I’ve heard it all. To each his own. :)
“The “Microsoft millionaires” aren’t going anywhere, but there aren’t going to be many new ones.”
Many new ones? MSFT stock price has been stagnant since 2000….They haven’t been printing millionaires since the tech bubble. MSFT pays well, but they aren’t making millionaires anymore. It would have been better to work at AMZN from 2000 till now. AMZN went from $6 in 2001 to $100 Oct 2007.
Its a hell of a lot easier to delay license purchases than it is to delay hardware purchases, which is one reason why Apple and Dell will probably not do as badly in the recession as Microsoft will. Its also a lot easier to download a bittorrent of Vista than it is to steal a computer from Best Buy.
Anyways, comparing Apple to MS is a pointless exercise outside of the OS realm. A more apt comparison is Apple to MS+Dell, but even there its stupid since they aren’t really competing for the same customers that much. Its like saying “Oh, Toyota sells a "chocolate"load more Camry’s than BMW sells 545i’s, therefore BMW is going to go out of business and sucks.” Apple does not want to sell computers to people looking for the lowest cost solution, thats not their market and they know it.
Renter of Bellevue and Markor: agree. The job I was hired for is just fine. It’s all the meaningless all-hands meetings and extracurricular crap that drives me nuts. But then, that seems endemic to any company that gets larger than about 100 people. Once you’re no longer scrambling to survive and forced to focus on actually getting the d–n job done, you suddenly find all kinds of ways to waste employees’ time.
#10:
Umm…yeah. Call me when Nordstrom can hook its customers with something like an iPhone. A simple “retailer” can’t do that… and neither can a company like Microsoft under the leadership of someone like Ballmer.
I will literally stop paying my electric bill before I give up my iPhone. (I can still charge it at the airport, right?)
According to one BIL, Adobe is also planning some staff reductions… and they make great products. My other BIL is a sales executive for a chip designer in silicon valley… now into their third round of layoffs and he figures that he has a month left at best.
MS makes some crappy products, but everyone is getting hit.
But the very point a few people are trying to make here is that their market, which is heavily weighted towards teenagers, college students, and young adults that like to buy flashy premium products, is going to shrink more than other markets. A secular change in attitudes is underway and it’ll hit the high end much worse than the low end. For yet another housing example, see the MOS in areas like Mercer Island and West Bellevue.
A) I think the slow down of MSFT will, hopefully, get many of the recent (last 15 years or so) arrivals to leave Seattle.
B) The thing abt Apple v MSFT. Yes, the Apple hardware initially costs more; but because the OS is more stable, and the hardware has less problems, the cost of an Apple makes up for the cheap price if the PC in the midterm and longterm. I have no doubt Apple will drop prices for their low end laptops.
C) Rents come down! Rents come down! Yay!
Call me when the Mac store in the mall isn’t packed to the gills.
You naysayers have been preaching for the demise of Apple for years and yet they keep besting expectations.
MS on the other hand has been turning out bloated pieces of garbage Operating Systems for years (with Vista being the king Turd).
My ThinkorSwim trading platform is 1/10th the size of a download for my Mac than it is for my PC. MS keeps churning out bloated, resource hog, ginormous failures.
People are turning to Apple because they work and are reliable. Even in a recession no one wants to drive a Yugo.
yeslerhill @ 73: “many of the recent (last 15 years or so) arrivals to leave Seattle”
Showing me the door, are you? ;)
I have to say, I find the whole Mac vs MS “debate” rather amusing. The fanboys on both sides are so easy to spot.
Back to the original topic at hand, I find it humorous how many of the “These MS rumors are bs, MS jobs are secure, MS will never lay people off” aren’t chiming in with their two cents.
I believe it was just a few weeks ago when many were denying that MS would ever have layoffs and would merely be cutting back on contractors. You can’t spin the recent PNW layoffs as positive, this area is getting absolutely hammered.
Maybe Seattle is special…
Mukoh, — yes MSFT is doing some things to *enable* cloud computing where it makes them money, but as a business they are resisting the trend.
Their response to Software as a Service (which they call Software Plus Services) only makes sense from their own perspective as a software giant that sells client software. But it’s not what the market is asking for, and Microsoft will find itself “on the wrong side of history” if it continues to deliver product that’s more aligned to it’s own busine$$ interests rather than what consumers want.
Sorry for soapboxing off-topic.
PS, those that think APPL won’t survive a downturn:
WSJ-
“On Wednesday, Cupertino, Calif.-based Apple disclosed its cash pile – among the biggest in the technology sector – had grown to $28.1 billion. That dwarfs those of computer-makers Hewlett-Packard Co. (HPQ) and Dell Inc. (DELL), as well as software maker Microsoft Corp. (MSFT), services giant International Business Machines Inc. (IBM) and electronics maker Sony Corp. (SNE)”
APPL and MS suck… Linux rulz.
Guh… boring debate.
How much is 28.1 billion FRNs in a deflationary environment? Glad to see someone thought ahead.
Yesler, you have any facts on the cycle you seem so serious about in B)?
Jill, 1999 levels? We all know everyone else is saying 2004 or 02 levels, but 1999? What about the rest of the county?
As a renter (sorry owners) I’d love for that to happen, but how much of that prediction is hunch?
I’m in the camp that says Apple will be hit hard and probably soon. Their products are mostly luxuries. Twice now I’ve beaten a friend to the punch: I’ve fired up my cheap XP netbook, connected to a free hotspot and looked it up before he can get the info from the tiny screen on his $80/month (or whatever) IPhone. I doubt the IPod will continue to command a 4X premium over its competition. 2X for MacBooks with no right mouse button? People will of course give up luxuries when their jobs are gone or threatened. With MSFT layoffs, it’s clear that most jobs fit that bill.
The Great Depression was marked by a 10% drop in consumer spending. Just looking around, I’d say we’re at 20+% now. It’s only a matter of time before another depression is apparent to the masses.
FFIV. F5 Networks, also HQ’ed in Seattle laid off 10% of their staff today. Not good for the area at all.
Just ask yourself: is the economy worse now than it was in 2004? 2002? 1999?
I think 1999 or less levels, but it might take 10+ years. There’s no reasonable justification for 2004 levels anymore. Houses in Bellevue that are listed for $350K today sold for ~$225K then. We should eventually see pre-bubble prices.
“Houses in Bellevue that are listed for $350K today sold for ~$225K then”
Where I’m looking it’s more like $225k 1999 homes are listed for $500k today.
That’s $225K in 2004.
Umm, ThinkOrSwim client is Java. So that would have nothing to do what OS you’re running.
I don’t remember seeing any of that here.
Oups sorry Markor, I agree with that. And that we probably will see 1999 prices before we bottom out. 2004 prices are booming economy prices.
b @ 68:
Depending on the software licensing setup, it can be the opposite. Most fairly recent hardware is grossly overpowered for every day tasks. Software licenses can require an annual renewal, or a new version might be “required” in order to keep support, etc. I don’t think pirating software at a corporate level is a real consideration, at least not with the larger companies.
LHR @ 75
I’ve never owned a Mac product in my life, but I can accept that they make very good products which have a good niche. Now that I do most of my gaming on consoles, having an up to date PC isn’t as useful to me as it once was, and a Mac certainly is appealing. But when it comes time to bust out the plastic, I’ll probably stick with buying an inexpensive Dell and just live with Winblows’ quirks.
That said, anyone who can’t see the value of the other side is blind.
Matthew @ 76
I’m not afraid to eat crow. M$’s earning, profit, and cash position in no way require layoffs, which is why I thought the rumors were BS. It turns out they weren’t BS, just wrong on the size and methodology. IMO this is more being done to appease shareholders who haven’t gotten very little ROI the last few years.
