"To me, Microsoft seems like the former Soviet Union—Politburo, five-year plans, and all."
Here is the essence of a horseshit analogy. Microsoft is compared to an oligarchy - the Politburo [1]. And then by magic transformed into the entire Soviet Union. This allows the advancement of an argument for breakup based on shortcomings in the delivery of consumer goods.
"That’s why Steve Ballmer’s replacement should not be one executive but should be a number of people who have experience in different domains and who can run independent operating companies."
Mr. Wadhwa, how did that work for ATT? The article is utterly bereft of intellectual coherence. Microsoft is far more tightly focused than Samsung or Siemens and more profitable to boot.
I agree with your essential claim that it is poor reasoning to support a pre-disposed view, but sometimes folks reason backwards to see if they can justify their opinion.
Microsoft is clearly a complex place, and huge in ways that are hard to comprehend. But it is also conflicted. The 'essence' of the breakup argument are that the company's business units need to be able to execute on their objectives independently of the other company business units. And that is true for companies of this size. When it doesn't work well, which we saw in AT&T and Sun Micro, it causes internal friction and damage, when it does as IBM and GE have shown it can, it really does allow for getting more stuff done over all.
There are lots of ways that Microsoft could go, personally I think they would do well to create three 'views', Microsoft Consumer which presents the 'Surface' operating system to end users, Microsoft Developer which presents a developer focussed system to end users, and Microsoft Enterprise which presents a managed infrastructure to Enterprise customers. Each view has goals, but they grow from the same roots.
Don't be silly. We're having a world war in the IT scene at this moment among a number of monstrous companies: Microsoft, Google, Apple, Amazon and their allies. This proposal is like suggesting of partitioning the Soviet Union in 1942.
It makes no fuckin sense to break Microsoft apart. Microsoft is actually highly focused. There's synergy between every division, whether on the product side (e.g. hotmail/outlook accounts used in Windows, Office, Xbox, Internet services) or the backend/platform side (e.g Windows kernel powering PCs, Xbox, Tablets, Phones. Or the Azure cloud powering Office 365, XboxOne Cloud, and miscellaneous Windows SAAS, in addition to providing web-services AND also pushing and marketing the Windows and Xbox development platforms).
I disagree with this claim, and offer as proof the lack of Office on any of MS's mobile devices. Compare with Apple, who had versions of all of their iWork apps available on the iPad when that device launched. Further, Office has its own UX norms which frequently contradict the Windows norms.
I do not claim the article was high-quality, but I to take issue with the idea that there is intradivision synergy at MS. The opposite seems to be true, at least for now.
Wadhwa mostly fails to address that Microsoft (prior to a couple of weeks ago) was already "broken" up and organized by business groups (or customer segments) in much the same way he is proposing (Xbox = IEB, Online Services = Bing, Windows = Windows, Office = Office, etc).
I realize he is proposing an entire break-up, but I would have liked it if he had approached the problem providing the context of the difference between his proposed plan and the business unit separation. Afterall, Microsoft is famous for teams fighting each other for power and resources and meanwhile still requiring cooperation.
This is like Deja Vu. They said the same thing about IBM last century (I was an employee at IBM yorktown for a couple years).
IBM was dying, the PC (clones mostly) won the day and was in offices everywhere. The plan was to split IBM up into lots of little companies.. They brought in a CEO (Gerstner) who basically said, don't split it up, being big is a benefit and lets leverage that. It worked, and the company started doing better.
HA ha ha ha. No way. Don't discount M$. They have a very solid track record of coming late to the game, failing, flailing over and over... and once a market matures they move in hard and take it over.
They had a solid track record of crushing their opposition, by starving them of money (vs. Netscape), depriving them of critical applications (Apple with Office), or by throwing mountains of money at the problem (vs. Sony PS3).
Now they utterly own a few key markets, but have consistently failed to gain traction in others. Their online division is a disaster. Their console is set up for an apocalyptic flame-out. Their phone and tablet sales are already costing them billions in partnership deals and write-downs with almost nothing to show for it.
