MSFTextrememakeover

Monday, March 26, 2007

For want of a shoe, or time for a new rider?

A MSFT-employee recently challenged me to discuss what I would change at Microsoft. I have provided that commentary many times over dozens of posts on a topic-by-topic basis. However, doing it as a subject unto itself is new - and pretty daunting given a company the size and scope of MSFT (Indeed, as you'll see, I think that breadth is one of MSFT's major problems). There is also the immediate issue of determining whether you think the problems are a result of strategic shortcomings, or tactical ones. For example, while Benjamin Franklin was undoubtedly correct when he said:

“A little neglect may breed great mischief: for want of a nail the shoe was lost; for want of a shoe the horse was lost; and for want of a horse the rider was lost.”

It's also true that the right rider can make all the difference in the world. A relatively recent case in point: HP under Mark Hurd versus Carly Fiorina. While I was no Fiorina fan, given the rapid turnaround, it now seems apparent that the company must have been in better shape under her tenure than it appeared to be at the time - but it took Hurd to bring that out.

So, let's begin with the strategic:

Mission

MSFT does not appear to have a clear, honestly customer-focused mission that is understood at all levels. Importantly - and perhaps as a result - employees seemingly aren't in total accord or fully bought into it. If MSFT truly believes in "Your potential. Our passion", then it needs to do more than just pay lip-service to it. It needs to open itself to all that that entails (cross-platform support, not playing lock-in games, etc.) and deliver against it. If they do that, then most employees probably would be fully on board (i.e. maybe the problem is the current gulf between words and actions). Those that wouldn't be, need to go.

Leadership

Seven years have passed since Ballmer took over as CEO, and that's more than enough time to make a fair assessment of his performance in the role and suitability to continue. While he's off the charts for passion and desire, and has done a good job growing the top line (and, much less successfully, the bottom one), overall it's been a mixed bag at best, and abysmal at worst. In particular, I think Ballmer lost the confidence of the street - and maybe employees too - long ago. In my view, it's therefore time for a change. Moreover, it's time for an external hire to fill the role. MSFT needs someone with a fresh perspective, versus someone closely intertwined with the past and what used to work. Assuming Hurd can't be lured over from HP (which is probably true), Oracle's Safra Catz or YHOO's Susan Decker might be good candidates. But I don't mind if that new CEO has a previous MSFT pedigree. That may even be wise, especially if the individual saw what was coming more clearly and, in classic MSFT politics, got pushed out for making too many waves. Brad Silverberg, for example, comes to mind (interestingly, he was also one of the financial backers in Tellme, which MSFT recently acquired). Perhaps there are others even more suitable.

Culture

I see two concerns here. First, the need to move from a culture of "good enough" to one of "excellence" and "insanely great". I've posted about this before. MSFT has a long-standing approach, ingrained via Gates, of getting something - anything - out to market and then fixing it over time. That worked well for a long time when "free" alternatives weren't prevalent, and when competitors/markets weren't moving as quickly as they are today. Now, it's a lot less successful, and yet MSFT continues to do it and be surprised when it fails. This is an area where Apple's Jobs seems to get it, while MSFT appears clueless (and no, I'm not a MAC fanboy - just calling it as I see it). The second area of concern, reported in many sources and evidenced in comments on Mini-MSFT, is MSFT's "cult of personality" versus a true meritocracy. This is truly dysfunctional, and seems to have resulted too often in the wrong people getting ahead or staying, while other [more capable] individuals have been passed over, left, or been forced out. Again, it's impossible to ignore that the culture which currently exists requires Ballmer's tacit approval, if not his full support. It needs to end and ergo, again, he needs to go.

Training

What is MSFT's process for ongoing training and development? Does it exist? Especially within the leadership ranks, it appears to be ineffective or non-existent. Microsoft should put more cycles into trying to create a successful management development curriculum patterned after GE's highly regarded program. Obviously, it will have to be customized, but it's not a coincidence that many, many former GE senior executives go on to be CEOs of other major corporations. How many ex-MSFT senior executives have done that? One, if we count Rob Glaser at RealNetworks? Maybe this process has begun - I don't know, but the results aren't yet evident in overall execution.