The Tim is right on the mark.
Boeing, is, has, and always will be the tail that wags the dog in Western Washington. No other business matters the same way. I’m always surprise how few people who have moved here understand that. The prefect strom may be on the horizon if orders for the DreamLiner are canceled due to a lack of financing.
Roughly 75 thousand people get a pay check writen by Boeing. Common wisdon say that another 75 thousand (the low number) are employeed in operation that are daily contact with Boeing.
Last I heard Boeings not even going to fly a DreamLiner until the end of 2009 and won’t make any deliveries until sometime in 2010.
There is a lot a panicked laughter when I think of everything that could go worng between now and then.
Just a thought, but there doesn’t actually seem to be any Apple vs. MSFT debate. There are some people that say Apple sells luxury goods and luxury companies are going to get hit hard. They (most of us anyway) make no comment on the quality (perceived or otherwise) of Apple products and no comment on the ability of Apple to survive the downturn.
On the other side of the non-existent debate are people that say Apple’s products are so great and so much better than anything else.
The 2 points aren’t contrary, they’re orthogonal to each other. You can have a super-awesome product and not do very well and at the same time someone can have an totally mediocre product and do great.
What’s more interesting to me personally is to think how the economy is going to change and what that will do to companies like Apple, Microsoft, Google, Amazon, etc. I believe that companies like Apple and Google were flying extra high due to the debt bubble based economy and thus will feel the effects of the crash more severly. That says nothing about how good their products are, just how the economy is changing. Saying product X is good everybody likes it so it will experience any downturn is just like saying Seattle is a nice place it’s so desirable so prices can never come down here.
So, again, I’m not attacking Apple products, I’m just trying to state the effects of the debt bubble bursting on the tech industry.
To any realtor, banker or underwater home owner who think about making a comment about people cheering on the crash of home prices, consider that it was you, not us that caused this mess and if we can find a little joy in the prospect of being able to buy a home at reasonable prices in the not so distant future while the economic crisis you contributed to impacts all of us who are you to complain?
Over all economic news was really pretty tame today.
Yes, Microsoft made a profit. It also cut jobs for a total savings of $1.5 billion dollars. How did that happen? How does 5000 jobs translate into $1.5 billion dollars in savings?
I agree there is a ton of dead weight in Microsoft management. The campus itself, along with the free soda and bus service, must be a huge expense.
If the company, any company, can shed $1.5 billion dollars in expenses I have to think they will come out the other side a stronger company. If I were a stock holder I would bet this was good news.
Joel posted:
“Just a thought, but there doesn’t actually seem to be any Apple vs. MSFT debate. There are some people that say Apple sells luxury goods and luxury companies are going to get hit hard. They (most of us anyway) make no comment on the quality (perceived or otherwise) of Apple products and no comment on the ability of Apple to survive the downturn. On the other side of the non-existent debate are people that say Apple’s products are so great and so much better than anything else. The 2 points aren’t contrary, they’re orthogonal to each other.”
Thank you, Joel. I’m glad some people are paying attention. Personally, I never said anything bad about Apple, more, that I would have purchased their MacBook had it not been twice the price of the Toshiba I decided upon.
I think Apple makes some great products. I also think their prices will not make much sense going forward. Just look at how they greatly reduced the iphone price, even refunding customers. That was silliness. They’ve been gouging, and they’re gonna get burned if they continue.
We bubbleheads already knew about this, but this is mainly for the benefit of the doubting thomases.
Falling Rents…
http://www.time.com/time/business/article/0,8599,1873081,00.html
“Surely MSFT has found a way to keep the lower-cost H1-B workers.”
Why do so many people think H1-B workers are hired because they cost less? To be able to file for a H1-B visa, companies need to pay above market average for the position that supports it, and while there sure are plenty of loop holes and a few companies that take advantage of these loopholes, many H1-B workers get hired because of a local shortage of qualified people or because they bring something special to the table.
Falling rents: “In 2009 the average apartment rent will drop 2.1%”. So that’ll be a whopping what… 30 a month for many here? Kinda disappointing considering the much larger hit house prices took.
there was never any rental bubble – least not that I recall
Joel,
I realize that TOS is Java based, but personally I’d rather spend less than 1/10 the time downloading a 1.2MB .dmg file or a 710KB .sh file as opposed to a 12.2 MB .exe file.
As for people on this blog claiming that MS is immune to hiring freezes or that the layoff rumors are b.s., you obviously haven’t been scanning the blog everyday, use the search function. West Side Billy already came forward, I can remember several others claiming the same.
I’ve met many obviously exploited H1-B workers, but none who were extra special. (E.g. a friend’s wage doubled soon after he got his green card, since he was no longer locked in to one company.) The very common game is to advertise jobs at way-below market prices, then hire H1-Bs for them. There’s a local shortage only of below-market-wage people, not qualified people, that I can see. If MSFT offered market wages for all jobs, I think there’d be exactly the desired number of qualified people to take them.
That said, I don’t blame MSFT for playing the H1-B game, or even asking Congress to remove the H1-B cap.
Today I spent all day signing (meaning meeting with clients to sign loan documents) clients all over the area and two of my appointments were at the Microsoft Campus early this afternoon.
I saw one of the most ironic and funnier things in a long time at one of the appointments ( and it was very funny to all in the room). The MSFT employee signing documents had a white board on their office door and someone scribbled a large cartoon of my clients house halfway under the water of an ocean scene. Wish I had a camera. Have no idea if this client is a Seattle Bubble reader (was not going to bring it up), but someone was a great cartoon artist with a dark sense of humor.
S-Crow
@ 99
Here’s a question… if this is the worst recession since the great depression, then why would rental prices not go down? Either the media is overstating things or apartment owners are just kidding themselves.
Good article! It’s going to be a tough call when to buy a house again. Real house prices (adjusted for inflation) might fall for 10+ years, but, before they rise again, owning a house may still be a decent way to combat the massive inflation that looms due to the teetering national debt. Zimbabwe is a good study on that; here’s a quote from 2006: “Although the southern African country is suffering an economic meltdown blamed by critics on President Robert Mugabe’s government, property is booming as people hedge against the world’s highest inflation rate, currently above 1 000 percent.”
In any case I’m gearing myself up mentally to possibly continue renting for a decade or longer. Fortunately it’s not too hard, since there’s a lot to like about renting.
I don’t see why they wouldn’t for now, esp. as more layoffs happen. Eventually inflation should reign. The economy in Zimbabwe is way worse than here, and worsening it seems, but rents are rising rapidly there, along with prices of everything else. The turning point will happen as investors demand higher interest rates to take on more US debt.
Thomas B, @ #103
Yup apartment and landlords are kidding themselves those prices aren’t real. :) LOLz. The money they are depositing in the bank is not real either.
Really, rising rents in zimbabwe? Any evidence at all to back this up?
With all the layoffs going around I have no doubts that rents locally, are going to trend down for the next couple of years. I saw apartments close to MS campus advertising a month off on 12 months leases and such. I had never seen such a thing in the past few years. And that was before the stuff really hit the fan in the form of MS layoffs.
Does anyone know what’s going on with downtown rents? I have been browsing since my lease is up soon, and it seems as though things have gone down substantially. I’m paying $1,800/mo for a one bedroom, and I’m seeing 2 bedrooms advertised in the same place now for $1,900/mo, and then one bedrooms from $1,200/mo.
I’m thinking the recession is going to hit my apartment complex particularly hard, because it seems like half the people here are transplants who recently moved here to work for MSFT, AMZN, Boeing, etc., and then those corporations actually rent apartments here too as temporary housing for transplanted employees. I have to think that’s the story with many downtown apartments.