At this point Microsoft would be hard pressed to beat out Blackberry in the phone space.
MS got its initial strength primarily from IBM signing something extremely stupid. I don't see anyone signing anything like that with MS today and there isn't the same monolithic business entrenchment that there was with IBM back then, so I don't see how they are going to get back their leverage.
Well, this is wishful thinking. With their recent major re-org, Microsoft went the complete opposite direction, and they are going to have tightly coupled, horizontal/functionally-aligned departments rather than loosely coupled, vertical/product-aligned divisions. Will be interesting to see how that works out.
I too have written less than inspired articles in the past, so, I'll assume the author was under some kind of editorial pressure and couldn't think through the core idea.
The idea of giving away RT in order to compete with Android is only viable financially with the multiple network effects between the products of different divisions. If he proposes breaking up Microsoft, he should, at least, propose a business model that would work with the broken up company.
At the time, I thought that not breaking up Microsoft during the monopoly trial (a very remote possibility) was the worst thing that could have happened to Microsoft. As a large company, they lost a lot of the tech edge that they had in the 90's. Had they split into three groups something like: OS/ servers/dev tools, Office applications, and Internet services/Xbox(?), they would be a much more formidable competitor in the future.
Imagine how much would be different now, had there been baby-microsofts competing during the last ten years.
Not going to happen. Microsoft will continue to make gobs of money no matter what, just because so many users are afraid of change and learning new ways to do things (i.e. not using Office). Until Apple products drop dramatically in price, the average user will continue to buy PCs with Windows and other MS products.
The phone and Surface might end up failing (which is a shame, both of those products are WORLDS better than they ever should have been), but the classic Windows PC will stick around for quite awhile, and Xbox isn't going anywhere either.
I know it is silly, but its weird to see this post in the light of Bezos as owner of this publication. He is not exactly neutral on this topic. AWS competes with Azure.
There is a lot to learn about editorial independence in newspapers. While they aren't obliged to announce that kind of influence, I would imagine that a lot of Washington Post writers/editors would speak out if Bezos dictated the content of this post.
This actually makes a lot of sense. A lot of articles have been talking about how there's no obvious candidate for new CEO, and that it's basically too much for any single person to take on.
But if Microsoft were split into divisions (Windows/Mobile/Tablets, Enterprise/Office, Xbox/entertainment, Bing/Hotmail somewhere?) that could freely compete, it's actually pretty easy to imagine suitable CEO's for each one.
I'm truly hard-pressed to think of any value Microsoft as a conglomerate of these divisions, actually provides, strategy- or synergy-wise -- at least that's visible to those of us outside the company.
But is there any kind of precedent for this? It's common for companies to spin off a division, but I can't think of any company voluntarily truly breaking itself up like this. It's hard to imagine a board saying, "we admit we're not providing strategic value here, let's break ourselves up".
Remember that every division with the exception of Windows + Office has a hard time turning a consistent profit.
XBox (independent) vs. Sony, Android and Apple is a losing proposition, they may as well sell the division. In a high-stakes game like that, you need a parent company with deep, deep pockets.
Windows independent of Office is worthless. There's virtually no reason to use Windows apart from the Office infrastructure built around it, or the entrenched base Visual Studio developers. It's somewhat popular as a gaming platform, but as Linux starts to be reshaped into a first-class gaming operating system, that will quickly become a non-factor.
The online division is the most troubled, basically a black-hole for money. Surely it could be made profitable, or simply sold for a massive chunk of cash to someone like Yahoo! who could afford to pick it up.
It's not that the divisions would do better independently, but they're part of a highly dysfunctional family that cannot survive independently.
I'm truly hard-pressed to think of any value Microsoft as a conglomerate of these divisions, actually provides
You must not be an enterprise IT buyer. Here's how it works:
All large corporations use some Microsoft product, be it Windows, Exchange, Office, or something else. And they get volume discounts and significant other discounts off the list price.
