For the first time in its 33-year history, Microsoft is planning a major redundancy with 5,000 jobs — about 5% of the company’s 94,000 strong workforce — ready to be axed, 1,400 of those with immediate effect. This comes in the face of an 11% drop in net income for the last quarter compared to the year before.

Yes, Microsoft is being hit like so many others by the global economic crisis but one of the major reasons cited for its fall in profits is none other than the netbook. The weakness of the PC market and the shift of customers to cheaper netbooks has contributed to the fall in profits.

Most Windows-based netbooks use the OS they can handle, that being the older XP, and of course that is considerably cheaper than Vista — the OS that netbooks by large are not powerful enough to run well — and thus it means less profit for Microsoft.

Microsoft still posted a profit of $4.2 billion but since that was down from $4.7 billion the previous year, it seems to have set off alarm bells and many workers have already or will soon find themselves unemployed.