If the trend is down, I hope it continues…
The Hulk!
Long time not talk.
Hey just wanted to point out the article that you referenced actually says Seattle’s rents are going up 2.9%.
“But other cities, like Seattle, Baltimore and St. Louis, Mo., are due for higher rents. “
“But other cities, like Seattle, Baltimore and St. Louis, Mo., are due for higher rents.”
I love how these articles make these claims, but provide no rational as to why this would happen.
Let Me Google That For You
I thought this was not supposed to happen in Seattle. Seattle is special! The only thing that is constant in Seattle is the rain.
Meh,
The article can say whatever it wants, all I know is apartments near MS these days are renting for about 100-200$ less per month than what they were a year ago. This based on someone I know whose lease expires shortly and is shopping around.
I believe it–I’m watching Eastside rents too. Rents should now fall with the worsening economy, then rise with the inevitable inflation. House prices also.
Plus MSFT layoffs were likely not considered.
The biggest impact of the Microsoft announcement will be psychological.
People will be thinking:
“If one of the largest, most stable companies in the world – who has never had large scale layoffs before – is laying off people, we really are a world of hurt.”
and more locally
“If Microsoft isn’t so special, mabe Seattle isn’t either…”
Could be the spur for accelerated declines….
Not even that, lately! I’m looking forward to rain so I can have a cozy fire again.
I doubt that very much. I think it is far more likely we will see deflation for quite a few years in the future.
I have put together a podcast explaining why long-term deflation is in our future.
http://msurkan.podbean.com
You could be right. I don’t have a strong feeling for how long deflation will last, that’s why I’ll keep an eye on it. When inflation kicks in, it could well be vicious but there should be ample time to buy a house or something else to keep pace with it.
“When inflation kicks in, it could well be vicious but there should be ample time to buy a house or something else to keep pace with it.”
There is a giant spring being squeezed that is going to be let go: money is at record levels in money market funds and the government is borrowing and spending like mad trying to get that money back into the economy. That flow will reverse when things have stabilized and people want to get back into the stock market and maybe buy a house at a low price. Suddenly there will be spending everywhere, causing inflation, and at the same time interest rates will go up to fund the federal debt when people are no longer putting all their savings in money market funds.
If we have strong inflation or something like it, a better bet would be to put your money in TIPS or stocks. I would rather not put a significant amount of my savings in a leveraged depreciating asset.
And yes, if inflation truly goes bonkers, you can bet that interest rates will rise as well. At that stage, if salaries are the same (salaries typically lag inflation) and interest rates are rising how are people going to afford those mortgage payments on 300K houses?
National housing inventory is falling and construction is very low. When everyone who is now waiting and saving sees the bottom, there will suddenly be a low months of supply and it will take time for the construction pipeline to fill up again. At that time existing owners will be spending cash to move up to depressed priced high end houses. That will free up houses at the low end, but since the high end is a smaller market, the relief at the low end will be smaller than the number of people moving in from apartments.
That is going to happen first in areas where jobs are strong, and so all the housing inventory now piled up in places like Detroit and the inland empire is not going to matter.
If interest rates jump up quickly, that will just signal the builders to not start building and the housing supply will stay small, because the only people buying will be people who have saved cash and are moving to houses from apartments or moving up the scale. So high interest rates will not stop prices from going up, but the number of new houses will stay low.
“I’ve heard from two HR people at MS (one recruiter and one in HR) that Microsoft places a lot of value on school pedigree. I don’t know if it’s to the extent that they don’t hire from certain schools, but both people have told me MS goes to great lengths to attract those from brand name schools.”
UW has a highly ranked CS program, and admission is quite competetive.
http://grad-schools.usnews.rankingsandreviews.com/grad/com/search
I’m not so sure. I didn’t trust TIPS under Bush, who kept mucking with gov’t reporting rules. Not sure I’d trust them to a gov’t facing default pressure in any case. The Dow has risen 4.1% annualized since inception (1928), barely beating inflation. In the long run house prices have nicely tracked inflation too, and although both stocks and houses can plummet in value, I can live in the house, and I can more easily foresee and hence escape a house price plummet (albeit at 10% cost).
@106
Yeah… you’re right… that deposit check is real money.
But revenues are down due to vacancies, so that real money is a little less than last year, but they are not kidding themselves. Supply and demand doesn’t work in their world. Heck… if they can keep prices high regardless of the economy, why doesn’t OPEC jack prices back up to $150 per barrel, they would be rolling in money… until people decide to get rid of their cars and use public transportation and renewable energy. Duh.
Then the baby boomers will die off and there will be lots of available homes.
Except each baby boomer bred 2+ kids on average, to replace themselves.
Rents are definitely down anecdotally. I am looking to renew in a month or two and I am seeing things down about 15% for the stuff I look for (2bd, new, eastside) compared to about 8-9 months ago.
“If PC’s that cost half of a decent Apple product are such a great bargain, then why do all the PC users always complain about their computers.”
Because they don’t know how to set them up and maintain them.
I just bought a 14.1″ laptop with a dual 2ghz Intel processor, 4gb ram, a 320gb 7200rpm hd, and a 3 year warranty for under $600. I wiped the Vista OS and installed XP. This super lightweight el cheapo screams! Not only do I not need an overpriced Mac, I won’t need a new computer period for 3 more years.
As far as MS operating systems are concerned, when I was attending UW, I picked up XP pro for $15. It’s served me well for 3 years and will continue to do so for another 3 years. It’s worth every penny I paid. This is the 3rd laptop I’ve ran it on because I wore the first two out. The question is not whether I can bypass Vista; it’s whether I can get by Windows 7?
This is a legitimate $600 el-cheapo highly portable scream machine. Can someone remind me of why I need Vista or a Mac?
Not me. I recently bought a $400 netbook that has XP. Seems plenty fast & usable to me. Vista came on my desktop. I haven’t found any must-have it has that XP doesn’t also. They seem to have the same obvious deficiencies too, like when you open the file explorer in Vista, it still defaults to a folder I never touch, with no easy way to change that. That’s 10 years after someone at MSFT should have been fired for not fixing that.
“I’ve met many obviously exploited H1-B workers, but none who were extra special”
You did eh? Well I for one got hired and sponsored for an H1-B because of my ‘extra special’ skills, and I know a few others who got hired in the US because of their specific expertise. And I know a bunch of regular H1-B workers who earn market average. I guess our experiences differ.
Also, I’m regularly involved in hiring software developers, and gosh are good matches hard to find. We just hired a few and it took us about 4 months to find them. Good conditions, interesting job and all, advertised on all the right sites, but hardly got any response. And I’ve hear similar stories from other (smaller) companies who are struggling to find qualified people. I’m sure given the current economic situation this will change for a year or two, but given the low enthusiasm for IT studies (at which UW is indeed a leading university) and the increased prices (and failures) of offshoring, it’ll be hard pretty soon again to find talent. Which is why Google, MS etc are trying to get more H1-B in, and based on what I’ve seen rightfully so, even with this economy. Sorry, but – aside a few now famous exceptions – I don’t buy that H1-B exploitation FUD.
It’s a LOT cheaper to hire someone to work in India, etc. than bringing them over here on an H1, so why didn’t they just outsource in the first place?
The reason they bring H1’s here is because they need people HERE. If the H1’s are cut off, they will have to hire locals.
which stock graph looks better?
http://chart.finance.yahoo.com/c/5y/a/aapl
http://chart.finance.yahoo.com/c/5y/m/msft
Did y’all try raising the wage? I’ll bet the wage was not even advertised, as it usually isn’t. Try advertising $200K, or just let the word on that leak out, and I’ll bet you’ll have qualified people knocking the doors down.