"Oh, you want to replace Office with OpenOffice? Hmmm, seems we made a mistake calculating your Exchange licenses - the price just went up 300%."
I think there's some value in the goal of having a common interface and set of features across desktop, mobile, xbox, server. People would like that. Microsoft haven't achieved that there yet but it's still a worthy goal. I think slimming down and refocusing might be more effective than a massive break-up.
Maybe, but here's the thing. Splitting them like that might help the already rich ones (Windows and Office), while it would hurt the struggling ones (Xbox, Bing, Surface).
I actually don't know how Xbox is doing financially on its own these days, but I doubt it's extremely profitable and has a lot of cash on its own. The consoles usually make the money back over certain period of time from games. Could Xbox survive on its own in that scenario?
As for Bing - it's still losing billions of dollars a year last I checked. So are the Surface tablets, and Skype - well Microsoft paid over $8 billion for Skype, and they're not going to get that money back anytime soon. Hotmail, despite many registered accounts, was pretty dead, and I think only some transitioned to Outlook.com.
Outlook wasn't originally part of the Office team's domain.. it was originally part of the Exchange team. Though I do think that Exchange's integration is second to none for teams, and that Outlook as an email client is actually pretty good these days, and integration with Exchange, and bundling with Office keeps it all afloat.
That said, there's no reason Office+Exchange couldn't be split off as a separate sub-organization together, separated from the larger windows org... possibly combined with webmail services (hotmail/outlook.com/office365), simply using an azure org for their deployment/infrastructure.
Hardware could be spun off as well, with "special" deals with a core windows team to be able to build on "top" of windows core.
The Windows org could be responsible for windows core, windows desktop os, and developer tools.
There, you could then have three independant organizations within microsoft that could utilize the core resources, while still having autonomy.
The office org could then concentrate on bringing their services to a broader audience... not worrying if their Office for Android would cut into windows slate sales... and the slate/devices team could expand upon their UIs instead of having to bind into windows core.. and the core team wouldn't need to build clumbsy desktop UIs that don't fit the patterns people have been using for two generations.
On the other hand: if it were to split up then the parts would have to be more open; more open protocols and less lock-in games; less fire and motion. Maybe that would have had benefited the Windows ecosystem in the long term. Who knows, it is hard to tell.
Perhaps Microsoft should break up - but there's a lot of wishful thinking in there. Windows RT would beat Android in tablets if it were its own company? How? It couldn't do that with billions of dollars behind it.
No, not a breakup. Silly. Throwing
out the baby with the bathwater. Passing
up a great opportunity.
Review: Windows 7 desktops remain important
for people running high end applications from
AutoCad, Adobe, Mathematica, Office, etc. Also
developers for code to run on Windows Server
or in house Windows 7 desktop applications.
There are many client devices with many more
to come.
The client devices need the Internet and
servers, and as concerns about security
increase clients should just cache data,
easy to erase quickly in case the
device falls into other hands,
and not store the data; servers need to be
very secure; and many organizations
and individuals will
want their data on their servers in their
physical space protected by the Fourth
Amendment.
Shrink wrapped software? Okay, have a nice
application and want to write it for
sales, installation, support, and usage
on all the different client devices, Windows
XP, Vista, 7, 8, smart phones, tablets? Heck
no. And, for Windows 7, etc. a user is
very reluctant just to install a shrink
wrapped application due to issues of
system security and stability. So, the
shrink wrapped business is in deep trouble
except for the big applications from
AutoCad, Adobe, Mathematica, etc.
So, what to do about the work of
shrink wrapped applications? Sure:
Make them Web apps; that is, use
a Web browser for the user interface;
let the browser run on whatever client;
and put the rest of the code on a server.
If the client can't run a good Web browser,
then do the same thing by writing
a client app that uses a Web server for
the data, algorithms, and computation.
So, we've got it: For Microsoft, push
Windows Server for the servers. Push
client devices. Have really good Web
browsers. And in cases where own
both ends of the wire, take advantage
of that for more in functionality.