Rewards and Punishment

MSFT's reward structure seems to be inconsistent, inequitable and disconnected from the things that drive shareholder value. A leadership team who misses their own earnings goals, for example, should not be eligible to earn 100%+ of their $1B SPSA bonus payout - period. While each group should have metrics that are unique to their business, certain core objectives - like earnings -should span all units and act as global multipliers. In other words, miss your earnings objective, and your entire bonus will be impacted regardless of how well you did on other non-core metrics. MSFT also needs to review the skew between the "top 500" - now morphed to 800 or more given MSFT's ongoing bloat - and everyone else. IMO, it's unjustifiably high. Since overall results don't support increasing the size of the pie, it's time to start allocating it more evenly with those who actually do the bulk of the work. Finally, punishment goes hand in hand with accountability. Sadly, it's been non-existent - at least at MSFT's executive levels - for most of this decade. Recently, we've seen some improvement there, but even then it's often late and mired in uncertainty (e.g. was the executive fired or did they quit?). Punishments, like rewards, should be clear, timely, and leave little doubt about why they're being doled out

Prioritize/Focus

Stop fighting major wars on multiple fronts simultaneously. It is simply ridiculous for current management to assume that MSFT can fight the biggest and best companies on earth, across a dozen or more battlegrounds, and still hope to prevail. Just take a look at some of the folks MSFT is going up against: SONY (and Nintendo) in gaming, Nokia and many others in mobile, GOOG and YHOO in Search, Everyone from Alcatel to Siemens in IPTV, IBM/Oracle/SAP (and smaller players Salesforce.com. Rightnow, etc.) in ERP and CRM, IBM/Adobe/FOSS in middleware and development, AAPL and most of MSFT's former partners in mobile media, AAPL and GNU/Linux in Operating Systems, and FOSS in personal productivity. Worse, these battles are spreading MSFT too thin, and leaving its core cash cows increasingly vulnerable (would Vista have taken 5 years to develop if management hadn't been distracted with a dozen other battles?). MSFT needs to prioritize the current list down to something more realistic, while ensuring that the appropriate vigilance is maintained on the crown jewels. As a start, any new battle should require them to give up an existing one. Notice how that NEVER happens and they're always additive instead?

Better together

Put "partnering" back in Platform. Windows and Office (to a lesser extent) have been successful historically not just because they were decent products, but because they provided a platform for others to develop on. Today, MSFT is increasingly competing against many of its former partners. If you were SAP right now, would you be putting more resources into Windows/SQL/Office, or looking to Linux/mySQL/OpenOffice? Where is Adobe putting an increasing amount of its efforts now that MSFT is competing against them in numerous categories? Ditto, CSCO? Ditto, far too many suppliers imo. If Windows and Office - not to mention most "for-profit" s/w offerings - are going to continue to succeed against increasingly functional low or no cost alternatives, its going to be on the overall platform experience and not the features of any one product. Otherwise, it's just a matter of when, not if, OSS alternatives become good enough in each category to supplant the incumbent (some argue they already are).

For-profit suppliers need to wake up to this bigger threat, and MSFT needs to get back to its roots of providing developers with the preeminent platform for adding value to other's solutions - not cherry picking them off one by one when they establish a market that gets large enough to attract MSFT's competitive interest. I'd also like to see more cross-promotions of mainstream offerings (i.e. not bundled "craplets"), and a global Window-update equivalent (like Linux/FOSS has via "apt-get" and associated GUI front-ends like the Synaptic package installer). Does it really make sense to have half a dozen separate updaters running on my PC - each with its own GUI, process and quirks? If there's a Windows anti-trust concern, make it a Live service. While you're at it, throw up a Live service to clean the craplets off new PCs automagically - the out-of-box customer experience there is terrible (yes, this is primarily an OEM-initiated problem, but since they're not economically inclined to fix it, offer a service which does - it's in MSFT's best interest).

The LBU - Linux Business Unit

Yup, time to face the music and stop pretending Linux isn't here to stay. Not only is it, it's likely to eventually gain a significant share of global desktops (read: eventually much more than AAPL). So why is MSFT resisting it so hard versus simply embracing it as yet another opportunity to sell software a la the Mac Business Unit? IMO, MSFT should be focused on what it can still sell accounts who go this route. At a minimum, that could include Servers for legacy support of Windows apps. But maybe MSFT should even develop it's own "customer-friendly" linux distro (or, if GPL exposure of that code is an issue, maybe a non-GPL licensed library to run on any distro, or a BSD-based distro)? BTW, if they haven't taken steps to at least determine the engineering feasibility of that and effort required, then they're not doing their job. Additionally, why make it a religious battle? Like any OS, Linux does some things very well. For one, it's much more modular than Windows. So why not empower an internal group to promote it where it might make sense - like say in a set-top box or audio device? The Novell SUSE distribution thing is a step in the right direction, but MSFT needs to do more. Heck, if it can't convince itself that the Windows kernel and architecture is superior - and I can't find a single analysis that argues that's the case (company published or otherwise - if you have one btw, I'd be interested in a link) - maybe it should do an AAPL, hop on board a Mach/BSD kernel, and add value at higher levels only moving forward?