In the early 1990s MSFT bought a company called Fox Software in Ohio. MSFT wanted every Fox employee to move to Redmond, so to extricate them from family ties they simply offered them $250K minimum. Guess what? They all moved.
Until I see wages of $1 million offered for developers, with no US takers, I won’t believe there’s no qualified US workers available.
Jon@120 is correct if inflation happens that way, and he usually has a good point. I just turned 42 and not to surprising I have been DRINKING. If my wife ever looked at my posts I would probably given an ultimatum about meetings.
Hugh at 116, Microsoft fell off the deepend some time ago, but still seems to make money. sniglet, you have definately become the new 500 realty. Would everyone here like to see my new site about debauchery…
http:/ debauchery.com Please call now.
markor no each baby boomer didn’t have 2+ kids, now each couple may have
Markor – for population net replacement each couple needs to average 2.11 kids. In an educated region as the NW, immigration from other states is critical.
Off topic – last week it was announced the median home price is SoCal is now $275K. Probably under $200K in a year.
Kind of curious what folks think about overall salaries going forward. That is, since there’s so much “deleveraging” going on due to the housing market, might salaries be next? If the “single largest purchase” most Americans will ever make is rapidly going down in price, what is the motivation for companies to pay higher salaries. In addition to layoffs, I’ve been reading that companies are starting to implement pay cuts for staff that stays on. Personally I feel like our scenario is closer to Japan then Zimbabwe.
““I’ve heard from two HR people at MS (one recruiter and one in HR) that Microsoft places a lot of value on school pedigree. I don’t know if it’s to the extent that they don’t hire from certain schools, but both people have told me MS goes to great lengths to attract those from brand name schools.”
UW has a highly ranked CS program, and admission is quite competetive.
http://grad-schools.usnews.rankingsandreviews.com/grad/com/search”
Their undergrade CS/CE progam is highly respected as well. When I got into the program they only admitted 40 people in CE. If you didn’t have above a 3.7 in core required classes they put your application in the trash.
MSFT, donated a lot of money to the program and gave all of us free software.
Paul donated a lot as well. Paul Allen Center
“If the H1’s are cut off, they will have to hire locals..”
If US companies are constrained by labor laws to pay wages above the world rates, then overseas companies will take over the market. Redmond would be the new Detroit.
“Then the baby boomers will die off and there will be lots of available homes.”
The graph I have seen shows that the demographics after the baby boomers tapers off slowly. So there will be a big increase in the number of estates, but that is still 20 years off. Right now the big change is that they won’t be able to retire because their investments have been wiped out. So all the housing inventory in Miami, Arizona and such will just sit idle, and inventory in job centers will tighten up.
Good point. Software engineers the world over have the same expenses, so they should all get the same pay.
Speaking as someone who had to train some of these “specially skilled” H1Bs to use Outlook and Excel, not to mention LoadRunner (the special skill they were supposed to have, but didn’t), I can say that there are a number of H1Bs that aren’t getting top dollar and have skills below most high school grads. Couple that with a culture that’s afraid to say “I don’t know how to do that” or “I don’t understand”, and you can see the level of frustration many in IT have with some H1Bs.
And by the way, Microsoft isn’t cutting their Indian workforce. Why would that be? They must be extra specially skilled.
We will not have massive inflation with wages declining or remaining stagnant. 700-800 billion dollar govt spending programs and 750 billion dollar TARPS are a drop in the bucket compared to 5+ trillion in lost home equity, trillions in equity loss, trillions in commodity loss, etc.
Global deflation is what we are seeing. Get used to it, the government is attempting to plug 30 leaks in the dam with 10 fingers. It ain’t gonna work.
A strong job market is what brought people here for the past decade. In my opinion it started with the merger of Boeing and McDonnell Douglas. Microsoft became a household name with the launch of Windows 95.
We’ve seen a lot of companies rise here like the presence of Adobe and Amazon. The real question is if our job market will continue to be attractive. No matter what goes on in the world or rest of the nation, the question is if people will come here in the future for jobs. The second question is if companies will remain here given our tax structure and political climate towards business.
What conditions are going to maintain our economy?
“Good point. Software engineers the world over have the same expenses, so they should all get the same pay.”
Yes, that’s why WalMart buys all their products from US manufacturers, because their customers understand that the workers who make the product want to live in nice neighborhoods not worry about competing.
“We will not have massive inflation with wages declining or remaining stagnant. ”
With the federal debt ballooning rapidly, taxes will have to go up to pay for that. So while wages won’t be able to go up by much, products will still cost more, and that will drive up the cost of building new houses to handle population growth.
It’s not a matter of “will people come here look for work,” it’s a matter who will come. I think that the only people we’ll see moving to the Northwest over the next five years or so will be the least informed and the most desperate. In other words, the un-working poor with nothing to loss, People with something to loss will be less inclined to take risk.
Jon,
Please explain how products will cost more when there is less demand for them.
Prices are crashing among all asset classes. There will be no population growth because immigrants will not come to this country when there are no jobs. You have been dead wrong on your thesis but yet are still sticking with it. It’s time for you to consider some alternatives.
If someone tells you they have 2 kids, does that mean the couple has 4 kids?
Why wouldn’t there still be jobs for immigrants? Companies can still make a nice profit if only they can halve the wages, and immigrants will gladly take half. That’s why MSFT wants Congress to remove the H1B cap: so all jobs can become H1B jobs.
“trillions in equity loss, trillions in commodity loss, etc.”
Most of the few trillion dollars that has been “destroyed” was mostly paper profits sitting in accounts of the top 1%. That number is being used to drive a sense of panic to allow Congress to overreact to a bump in the unemployment rate that is the normal rate for a typical recession.
“Please explain how products will cost more when there is less demand for them.”
Because Congress is focused on getting an $800 B stimulus into the economy as quickly as possible, on top of the second $350B that was just approved. Actually building stuff would take too long, so they are just going to dump the money on anyone who has a sob story or is a contributor to a House committee chairman. So with lots of dollars chasing the same goods, you’ve got inflation. While your wages may or may not go up, the chunk taken out for taxes will go up once the short term tax cuts are cancelled.
One site says the U.S. average fertility rate is currently 2.13 births per woman (I guess “per woman” is the best way to put it, instead of “per person” or “per couple”). That would suggest that baby boomers are fully replacing themselves nationally, but then maybe it’s the immigrants who are having the most kids. In any case I’d like to see population fall quite a bit. I think we’d be better off in the long run, and houses would be cheap!
Good explanation Jon!
thanks!
The American homeowner has lost over 3 trillion dollars in equity. That is not paper profit in a Wall St. fat cat’s bank account. The American worker has lost trillions of dollars in their 401k account.
The stimulus is being used to PAY DOWN DEBT, not to buy cheap goods.
Deflation Deflation Deflation. DEBT = DEFLATION
We cannot hyperinflate our way out of this without destroying the US Dollar. Deflation will rule the day.
Markor,
What happened the last time CONgress attempted to pass an amnesty bill for illegal aliens?
What do you think will happen to the anti-illegal alien sentiment in this country when we approach 10% govt # unemployment??
It was estimated that over 70% of the last stimulus package was used to pay down debt. The average American keeps a balance of thousands of dollars every month on their credit card. The national savings for a household is negative. And you think people are going to spend the government stimulus on cheap crap when they are worried about losing their job?
SOLD TO YOU.
“It was estimated that over 70% of the last stimulus package was used to pay down debt. ”
That’s a lot better than I would have expected, which is that the money would have been spent buying imported products. In any case, the debt was simply moved from personal debt accounts to the federal debt account. But now that the debt is gone, people will be ready to spend up to the limit once the job situation stabilizes. The banks will be eager to lend it back, because all the TARP money is sitting in their reserves. People won’t be worried about losing their jobs, because government spending will be aimed directly at keeping unemployment low.