Fundamental point: People using
devices, including mobile, want some
utility, functionality, etc.
Since a single mobile device is quite limited
in what it can do, the device is mostly
for user interface (UI) for
services, applications, algorithms, data,
etc. on servers. So, the servers remain
just crucial.
Microsoft has shown that it knows how to
run huge server farms, well managed,
with minimal staff. That's a huge
business advantage. Computing is
charging on; e.g., there is a new solid
state mass memory that can put a terabyte
on the area of a postage stamp. It's been
a while since Intel knew how to put
1000 cores on a single processor. New
operating system concepts will be coming
forward. All this progress will need
lots of software development, e.g., for
servers. Microsoft's got the people,
funds, market, etc. to do that work and
lead in it.
Mistake: Dunkin Donuts sells more donuts
than Windows sells copies of Windows 8.
Similarly for hamburgers at McDonald's.
Similarly for smart phones from Apple.
And, for all three cases, so what for
Microsoft? There may be a lot of new
client devices, but that does not mean
that Microsoft has to dominate in all of them.
All the smart phones in the world won't
mean that a high end, 64 bit Windows 7
desktop system will be of no interest;
a smartphone and a high end Windows
7 desktop just are not the same thing
and are not really in direct competition;
even more the case for Windows Server.
Breakup? Windows Server can't exist
alone and, instead, must serve the
many client devices. So, Microsoft
should stay in the business of
soft/hardware for some client devices.
So, don't breakup.
[+] [-] brudgers|12 years ago|reply
Here is the essence of a horseshit analogy. Microsoft is compared to an oligarchy - the Politburo [1]. And then by magic transformed into the entire Soviet Union. This allows the advancement of an argument for breakup based on shortcomings in the delivery of consumer goods.
"That’s why Steve Ballmer’s replacement should not be one executive but should be a number of people who have experience in different domains and who can run independent operating companies."
Mr. Wadhwa, how did that work for ATT? The article is utterly bereft of intellectual coherence. Microsoft is far more tightly focused than Samsung or Siemens and more profitable to boot.
[1]and what corporation couldn't be?
[+] [-] ChuckMcM|12 years ago|reply
Microsoft is clearly a complex place, and huge in ways that are hard to comprehend. But it is also conflicted. The 'essence' of the breakup argument are that the company's business units need to be able to execute on their objectives independently of the other company business units. And that is true for companies of this size. When it doesn't work well, which we saw in AT&T and Sun Micro, it causes internal friction and damage, when it does as IBM and GE have shown it can, it really does allow for getting more stuff done over all.
There are lots of ways that Microsoft could go, personally I think they would do well to create three 'views', Microsoft Consumer which presents the 'Surface' operating system to end users, Microsoft Developer which presents a developer focussed system to end users, and Microsoft Enterprise which presents a managed infrastructure to Enterprise customers. Each view has goals, but they grow from the same roots.
[+] [-] freehunter|12 years ago|reply
[+] [-] cygwin98|12 years ago|reply
[+] [-] macspoofing|12 years ago|reply
What a terrible article.
[+] [-] revscat|12 years ago|reply
I disagree with this claim, and offer as proof the lack of Office on any of MS's mobile devices. Compare with Apple, who had versions of all of their iWork apps available on the iPad when that device launched. Further, Office has its own UX norms which frequently contradict the Windows norms.
I do not claim the article was high-quality, but I to take issue with the idea that there is intradivision synergy at MS. The opposite seems to be true, at least for now.
[+] [-] canistr|12 years ago|reply
I realize he is proposing an entire break-up, but I would have liked it if he had approached the problem providing the context of the difference between his proposed plan and the business unit separation. Afterall, Microsoft is famous for teams fighting each other for power and resources and meanwhile still requiring cooperation.
[+] [-] acomjean|12 years ago|reply
oblig wiki page: http://en.wikipedia.org/wiki/Louis_V._Gerstner,_Jr.
