The "harsh truth" revealed in the open letter from Microsoft CEO: the company is profitable, but still needs to lay off employees

Microsoft CEO Satya Nadella's internal open letter is revealing the harsh transformation reality of the tech industry: in the AI-driven change, even companies with booming performance will undergo massive layoffs, with the software industry being the first to bear this impact.

In this 1,150-word memo justifying the layoff of 9,000 employees, Nadella attempts to reconcile two seemingly contradictory realities— the company is "more successful than ever," yet still needs to cut jobs. This narrative framework reflects the harsh reality that while AI theoretically makes companies more profitable, it also means employing fewer workers.

Nadella repeatedly mentions "forgetting old knowledge" and "learning new skills" in the memo, implying that some employees' skills have become outdated, and the company chooses to hire fewer but more AI-strategy-aligned professionals.

Analysis indicates that the impact of this memo extends far beyond Microsoft itself; it is essentially a "weather forecast" for the entire software industry. Just as rapid automation changed the industrial economy, the digital economy will face similar transformative shocks, with the current software business model being the primary target of the AI impact.

Profitability Layoffs Become the New Normal

Nadella wrote in the memo:

"By any objective standard, Microsoft is thriving: our market performance, strategic positioning, and growth all point to an upward trend. Our investments in capital expenditures are greater than ever. This is the puzzle of succeeding in an industry without charter value."

According to a previous article by Jianwen, Microsoft's layoff of 9,000 sales positions in July occurred right after a quarter of accelerated revenue growth. The company has laid off a record total of 15,000 employees this year, while AI infrastructure investments surged to $80 billion during the same period.

This statement attempts to answer a difficult question: how can a company be "more successful than ever" while also laying off employees?

In traditional industries, this is akin to a healthcare institution saying, "We made a lot of money, but we need to lay off nurses to replace them with machines," or a steel mill CEO saying, "Of course, we are profitable, but we have to lay off workers due to the advent of smart manufacturing."

The phrase "the puzzle of succeeding in an industry without charter value" is, in fact, another form of rationalization.

Nadella's comparison of the current transformation to the PC revolution of the 1990s is calculated, as it both sparks excitement and fear of missing out, while normalizing the idea that significant technological changes require personnel casualties.

Skill Elimination Under the "Learning" Slogan

When Nadella says, "The success we want to achieve will be defined by our ability to endure this difficult process of forgetting and learning," he attempts to shift attention from immediate challenges to future possibilities.

However, this approach obscures the harsh reality: the pain of today and the near future will be brutal.

Microsoft's leadership is essentially expressing that their layoffs are not due to financial difficulties, but because these employees do not align with the company's AI-focused strategy, repeatedly mentioning "forgetting" and "learning" implies that certain employees' skills have become outdated The company chooses to hire fewer employees with more relevant expertise rather than invest in retraining.

When Nadella uses the word "learning," it is not inspiring but rather a disguised warning that masquerades as motivation. This harsh reality will confront many employees.

The Software Industry Faces Comprehensive Impact

This memorandum heralds a new reality for the entire technology industry. Loyalty has become a one-way street: employees must remain loyal, but tech companies only need to provide "opportunities" when they deem it necessary.

New industry rules are forming: regardless of a company's financial situation, layoffs will be used for strategic positioning; profits will provide opportunities for investment transformation, sometimes involving the elimination of jobs; strategic layoffs will no longer be tied to the financial health of the company.

Analysts suggest that the normalization of profitable layoffs may become the next significant trend exported from Silicon Valley to the broader economy. Just as rapid automation transformed the industrial economy, the software industry will be the first to bear the brunt of the AI impact.

This is the truth behind Nadella's memorandum—a forecast of an impending industry upheaval