“We cannot hyperinflate our way out of this without destroying the US Dollar. Deflation will rule the day.”
The dollar won’t fall against other currencies, because all the other countries are doing the same thing. There will just be more people with available credit and a record pile of money in their money market funds.
As for stock losses, the top 5 percent own more than half of all wealth.
I APPRECIATE YOUR “ITS OK” LET’S NOT RUFFLE MSFT’S FEATHERS ATTITUDE ABOUT CHEAP H-1Bs EURO
But let’s get real.
Check out this story from Norm Matloff is a Professor of Computer Science at the University of California at Davis on H-1Bs…..its clear to me that eliminating experience on the cheap [H-1B or not] is like shooting your company in the foot [which MSFT did in my opinion]. Paying an experienced technical a decent wage and having this employee make you 100 times its pay is good business sense, but hiring a bunch of inexperienced techs on the cheap with no senior mentors is company suicide.
See the proof:
http://www.numbersusa.com/content/nusablog/nmatloff/july-20-2008/american-degrees-becoming-less-valuable.html
“The Dow has risen 4.1% annualized since inception (1928), barely beating inflation. ”
If you were to suppose that the current drop is going to parallel the drop in the 1930’s, then the current point is equivalent to March of 1931. From there the market dropped another 40% to 1938.
From March , 1931 to now inflation has averaged 3.25 and with dividends the S&P 500 has returned an average 9.4%.
SW Engineer – I can understand the “cheap” but what makes you think H1Bs are “inexperienced”? Law asks for certain education degree and years of experience to become eligible for H1B visas. I don’t think MS has ever consider eliminating experience to hire H1B workers. There is competition in every aspect of business including salary rates and experience. That is what brings success to giant corporates.
One thing to consider is possible massive inflation soon. This will be a whooper possibly once things stabilize.
Look at the monetary base of the Fed:
http://eastcoasteconomics.wordpress.com/
“Try advertising $200K”
Like I said, good pay, interesting job. 200K would be ridiculous of course, but I take it you were joking.
“Speaking as someone who had to train some of these “specially skilled” H1Bs to use Outlook and Excel, not to mention LoadRunner (the special skill they were supposed to have, but didn’t), I can say that there are a number of H1Bs that aren’t getting top dollar and have skills below most high school grads.”
If that’s true, why does your company hire them? I’m sure such skills are as easy to find locally and if not for less money, surely for less of a hassle. Or are even the bottom skills in the IT market (Load Runner a specialty? you gotta be joking right?) still hard to find? Or is this experience of yours before the bursting of the tech bubble?
Rhetorical questions, right?
There will be plenty more backlashes against immigrants, but it’s inevitable I think that eventually there will be a “world wage” for every job type, with similar standards of living in every country, and no more dictatorships. Might takes 100 years, or 500. Hopefully by that time the widening division between rich & poor will have been reversed for good.
The article softwarengineer posted sums it up nicely: “…when employers tell Congress there is a shortage of tech workers, they mean a shortage of young, cheap ones.” Attempting to stop the immigrant tide will likely do more harm than good, so the best most US citizens can do is vote to restrict the influx while greatly increasing taxes on the rich.
Jonness,
Consider what you said (typed):
“I just bought a 14.1″ laptop with a dual 2ghz Intel processor, 4gb ram, a 320gb 7200rpm hd, and a 3 year warranty for under $600. I wiped the Vista OS and installed XP. ”
How many computer users who are not engineers/programers/nerds out there would understand this? Very few. A good doctor/salesperson/cop/housewife/etc doesn’t care about the insides of their computer (even if they do understand the technical stuff). To them the computer is an appliance and they just want it to work. I believe that Apple has a better understanding that the majority of users are non-techies. Apple provides plenty of real-time live help and support for it’s customers (hang around the Genius Bar at an Apple store and observe) and that is why I beleive Apple will continue to pay more for Apple stuff as long as Apple continues their level of customer support and product ease-of-use. If MS/Dell/Sony/etc improve their customer support , including live-body-walk-in centers, and product ease-of-use then Apple may not be able to maintain it’s price premium.
As a nerd (I’m an engineer from before it was cool) I’ve been using/configuring/supporting PCs from DOS 3 to WinXP, and still use WinXP at work, but at home I just want to relax and use my appliance (macbook).
Yep. Still, the very best indication of what the Dow will do in the long run is 4.1% annualized. Occassional crashes are to be expected it seems, so none should be ignored (unless one is confident they can foresee it & sell beforehand). The S&P 500 has closely matched the Dow in the long run.
What are we discussing here?? Housing Bubble vs US hiring H1Bs. vs Apple products vs MS products vs MS layoffs.
Maybe we should more on focus Seattle Bubble vs MS Layoffs. I am having hard time following all your comments..
Back to topic – MS insiders tell double number of Seattle MS contractors (around 2000 ) will be terminated in Q1-Q2 2009. Mostly local people I guess as I am not sure if you can be a contractor with foreign work visa. That should impact the house prices..
“When employers tell Congress there is a shortage of tech workers, they mean a shortage of young, cheap ones.”
Exactly.
It was an extreme example to make the point that there is not necessarily a shortage of qualified workers like you say. 200K is ridiculous to you or me only because we both know that someone will take less. But if you offered 200K only to local workers, you’d have no shortage of qualified applicants. MSFT could tap its contractor pool anytime to get qualified local people for full-time jobs. It does that sometimes, but not always because it costs more than alternatives like H1Bs.
To become an R&D engineer that makes a difference to a company, not just a code monkey you need the same level of intelligence and schooling as a lawyer or an MD. Tech companies would love to make engineers into the new blue collar low wague workers. The only way of doing that is to employ foreign workers that settles with less than what an highly intelligent, highly educated american engineer will ask for. It’s bad bean counter thinking since if you make revolutionary products in R&D you make up any wagues by mass production. Yes, even $200k and if you have the right product ( Apple ) you don’t need to worry about competition from low cost R&D companies.
So true! If they knew enough the economy might suffer more, since the cop is paying more for 4GB of memory and never using more than 2GB.
Didn’t know that!
GOOD TAKE PATIENT
I believe The Tim has brought up the fact that Seattle aerospace experience isn’t mentoring the youth [its full of average 50+ aged workers], eventually we’ll forget how to develop aircraft after the older crop leaves, assuming if they sell anymore anyway….so putting only youth in charge is a good way to make your product quality stink and your sales plummet.
It isn’t just arospace or computers; its head nursing, teaching, medical physicians, etc, etc….our companies and government agencies got so cheap, they forgot we needed experience and youth to make a future.
As my article on H-1Bs referenced; the rest of you New World Order enthusiasts may think you’re immune; but even brain surgeons, immigration attorneys, etc, etc are all on the wage chopping block; as we trade future value for short term profit, or lately, massive stock losses due to shoddy products/services not selling.
Have any of you tried to carry a normal business communication over the phone with someone with an accent you can’t understand [and they can't understand you either]? I know, its good for business, the NWO hardliners will allege…lol….not my business, I wouldn’t hire anyone who couldn’t be clearly understood to do communications, its clear company suicide. Have any of you called the Microsoft help lines overseas….I have and it was horrifying.
That lack of customer service [and brainless management] alone would send me to Apple or anyone else that had a clear communications tech support that understood and I could understand them.
Now, let’s get on with the bubble topic, how are NWO wage deterioration overpopulation wishes [if further implemented] going to affect RE prices? How about collapses to 1980s levels?