Investments that make money

Duh, you say? Well consider that despite years - or in some cases decades - of effort and $10B's spent, MSFT's emerging business "bets" are STILL collectively unprofitable. Business can and do make investments for a variety of reasons. These include generating an ongoing stream of earnings, creating a asset which can be sold to realize a profit, protecting an existing earnings stream, and ensuring access to a future one. MSFT's problem is that almost all have been sold to shareholders and the market as the first, but have failed miserably to provide a return. While execution blunders and other mistakes have normally been a contributing factor, it's becoming increasingly apparently that either management plans to ignore that, or their actual goal was always defensive versus offensive and they simply misrepresented their original intent. IMO, either of those options is unacceptable.

Research and Development

MSFT spends a ridiculous amount of money on R&D - as they're happy to point out at every opportunity. How much? About $35B since 2000 (more than IBM, and more than SONY/GOOG/AAPL combined). What they don't like to talk about, is how little of that is the "R" part (only $500M or so annually). In other words, it's mostly development costs masquerading as R&D for tax purposes and to maintain the fantasy that maybe it's mostly discretionary. More importantly, like the "investments" above, you rarely hear details on the return being generated. Either MSFT needs to figure out a way to better tap the ideas coming out of the MSR brain trust, or maybe it's time to disband that group like Apple did. Someone then needs to look at that overall Development cost and figure out why it's so large. To put it in perspective, AAPL has spent less than $5B on R&D since 2000, yet doesn't appear to be lacking for either innovation or development. Indeed, they seem to be kicking MSFT's butt at both, resulting in larger returns, much quicker paybacks, and faster growth. Fixing this obvious imbalance, would likely be the biggest single contribution to accelerating earnings that any new CEO could make.

Mergers and acquisitions

MSFT's track record in this area is mixed to horrible. In most cases, the acquired company's products have either disappeared completely or been incorporated into some other offering. Additionally, the size and scale of these acquisitions have been very modest relative to MSFT's size and cash position. IMO, that's overly-conservative. I've posted before that MSFT could - and should - have done more at the bottom of the dotcom/market bust when the who's who of technology were trading at pennies on the dollar. I view this as one of the largest single mistakes of Ballmer's entire tenure - and there's no shortage to choose from. Even today, he is routinely quoted as stating a preference for many small acquisitions versus a larger one. Then why carry that much cash on the Balance Sheet? Is MSFT a bank? While larger purchases bring with them more integration risk, and MSFT hasn't exactly blazed a trail of success on smaller ones, companies like HPQ and Oracle are demonstrating that the widely-held industry perception of larger acquisitions "never working out", may not be true. As a result, I think MSFT needs to get more aggressive in this area and better at it. The recent Tellme acquisition is a positive step in the right direction - at least it's bolder. But MSFT needs to figure out how to successfully leverage new acquisitions a la the recent EMC/VMware model, versus doing their usual borgify and ultimately destroy. Again, one of the core strengths of a new CEO should be a demonstrated track record of M&A success.

A truly global structure

Don't just talk globally, act globally. While growth is increasingly shifting to emerging markets, and MSFT talks up the opportunity, it continues to be hugely Redmond-centric. Yes, the company has established some foreign labs, etc., in recent years, but it still pales by comparison to the market opportunity or similar large global entities like IBM or HPQ. MSFT sells decentralized computing but acts more like a mainframe. Time to push more and more operations overseas where the growth is, and where the greater talent pool exists. IMO, had MSFT done more of this sooner - like in Europe, for example - they also wouldn't be perceived as such a US-entity, and would be better embraced by foreign markets (and especially Governments) as part of the local community.

Oh, and freeze Redmond headcount (except for select strategic initiatives) for at least the next two years.

Marketing/Sales

Marketing and Sales needs to become world-class. I'm not sure MSFT ever was a leading marketing or sales organization - although in the 90's, when things were all going the company's way, the perception was that they were incredible. Frankly, I think IBM, Oracle, HPQ, SUN, etc. were always significantly more experienced in selling to the enterprise and maintaining high-level relationships. And in the consumer space, which is increasingly important, MSFT is getting beaten hands down by AAPL and many others. Again, that needs to change. On the consumer side, MSFT needs a new advertising company pronto and/or new executive oversight. For every one good ad/campaign, there are ten bad ones. They also need help with product design, packaging and especially naming. On the enterprise side, I'm not sure whether the solution is new training, new recruitment, or new leadership - probably all of them.

