Microsoft said they were sacking 1,400 people across the entire company, yet a disproportionate number of those cuts fell upon the (relatively) small gaming group. What gives? Did somebody piss in Steve Ballmer's coffee?
In the literal sense, no, but somebody looking at Micosoft's research & development budget may well have exclaimed "oh man, the entertainment & services division is sure pissing in everybody else's coffee".
Look at this graph. It shows the R&D spending across the entire company in the six months leading up to December 31, 2008. Now look at the far right. Look how much the entertainment & devices division (the Xbox, Games for Windows, Zune & Windows Mobile guys) blew through.
They spent more than the Windows guys! Who were working on Windows 7! And nearly as much as the server & tools crew! This despite the fact the E&DD team is small compared to those other two, and contributes bugger-all towards Microsoft's overall bottom line (only $329 million of the company's $6.2 billion).
So if costs needed to be cut, and you were doing the cutting, and you looked at that expenditure, you'd know a good place to start.
Before you all go blaming some mysterious Xbox portable, the rumoured 360 waggle or even the Zune, it's worth noting a fair whack of that increase in spending was due to Microsoft's acquisition of the guys behind T-Mobile's Sidekick. That meant more people working on more R&D, which increased the spending proportionately.
So, there you have it. One good reason (one out of a few) why the axe fell on the E&DD group. All that spending with so little return made them the first, and most obvious target for some enforced belt-tightening.
Before cutbacks, R&D soared in Microsoft Entertainment Division [TechFlash][Image: James Duncan Davidson]