10+ trillion dollars in wealth destruction – [2.5 trillion (fed balance sheet) + 1.6 trillion government stimulus + 750 billion dollar TARP does not = inflation
period.
At this point I wouldn’t pay more than $225K for a basic Bellevue house, $125-175K less than today’s list prices. I wouldn’t be surprised to see mid-1990s prices again, along with another one of those billboards asking the last person to leave Seattle to turn out the lights. By the end of this year I bet we’ll see a mass of Dreamliner cancellations.
Matthew, what happens when the gov’t can no longer borrow at low rates?
Yeah, that is what people think. There are many contractors at MS (and I am sure at other large tech companies) who will have almost all their employees working on a foreign visa. The people who employ these contractors are the real vultures. They will not provide any support to their “employees”, take their pound of flesh from the paycheck, and oh yes the so called employee has to look for jobs on their own inside MS.
The only reason these vultures are in business is because with huge companies the size of MS, they will only have a certain small number of big contractors they are willing to work with. Thus, X is the big contractor who subcontracts the work to company Y, Y to some smaller company W and then finally the poor “employee” Z who is actually doing the work. X will charge 100 $/hr, Y will take 30% and so will W and the employee is left with the bones.
That is how people conclude foreign visas are leading to lower wages (because they only see what Z is getting). In reality the position itself is paid well, but its the middlemen who make all the money.
“10+ trillion dollars in wealth destruction – [2.5 trillion (fed balance sheet) + 1.6 trillion government stimulus + 750 billion dollar TARP does not = inflation”
If they did pump that much back in, then house and stock prices would go back to where they were, close to double where they are now. They can’t do that, but what money they can borrow they want to inject directly into the economy fast, so the change will be very rapid. And then after that we will have ongoing deficits while we have pay the interest on the federal debt, plus the new baseline in spending created by the stimulus programs.
“But if you offered 200K only to local workers, you’d have no shortage of qualified applicants.”
Neither would there be a shortage of people who can buy 600k+ houses. And competing globally is difficult enough even with today’s wages.
jon -
go read Krugman’s blog, its very good economics material. right now the Fed and Govt are fighting to keep things at 0%, and Krugman is advocating trillions in new debt spending to prevent a deflationary spiral from occurring. we are long past the point where Fed stimulus might overshoot and cause rampant inflation. despite massive amounts of stimulus and Fed action we are still deflating with no end in sight. if deflationary expectations take hold (and they are starting to, banks and people are hording cash instead of lending it) then look out below.
b-
Yer crazy I tell ya…crrrrrrazy. Just remember, a couple trillion more and housing will double from where it is now and everything will cost more even if wages don’t increase.
Silly bubbleheads, wages have nothing to do with prices. Everybody will be able to charge what they want even though nobody can afford it.
People will spend all that money they don’t have like crazy. Even if they only spend it in their imaginations, prices in the real world will rise so fast that we’ll all go hungry.
Except homeowners of course!
How do I know? Because some Realtor said so.
jon – here is a good one from just a few days ago. We are at 0% and pumping in huge amounts of stimulus and yet we are still looking at serious deflation. Inflation bets are a fools game for the short term horizon (2-3 years).
True. Which is why I don’t blame MSFT for doing the H1B thing. I’d just like them (and other companies) to say they want to remove the H1B cap because they want to lower wages, not because there’s not enough qualified US citizens. CS admissions at American universities would skyrocket if the pay of IT jobs was high enough. There’s no shortage of smart in this country.
Now Starbucks.
http://seattletimes.nwsource.com/html/businesstechnology/2008663708_webstarbucks23.html
They were making $10/hr. The contracting company that was hiring them was billing them out at $35/hr. They were stacking these guys up like cords of wood in nearby apartments (about 4/room). The H1Bs were happy to do it, because every penny went home.
Don’t get me wrong, about 10% of these guys knew what they were doing and could have been competitive with their 1st world equivalents, but the vast majority were thick as stone and were harmful because you never knew if they “got it” until the rubber met the road.
Enough of H1B bashing. Let’s say that an executive order is issued giving H1Bs 2 weeks to GTFO. What do you think will happen to MS/Amazon/Google et al? They will smile and nod and rent more office space in China/India/Eastern Europe to accommodate their employees returning home. Meanwhile Puget Sound and San Francisco will lose a lot of highly-paid people and those jobs will never return. Why? Because experienced employees will be shifted into overseas offices and will continue working just like in Seattle. Why should MS/Amazon/Google hire someone in Seattle when they have just had someone who knows how to do the job fly back to India/China/Canada where they have a ton of offices? Note that Microsoft recently opened a lab just across the border in Canada, just in case hostility to foreigners increases.
This xenophobic ranting against H1Bs has got to stop. We earn as much as citizens in a vast majority of cases (yes, there are always those who work around laws) but more importantly we contribute to local economies. Buying cars, going out to eat, and so on and so forth.
I’m an H1B. I am in the market to for a house in the Seattle area and will probably buy one this year. If I’m summarily sent home, and factoring for what I said above — who will buy that home?
Markor: “There’s no shortage of smart in this country.”
I don’t know about that. Even if CS jobs started paying enough money to tempt away the business majors, I think the math and science knowledge of our high school grads wouldn’t keep up with demand.
Also, just look at this housing mess.. not a lot of smart going on there.
” CS admissions at American universities would skyrocket if the pay of IT jobs was high enough.”
How much higher must it get? It is already one of the better paying professions out there, at least if you have a bit of experience. Sure, if you throw a lot of money at it, you’ll get more people in (though not necessarily the motivated people you need, but that’s another story). But you can ‘fix’ any problem like that can’t you? There is a limit to what is a reasonable wage for any given job, and going much above that simply destroys your competitiveness and encourages boom/ bust cycles in the profession.
“There’s no shortage of smart in this country.”
There’s no shortage of that in many parts of the world, and America actually does poorly when it comes to education compared to many industrialized countries. It just has a few great universities and is a popular immigration destination for talent to make up for the dismal educational standards in much of the country. The new administration’s plans look hopeful, but the US has way to go catching up.
“True. Which is why I don’t blame MSFT for doing the H1B thing. I’d just like them (and other companies) to say they want to remove the H1B cap because they want to lower wages, not because there’s not enough qualified US citizens.”
They won’t say that because it is not the truth. H1-B enables them to pick out the best talent world-wide. If you need simple work to be cheap, you just outsource/ offshore it. Again, I’m sure some companies misuse H1-B by exploiting loopholes, but I don’t believe for a second that this is the general practice. And then my own experience hiring people… we put a marketing position out and we get 50 resumes in a day. For a software engineering position – with comparable pay, and interesting subject matter and technologies – we get maybe 5 a day, of which 4 lack a cover letter, have resumes that are obviously not tailored for the job they are applying to, and lack the relevant experience that we asked for (and we weren’t really being that specific either… for instance someone with only Visual Basic experience when we’re asking for Java).
“I’m an H1B. I am in the market to for a house in the Seattle area and will probably buy one this year. If I’m summarily sent home, and factoring for what I said above — who will buy that home?”
I’m an H1B, so is my wife (well, Green card now, but started out on H1B), and we bough a home this year, and now we’re spending my inheritance money in doing remodeling. Someone has to keep the economy rolling! ;-)
“It just has a few great universities and is a popular immigration destination for talent to make up for the dismal educational standards in much of the country.”
UW does a lot of world class research, and yet is ranked 41th in the US according to USNews. Other countries have a very small number of top quality universities. That’s why the cost of outsourcing was rising so much. In places like India the demand for well educated people exceeded the current capacity of the educational system. When you run into an H1B with dubious knowledge, it’s probably because they went to one of the many CS schools where they don’t get to use a computer until the final year and the instructors have little knowledge themselves.