Public Face

I am sick and tired of MSFT executives "trash" talking competitors in public. This is such a fundamental business tenet that it's an embarrassment to have to even list it. But Ballmer and Gates were apparently asleep the day everyone else learned it. Moreover, others throughout the organization appear to key on this and feel empowered to do likewise. It needs to stop and asap. Be judged by your products, support, and execution - not your mouth.

Put the fun back into computing

Somewhere along the line, MSFT seems to have fallen into the IBM trap of trying to please corporate IT departments instead of users. To do so, imo, is to forget the lessons of Windows 95. Windows 95 was a hit not because IT departments demanded it - they didn't. It was a hit because users embraced it and then demanded it at work. I recently loaded Vista, which I may post about, and liked it overall. But there was very little "Wow" - certainly not enough to justify upgrading my existing machine and purchasing the retail version to get it. Which makes the advertising campaign that much more ridiculous. Underpromise and overdeliver - another basic business tenet that MSFT routinely ignores. My advice? Get a feature pack (and not just a service pack) out asap. Beyond that, get back to making computing fun for users.

Okay, now on to the more tactical:

Windows

Sending in Sinofsky to clean house and get this division back on track, was smart and way overdue. IMO, Allchin and others should have been fired during the Vista reset fiasco - but undoubtedly Gates fingerprints were so prevalent in that screwup that sending others packing would have been the height of hypocrisy. As above, I think Vista is just "good". So much for Ballmer's "It'll be great - bet on it". That's pretty unacceptable after all the time and money spent, and it's going to make it that much harder to sell (all PR puff pieces about exceeding initial XP sales aside). Stepping back, I think the writing is on the wall that MSFT needs to develop a cloud-type hybrid OS that lives on both the desktop and server. Others already are, via companies like this (sporting ex-MSFT distinguished engineer Lou Perazzoli, and ex-CFO John Connors as an investor) or via technologies that promise a similar experience - like Adobe's Apollo. It would be nice to think that MSFT is way ahead of the game on this, especially given how core it is to the business and how far along others appear to be. Sadly, based on this and this, it sounds like they're late to the party yet again.

I also think MSFT has to decide whether it can continue to compete while dragging several decades of legacy code with it. Backwards compatibility is something that MSFT can be justifiably proud of. But moving forward, I don't see how the company can keep up with AAPL and Linux with the current code base. Pretty obviously, MSFT needs to be in a position where it can come to market much faster with new releases than it has done. In particular, I think it needs a consumer release that is a perpetual showcase for innovation. This addresses the more "fashion" orientated demands of this increasingly important market segment and, like Windows 95, would keep IT departments on their toes via end-user demand. All due deference to the more modular approach of Vista, I just don't see that being sufficient to enable this. Now, I don't profess to have the technical answers here, but all options - from new "cloud" OS, to dropping some legacy compatability and/or embracing a new kernel and leveraging higher-value layers only (like OS X) - should be on the table.

Business Division

Now that Raikes has finally woken up to former GE CEO Jack Welch's "when you think you've reached saturation, expand the market definition", I think the Office group is on the right track. If they can do a good job of that via telephony, etc. then justifying the additional cost of Office should be viable - assuming you get the world-class Salesforce in place that I discussed above. I also applaud the boldness of the new "ribbon" interface. I haven't completely made up my mind on it, but that took guts. Kudos.

On the ERP/CRM side (formerly BusSol), I think this group will never be the market leader as long as its mandate is polluted by trying to be an Office-delivery mechanism versus the world's leading ERP/CRM solution. In my mind, now that the moronic decision to go head-to-heard against previous partners has been made, this group should be free to pursue that objective 100%, including supporting OpenOffice front-ends, non-SQL RDBMS, etc., when and where that becomes desirable (if it isn't already).

Finally, given the renewed focus on Healthcare (which I agree with), I would seriously consider buying a large Healthcare software supplier that would be accretive - like Cerner. If you're wondering about the apparent contradiction there, I don't see that being as aggressively confrontational versus existing partners as were say, the ERP/CRM moves.

Server & Tools

This is a group that imo can be justifiably proud of their record of accomplishment. Yes, SQL suffered a huge delay. Yes, Exchange faces some imminent threats from OSS and needs to get easier to manage for larger entities. Yes, Home Server has some work to do. But quarter in, quarter out, this group has an excellent track record of profitable growth despite being in the direct line of fire from Open Source alternatives. It's going to take a lot to stay that way and adjust to the whole SAS model, but they seem up to the task.

