By many indications, things are going well for the tech industry. Mobile and cloud services are taking off. Apple, the comeback story of the century, is insanely profitable. Facebook is a public company, never mind its stock slide.
So why the heck is HP slicing 27,000 jobs? Why are promising startups slashing headcount or going belly-up? That’s just the way it is.
First, a quick review of recent – and upcoming – carnage.
- Research In Motion, the BlackBerry maker that thought it was flying high just a couple of years ago, warned today it would make “significant spending reductions and headcount reductions in some areas throughout the remainder of the fiscal year,” although it will be staffing up in other areas. This comes as RIM has lost market share in the fast-growing smartphone market and now expects to lose money this quarter.
- HP, the tech stalwart, said last week it would cut 27,000 jobs, or 8% of its workforce. CEO Meg Whitman said the layoffs were “absolutely critical for the long-term health of the company.” HP has suffered as its large PC and printing businesses slow down, and because of management turmoil.
- Google, whose $12.5 billion Motorola purchase just closed, could potentially lay off thousands of Motorola employees. Motorola, a mobile pioneer, did OK in its sale to Google but has largely been a failure since the Razr peaked – which was in the middle of last decade.
- Yahoo laid off 2,000 employees in April, or 14% of its headcount. Who knows what’s going to happen now, given that the company has just installed its sixth CEO in five years.
- Digital Chocolate, a seemingly promising gaming startup created by former Electronic Arts founder Trip Hawkins, has reportedly laid off a significant portion of its workforce, and Hawkins has stepped aside. Another gaming venture, 38 Studios, founded by former pro baseball player Curt Schilling, laid off all of its staff last week.
Get the picture? It can be pretty grim out there, depending on where you’re sitting.
So what’s the lesson here? As quickly as the technology industry creates new opportunities and new winners, it also presents a harsh reality for the losers. These aren’t even bubble-bursting times – again, things seem like they’re going pretty well, overall. But thousands will be out of work.
The good news is that this cycle of growth and decay can be a virtuous one. Those who may not have a job at Yahoo or HP today may start one of tomorrow’s great new firms, which may grow to employ thousands.
As the industry shifts toward even lower amounts of capital required to build new businesses – and to destroy old ones – this cycle may even speed up. No lead is ever safe. But as far as progress goes, it’s probably a good thing.
Miller Park sausage race photo (cc) Royalbroil via Wikimedia Commons.
Also: Tech’s Doomsday Plots: How Your Favorite Tech Companies Could Lose Their Edge