A part you are missing in the H1B debate is the corporate culture of Microsoft. Bill Gates wants computer technology world wide. Honestly I think we all want the technology in as many hands as possible.
I was talking with an older, retired, Microsoft employee from the 1990s today and we were remembering that Microsoft was built on a work ethic that included sixty hour weeks. People were brought from around the country as well as around the world to live and work on the campus.
H1B workers have a reputation for long hours without pay. It was the Microsoft culture. What I think though is that many foriegn workers will return to thier countries of origin where they will have western experience.
“H1B workers have a reputation for long hours without pay. It was the Microsoft culture.”
And anyone who isn’t a money obsessed 80ties-style yuppy hates that. So Google came along and introduced a culture where working is fun and well salaried. I hope that’ll be the future. And the future is already there in much of Europe, where people uphold a comparable productivity while working shorter hours (often less than 40 a week, even in IT) for decent pay, good benefits and offices without cubicles. It’s just a matter of acknowledging that talent is something to cherish, and hopefully more companies will follow Google’s lead.
erm… Google pays less than Microsoft. At least so I have heard from the people who received offers from both companies.
“erm… Google pays less than Microsoft.”
That’s possible. People I know who work for either actually get wages that most people in the US would be quite happy to take home, and that is above market average. I misinterpreted the ‘work without pay’, by which David probably meant no overwork compensation rather than low wages (which I understood). Overpay in IT is rare, (though my wife gets it), but then again, wages are generally high.
I know several people who left a company I was at to work for Google. They didn’t seem to think it was all that fun or relaxed, 60 hour weeks was expected, the 20% time was a joke and your soul was crushed by exceedingly boring projects (do you want to write python adsense stuff for years on end?). The only things they had going for them was the Google name/resume bump and the free cafeteria (which is just there to make you work more). The media’s wet dream over Google does not seem to be born out of reality from the few people I know, but maybe the Seattle campus is better.
What?
Yes the fun work place is what came along. Microsoft however found Bill Gates in the office from morning until night every day because he felt his company was changing the world. It was expected that every one who worked at Microsoft be as passionate. Yes, people hated it, but they were getting stock in the company at the same time. After Windows 95 it was apparent that those stocks were worth something.
The change the world part of the culture you can debate. All I know is that more people have access to Microsoft because of out reach done directly by Bill Gates. In my opinion his out reach for H1B employees is more about sharing technology than making money.
I think way too much is made of math and science for CS people. How many software developers are tasked with eeking out another 1% performance on a sorting algorithm? For most, it’s enough to know math no higher than algebra and to be logical, as in being able to answer a slew of reasonable logic problems. I used to interview & manage techies. If they were inexperienced I would just ascertain that they could think logically. Most subsequently excelled at any task I gave them, even in a language new to them.
Good point!
True. Tell that to the CEOs making mega-millions! When are we going to have H1B CEOs? I agree with the article that softwarengineer posted. We’ll eventually (if we don’t already) have H1B doctors, lawyers, everything. H1B techies is just the first wave. When we have H1B doctors you’ll surely see some hospital claiming that the universities simply aren’t pumping out enough quality docs anymore. In reality it will be almost exclusively a pay issue.
University educations aren’t critical to software development. Gates doesn’t have one. A whole legion of software developers from the 1980s don’t have one. I think they are mainly just a resume filtering criteria.
If that was a main reason, H1Bs would commonly have the same salaries as US citizens. Unscientifically, I observe that such is far from the norm. To be competitive, MSFT (and other companies) must exploit the H1B workers. If they can’t leave to work for another company because they don’t have a green card, you pay them a fraction of what a US citizen would get, just like an indentured servant. Shareholders would otherwise be furious.
I suggest the “comparable pay” you have in mind is predicated upon the availability of cheaper labor. When someone else will do it for half of x, the x quickly looks unreasonable. This is normal human behavior; it’s not wrong. A US heart surgeon might make $400K per year. You don’t hear people calling that unreasonable, even if they grumble about the high cost of health care in general. But just wait until there are competent H1B heart surgeons, trained in Bangledesh, happy with $100K per year. Then you’ll see hospital recruiters complaining to Congress that “we offered comparable wages but got no qualified applicants, so please remove the H1B cap on heart surgeons…”
That’s great. Let me emphasize that I have nothing against H1B workers, even when it lowers my own pay. Instead I bristle at our byzantine multi-year immigration process, which, for the sake of the country’s competitiveness, should be smooth and quicker for bringing in top talent. H1B workers should get their green cards faster, so they cannot be long exploited by the bad apples you mention. Ideally someday, workers should be able to cross all borders freely & easily, with each country competing for the best of them.
dls @165:
I agree. It’s a situational trade-off best left to personal preference.
You’ve now hit on my favorite topic: Doctors.
Doctors around the world are trained in the English language. In South American countries, for example doctors have training in a hospital setting after two years of med school. They change bed pans.The color of urine and stools can tell you a lot about what’s going on inside. They help more experienced nurses with patient care. It lowers hospital costs.
Practical experience is what sets many doctors apart.
That Calcutta trained doctor example is what’s used to scare the public from having doctors without borders. It’s ridiculous. The doctors in the United States are given high tech equipment from General Electric to train on while doctors in other parts of the world have to look for home remedies. That’s where the fear factor of voodoo medicine comes from.
Any one who has the ability should be able to be trained as a doctor. I think the University system should monitor that ability and encourage talent. That education should be free. It can be paid back in services.
Training doctors based on the ability to pay tuition is exactly why we have a bunch of momma’s boys making $400K a year. It is a return on investment.
Here in the housing bubble blog I’m surprised there isn’t more outrage about the high cost of health care. Here in the United States health care is designed for the very wealthy.
You go to the doctor to get little purple pills paid for by your employer paid health care insurance. That’s what your doctor is doing all day. For all the flowing white coat debate about how great American doctors are they leave millions, if not billions of people untreated every day,
Yes we should be passing out H1B Visas to doctors. Doctors should be allowed to go where ever they chose. If they chose to come to the United States it will be survival of the fittest. That is the capitalist system.
We should start with doctors because health care is the highest espense we have. Technology should be a close second, but the H1B Visa debate should be for more than the intellecutual elite.
I feel bad for all the people losing their jobs, and I think they are going to have a lot of company before things start to improve. Reading about all of the middle management “fat” at MS reminded me of the tv show “Almost Live”.
Any other Seattle area old timers remember the “Ineffectual middle management suckups”? Here is an episode:http://www.youtube.com/watch?v=IUIQX5esnNo&feature=related
Big layoffs expected at Starbucks, brokerage says
Another big round of layoffs is expected at Starbucks, possibly as many as 1,000 headquarters employees as well as some district managers and field employees, Diane Daggatt, a managing director at McAdams Wright Ragen in Seattle, wrote in an e-mail to the brokerage’s customers today.
wow that brings back memories
Excellent post regarding health care Dave.
Question for the “tech/engineering” posters on SB.
You guys are all obviously smart…after all…your degrees weren’t “fluff” …you know…like a business degree. (Economics was harder than business but still a joke).
If you had the opportunity to have a free education to become an MD and make 125-250k a year as a Physician vs. Pay for a degree in tech to make the same amount…which would you choose? (Assuming that you would work the same amount in either job) Or would you then feel the need to make $400k…just because you can?
Not everybody is smart enough to become a Dr. so of course there would have to be some sort of criteria…whatever it may be.
And Please don’t take my question as a flame on the tech industry.
We just really don’t have enough Dr’s…and more than enough video games/ipods/blackberries/option laden cell phones etc. from my perspective.
