'These Jobs Are Going, Boys'

Bruce Springsteen's lyric from "My Hometown," which I stole for today's note, is about working-class manufacturing jobs evaporating for good. But it's no factory foreman that's delivering the news about a couple of the server market's biggest companies. Rather, it's going to come from the top--and already has in the case of Sun Microsystems, which will be paring its workforce back by canning some 5,000 workers and rethinking its basic business strategy. Conventional wisdom is that Sun needed to streamline a long time ago, and in some ways that makes sense: Its basic longtime model of relying on proprietary servers, workstations and software is long dead, and the company's known that for a while now. Sun CTO Greg Papadopoulos acknowledged as much last Friday when he noted that the company's research and development will be concentrating on emerging technologies for service architectures, rather than products for traditional corporate computing. In other words, Sun is going to move its business focus toward products that feed companies like Salesforce.com or Google that emphasize the services model, rather than servers for your data center. Apparently, 5,000 people can't help reach that goal, so they get whacked. And that may be necessary to keep everybody in the company from eventually getting whacked.

However, 5,000 jobs pales in light of the cuts that Intel is allegedly considering, according to a recent online report. If TG Daily's news is true, Intel will be eliminating or redeploying 16,000 workers, a monumental number. Let's say that 1,000 of those jobs represent redeployment. In that case, 15,000 get axed--more than 15 percent of Intel's entire workforce. The remaining 85,000 will be charged with continuing to boost the company's efficiency and design and create the products that will enable Intel to meet the continuing challenge of AMD in the server and general computing processor markets. AMD has already reached one-quarter of the x86 server market share, so a lot of you like what they're doing; they're up to more than 15 percent in overall server share, according to Gartner figures. And Intel is going to meet that challenge by reducing its key employee assets?

You know from past newsletters and blog entries that I always figure that, as the server market goes, so goes the overall tech market--and by extension the general economy. By those measures, 21,000 jobs gone from key companies in the server sector is not a good sign for anyone--manufacturers, customers, and Joe Average. And don't forget what the whole line from Springsteen's imaginary foreman was: "These jobs are going, boys/And they ain't coming back."