[+] [-] sgift|12 years ago|reply
[+] [-] radley|12 years ago|reply
[+] [-] mrdodge|12 years ago|reply
Apple's iPhone business alone is larger and more profitable than all of Microsoft combined. Take out the iPhone and Apple is still bigger.
[+] [-] astrodust|12 years ago|reply
Now they utterly own a few key markets, but have consistently failed to gain traction in others. Their online division is a disaster. Their console is set up for an apocalyptic flame-out. Their phone and tablet sales are already costing them billions in partnership deals and write-downs with almost nothing to show for it.
At this point Microsoft would be hard pressed to beat out Blackberry in the phone space.
[+] [-] moocowduckquack|12 years ago|reply
[+] [-] kyllo|12 years ago|reply
[+] [-] rbanffy|12 years ago|reply
The idea of giving away RT in order to compete with Android is only viable financially with the multiple network effects between the products of different divisions. If he proposes breaking up Microsoft, he should, at least, propose a business model that would work with the broken up company.
[+] [-] mbreese|12 years ago|reply
Imagine how much would be different now, had there been baby-microsofts competing during the last ten years.
[+] [-] gutsy|12 years ago|reply
The phone and Surface might end up failing (which is a shame, both of those products are WORLDS better than they ever should have been), but the classic Windows PC will stick around for quite awhile, and Xbox isn't going anywhere either.
[+] [-] gutsy|12 years ago|reply
[+] [-] leokun|12 years ago|reply
[+] [-] untog|12 years ago|reply
The Washington Post is not PandoDaily.
[+] [-] astrodust|12 years ago|reply
[+] [-] crazygringo|12 years ago|reply
But if Microsoft were split into divisions (Windows/Mobile/Tablets, Enterprise/Office, Xbox/entertainment, Bing/Hotmail somewhere?) that could freely compete, it's actually pretty easy to imagine suitable CEO's for each one.
I'm truly hard-pressed to think of any value Microsoft as a conglomerate of these divisions, actually provides, strategy- or synergy-wise -- at least that's visible to those of us outside the company.
But is there any kind of precedent for this? It's common for companies to spin off a division, but I can't think of any company voluntarily truly breaking itself up like this. It's hard to imagine a board saying, "we admit we're not providing strategic value here, let's break ourselves up".
[+] [-] astrodust|12 years ago|reply
XBox (independent) vs. Sony, Android and Apple is a losing proposition, they may as well sell the division. In a high-stakes game like that, you need a parent company with deep, deep pockets.
Windows independent of Office is worthless. There's virtually no reason to use Windows apart from the Office infrastructure built around it, or the entrenched base Visual Studio developers. It's somewhat popular as a gaming platform, but as Linux starts to be reshaped into a first-class gaming operating system, that will quickly become a non-factor.
The online division is the most troubled, basically a black-hole for money. Surely it could be made profitable, or simply sold for a massive chunk of cash to someone like Yahoo! who could afford to pick it up.
It's not that the divisions would do better independently, but they're part of a highly dysfunctional family that cannot survive independently.
[+] [-] auctiontheory|12 years ago|reply
You must not be an enterprise IT buyer. Here's how it works:
All large corporations use some Microsoft product, be it Windows, Exchange, Office, or something else. And they get volume discounts and significant other discounts off the list price.
"Oh, you want to replace Office with OpenOffice? Hmmm, seems we made a mistake calculating your Exchange licenses - the price just went up 300%."
Is it becoming more clear?
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] dermotbrennan|12 years ago|reply
[+] [-] devx|12 years ago|reply
I actually don't know how Xbox is doing financially on its own these days, but I doubt it's extremely profitable and has a lot of cash on its own. The consoles usually make the money back over certain period of time from games. Could Xbox survive on its own in that scenario?
