[zach]

This is the correct read on this news.

Customer service is emerging from a major generational change at Blizzard. Understand that Blizzard went very quickly from a company of mostly developers to a company whose headcount was overwhelmingly focused on customer support. They had (before these layoffs) about 3,000 customer service employees worldwide. They hired a huge, huge amount of people, put together systems and tools as fast as they could, yet even so have only in the last few years been able to get their head above water. There was a lot of inefficiency, bad solutions, poor procedures and lack of automation. Todd Pawlowski was hired from Virgin America two and a half years ago to be Blizzard's VP of customer service and has been directing a huge amount of much-needed change. This is basically the latest step in Blizzard getting their act together and providing great customer service efficiently. It sucks for all the GMs that got laid off, though.

As for development, I think this doesn't indicate a whole lot, as you suggested. Maybe Cinematics is wrapping their work for Diablo 3, but the "development-related" jobs could very well be all QA positions. There is more than enough work in development for Blizzard to keep recruiting aggressively at GDC next week. The speculation elsewhere about this meaning something is changing for their future projects is far-out and wrong.

[digitalchaos]

It is always funny reading the hysterics of public perception when you are on the inside, isn't it? You are spot on though. These types of layoffs are the norm in gaming. I can't think of a single game shop that doesn't do semi frequent operational cuts (aka "trimming the fat") for the last 10-15 years. I don't know why this is always a shock to the community.