One thing for sure…we need more MD’s…and fewer “Hospital Administrators” with MBA’s. ;o)
When I refer to “criteria” I’m talking about being smart enough to get accepted to med school before just receiving free tuition for any applicant. Free tuition would be wasted on someone like myself.
Amazing. Just a few months ago I was being told that if my Microsoft salary didn’t let me buy a house then maybe I should find a new job. Now I’m being told that I’m paid more than most people.
“I know several people who left a company I was at to work for Google. They didn’t seem to think it was all that fun or relaxed, 60 hour weeks was expected, the 20% time was a joke and your soul was crushed by exceedingly boring projects (do you want to write python adsense stuff for years on end?).”
I have to admit I never worked for either Google or MS. Maybe I and the people I happen to know have just been lucky. 20% time and stuff does sound like a bit like a cheap trick to lure young enthusiast in who will spend that in over-time anyway and then burn out in 5 years :-)
“Amazing. Just a few months ago I was being told that if my Microsoft salary didn’t let me buy a house then maybe I should find a new job. Now I’m being told that I’m paid more than most people.”
I’m talking about 90-120K salaries, which isn’t as much as a heart surgeon takes home, but still a decent pay considering the national average, and a great pay for international standards. Is my estimation off, or do you guys really think that range isn’t much of a salary?
Most of the MDs I know really WANT to be doctors. They don’t necessarily do it for the money. Most of the people I know who do something just for the money are miserable.
Note that this is the median selling price of houses, not the median value of all houses, the great majority of which are of course not for sale.
These days about 1/2 of all sales in SoCal are foreclosures, mostly in the Inland Empire, so don’t be mislead into thinking that the median house in SoCal would only sell for 275K.
I posted this earlier but must have gotten lost in the spam filter
Starbucks is looking at another big wave of layoffs. I don’t think this company is going to be staying independent if they keep going at this pace…
http://seattletimes.nwsource.com/html/businesstechnology/2008665670_starbucks24.html?syndication=rss
There are big differences between different types of doctors, and I don’t think you can even compare the skills, training, and hours required of heart surgeons to those of computer programmers for whom a bachelor’s degree is really not that critical (as markor asserts and I agree with, to a limited extent). Note that I did not say software engineers; there are also big differences between different roles in software development that require different training and skill sets.
Yes, certain doctors’ services could be filled by medical professionals with less formal education, or by doctors trained in other counties with differing medical education systems. Many family medicine and women’s health services are performed by nurse practitioners and physician assistants. However, surgery is a practice that requires a very specialized skill set and extensive training, and not many people in any country can meet its requirements. Comparing heart surgeons to software developers is comparing apples to oranges.
“If you had the opportunity to have a free education to become an MD and make 125-250k a year as a Physician vs. Pay for a degree in tech to make the same amount…which would you choose?”
Right now, at least, you don’t have to pay for the tech degree but you do for the medical degree. I am currently in a PhD program for Electrical and Computer Engineering. All PhD students in my department are supported (tuition + stipend ~$25k/year). This is the norm for most ECE and CS departments across the country, particularly for the top ones. Starting salaries may not be as good as those of a surgeon or specialized physician, but there are no graduate student loans to repay.
The cost of medical school and the oppressive student loans I would have to take out to afford it were definitely one deterrent keeping me from that path. However, even if it were free, I probably would not choose a career in medicine because I simply wouldn’t want to have to deal with illness and death and blood and body parts on a daily basis.. it’s just not my thing, and I’m glad there are other people out there willing do it.
Sorry to interject the doctor topic, but it was a response and very close to the topic.
Bill Gates has made several statements over long periods of time that technology should be shared, not code mind you, but computers in every house hold kind of thing.
Computer science, technology, code included, can grow exponentially with more people having access. Yes you can get a degree practically free if you have the ability for programming or computer engineering.
It’s done by ability, you either have it or you don’t. You can do it India, Egypt, Columbia, or China, to name a few. All countries seem to have some program for the advancement of technology.
The Bangladesh doctor reference is typical of why we just refuse to allow other professions the same courtesy of access to education based on an ability.
H1B allows people to come here where we have everything, everything. We have food every day. It’s easier to train people here. The Visa status is monitored because once people get used to having hot showers it’s hard to get them to leave.
There is nothing sinister about it. In my opinion Microsoft should be an example of how far and fast a new industry can grow with inclusion.
That being said, didn’t Microsoft add 15,000 in the past couple of years? So how is the lay off damaging? As I’ve heard and read they also intend on continueing to hire in the next couple of year. What if we are talking about a change in direction rather than lay offs?
“I posted this earlier but must have gotten lost in the spam filter
Starbucks is looking at another big wave of layoffs. I don’t think this company is going to be staying independent if they keep going at this pace…
http://seattletimes.nwsource.com/html/businesstechnology/2008665670_starbucks24.html?syndication=rss”
Perhaps, Kraft can have a luxury brand to complement Maxwell House
>>H1B allows people to come here where we have everything, everything. We have >>food every day. It’s easier to train people here. The Visa status is monitored >>because once people get used to having hot showers it’s hard to get them to leave.
Hi David Losh,
My Dear its not just the hot shower’s which H1B’s like here in US. Most of the H1B’s here in US are pretty well educated and they could definitely afford a hot shower/food in their home countries.
Its the Freedom which people get in the US which really draws people to the US apart from the comfort’s. (This is something which you would not understand if you are born in the US).
It is the great diversity which produces companies like Microsoft,Google and many startups in Silicon Valley. I have personally heard from people that children of immigrants/H1B’s really fuel the US economy as they have the zeal to be successfull just like their parents. You could show some respect to H1′Bs.
Thanks!
“Its the Freedom which people get in the US which really draws people to the US apart from the comfort’s.”
Freedom of high taxes yeah, but I can’t legally smoke pot anymore and I have to wear a frigging helmet when riding bicycle! And without my cozy European welfare blanket, without 6 weeks of paid holidays and now being dependent on a sponsor for my H1B visa, for the first time in my life I feel like a complete wage slave. But heck, nothing beats living in a city with hills, lakes, big trees and a decent music scene :-)
Anybody remember the original topic? I just wanted to chime in because I used to be a MSoftie.
I believe their publicly announced layoffs will prove to be grossly under reported. For one thing, every year they fire the bottom 10% of staff based on performance reviews. It’s based on the GE model. They never call these “layoffs”. They are fired for cause. So by just freezing new hires, MS will shed around 8,000 jobs per year. If the economy stays weak, there is also a lot of duplicate effort that could go fast.
Microsoft is basically a PR company with some software that they change superficially every few years, so they can re-sell the same thing to locked-in businesses. (Sound like the music business model yet ??) They don’t want the negative publicity of mass layoffs.
Boeing is doing the same thing. Publicly stating everything is great, until suddenly the dreamliner had to be delayed another year. Luckily, airbus is in sorry shape as well, so they can still survive on the older models.
I’m not sure why this market is holding up as well as it has. It probably means the consumer spending decline is over stated, or credit deflation isn’t as horrible as the MSM makes it out to be. But I sure won’t be buying a house until prices stabilize and start going back up, or until we have massive foreclosures as seen in CA.
You’re feeding into a myth of the hard working immigrant.
They may be able to afford food and hot showers, but here it is every body. I mean every body who wants food and hot showers. Those are the luxuries most people remember about the United States.
Freedom? That’s only for the very wealthy and the desperately poor in this country.
Most people who strive for success here talk about going home or sending money home. You can migrate by class, but that’s different from freedom.
[...] you’ll remember, a few months back Microsoft laid off 1400 employees as part of some cost-cutting and downsizing [...]