As for Bing - it's still losing billions of dollars a year last I checked. So are the Surface tablets, and Skype - well Microsoft paid over $8 billion for Skype, and they're not going to get that money back anytime soon. Hotmail, despite many registered accounts, was pretty dead, and I think only some transitioned to Outlook.com.
[+] [-] sidww2|12 years ago|reply
[+] [-] MichaelMoser123|12 years ago|reply
[+] [-] tracker1|12 years ago|reply
That said, there's no reason Office+Exchange couldn't be split off as a separate sub-organization together, separated from the larger windows org... possibly combined with webmail services (hotmail/outlook.com/office365), simply using an azure org for their deployment/infrastructure.
Hardware could be spun off as well, with "special" deals with a core windows team to be able to build on "top" of windows core.
The Windows org could be responsible for windows core, windows desktop os, and developer tools.
There, you could then have three independant organizations within microsoft that could utilize the core resources, while still having autonomy.
The office org could then concentrate on bringing their services to a broader audience... not worrying if their Office for Android would cut into windows slate sales... and the slate/devices team could expand upon their UIs instead of having to bind into windows core.. and the core team wouldn't need to build clumbsy desktop UIs that don't fit the patterns people have been using for two generations.
[+] [-] MichaelMoser123|12 years ago|reply
[+] [-] devx|12 years ago|reply
[+] [-] graycat|12 years ago|reply
Review: Windows 7 desktops remain important for people running high end applications from AutoCad, Adobe, Mathematica, Office, etc. Also developers for code to run on Windows Server or in house Windows 7 desktop applications.
There are many client devices with many more to come.
The client devices need the Internet and servers, and as concerns about security increase clients should just cache data, easy to erase quickly in case the device falls into other hands, and not store the data; servers need to be very secure; and many organizations and individuals will want their data on their servers in their physical space protected by the Fourth Amendment.
Shrink wrapped software? Okay, have a nice application and want to write it for sales, installation, support, and usage on all the different client devices, Windows XP, Vista, 7, 8, smart phones, tablets? Heck no. And, for Windows 7, etc. a user is very reluctant just to install a shrink wrapped application due to issues of system security and stability. So, the shrink wrapped business is in deep trouble except for the big applications from AutoCad, Adobe, Mathematica, etc.
So, what to do about the work of shrink wrapped applications? Sure: Make them Web apps; that is, use a Web browser for the user interface; let the browser run on whatever client; and put the rest of the code on a server. If the client can't run a good Web browser, then do the same thing by writing a client app that uses a Web server for the data, algorithms, and computation.
So, we've got it: For Microsoft, push Windows Server for the servers. Push client devices. Have really good Web browsers. And in cases where own both ends of the wire, take advantage of that for more in functionality.
Fundamental point: People using devices, including mobile, want some utility, functionality, etc. Since a single mobile device is quite limited in what it can do, the device is mostly for user interface (UI) for services, applications, algorithms, data, etc. on servers. So, the servers remain just crucial.
Microsoft has shown that it knows how to run huge server farms, well managed, with minimal staff. That's a huge business advantage. Computing is charging on; e.g., there is a new solid state mass memory that can put a terabyte on the area of a postage stamp. It's been a while since Intel knew how to put 1000 cores on a single processor. New operating system concepts will be coming forward. All this progress will need lots of software development, e.g., for servers. Microsoft's got the people, funds, market, etc. to do that work and lead in it.
Mistake: Dunkin Donuts sells more donuts than Windows sells copies of Windows 8. Similarly for hamburgers at McDonald's. Similarly for smart phones from Apple. And, for all three cases, so what for Microsoft? There may be a lot of new client devices, but that does not mean that Microsoft has to dominate in all of them.
All the smart phones in the world won't mean that a high end, 64 bit Windows 7 desktop system will be of no interest; a smartphone and a high end Windows 7 desktop just are not the same thing and are not really in direct competition; even more the case for Windows Server.
Breakup? Windows Server can't exist alone and, instead, must serve the many client devices. So, Microsoft should stay in the business of soft/hardware for some client devices. So, don't breakup.