Online Services

Let's face it, MSN has been an abject failure. Indeed, outside of IPTV and MSFT's $10B of failed cable investments, no other group in MSFT has burned through more cash, over a longer period, and still had losses to show for it. WRT the more recent efforts here in Search and Advertising, those too have been massive failures. Again, that's not just my assessment - it's the assessment of professional analysts whose opinions I have quoted on several occasions. As a result - and as I posted here - I think MSFT should give the current team until year-end to show the beginning of a turnaround. Recent monthly stats provide some reason for optimism in that regard (the ongoing market share losses having been arrested, at least temporarily), and I have confidence in at least Berkowitz. But if they can't show progress by then, it's time to pull the plug and outsource the entire effort to YHOO in return for a % of the action.

Entertainment and Devices

Why is MSFT in the device market? If they are going to be in it, shouldn't there be a plan to be #1? If so, why didn't they buy Logitech at some point? I mean, if you're going to tank overall margins with hardware anyway via Xbox, why not do it with something profitable? WRT that bigger concern - Xbox, what can I say that I haven't said repeatedly before? It will likely take multiple decades, if ever, for MSFT to recoup the $5B+ expended on Xbox to date. Additionally, it would be hard to find a buyer given that profit picture and the massive losses generated on each console rev. I also think MSFT's current management has no intention of selling it. As a result, Xbox is a financial failure by any reasonable overall assessment. That said, the $5B is now a sunk cost, and if leadership is convinced that future losses can be mitigated and a [ongoing] profit generated, then it makes sense to continue forward. Gaming is big business overall and I think MSFT needs to be represented. It should just have been done in other ways, and imo MSFT stupidly neglected the PC-gaming market in the interim (an oversight which, thankfully, appears to be getting addressed). What doesn't make sense is to pretend that Xbox has been a success or even a "great success", or to give the executives involved - many of whom are the same geniuses who predicted 2-3 year paybacks back in 2001 - more responsibility. Oops - too late - Zune.

Conclusion

Those are some of the issues as I see them - strategically and tactically. Again, I don't profess to have extra insight, nor do I think I have all the answers - or even any of them. At the same time, I'm not splitting $1B in bonuses with 800 other senior colleagues because of my supposed world-class brilliance. What I am, is a shareholder who has held an underperforming stock for this entire decade, while the current management team has been telling me to "have patience, our plan is working". It isn't, and it's time for someone new to come in, acknowledge that fact, and start making the tough choices required to get things back on track - or at least fail trying.

Update: Various articles that touch on the themes here in some way (i.e. directly or indirectly):

48 Comments:

  • Some interesting observations, indeed. Particularly your point about communicating the value of the platform vs. individual products.

    I posted on this (on my msdn blog-calling it the MSFT's Cool Hand Luke Problem--our inability to communicate).

    http://blogs.msdn.com/maamktg/archive/2007/03/22/microsoft-s-quot-cool-hand-luke-quot-problem.aspx

    I may not be as bearish, but can't disagree with everything.

    By Blogger Jeremy, at 7:21 AM  

  • Wow. You basically seem to be saying "milk the last cash out of the monopolies, don't build any new businesses, and let--even actively encourage--those monopolies decay."

    Here are the points where I agree with the current MSFT leadership and disagree with you.

    1. Support Linux/FOSS.

    First of all, regarding Linux desktops. Been hearing it for seven+ years now with absolutely no progress whatsoever. Up-front license costs are lower, but which Linux UI will you standardize on? What will you do when you can't find a hardware driver? What about those apps that won't run? Are the supposed marginal benefits of Linux--security, stability--that much greater than Windows to justify the other costs? Not to my business...or, apparently, many others.

    Now, Linux on the server and in embedded systems is proven. But there, Microsoft should imitate--hell, steal if necessary--the features that customers find appealing in Linux and put them into CE or Windows Embedded.

    My point: why the hell would Microsoft want to cannibalize its 80%+margin business by supporting a competitor on which it will earn nowhere-near-as-large margins because it can't charge any money for the actual software, only lower-margin boots on the ground "services" like boots on the ground deployment and integration and support. (Sounds like IBM.)

    I mean, that case why not just sell your IP off to the highest bidder and close shop?

    2. Prioritize/abandon bad investments.

    So where will growth come from? I thought you were dissatisfied with single-digit growth in the core businesses.

    Look, it's going to be harder and harder to create compelling new versions of Windows and Office. Those products are mature, as you've noted. (I mean, can you think of any rock and roll features that Vista could have added that was more "wow"? Apart from aping Apple's built-in iLife apps?) Greenfields in the devceloped world are gone. IT doesn't want to upgrade more than every three years, tops, and ideally less than that. What, you're going to rely on new sales to developing economies? Talk to me about the billion pencils sold in China...

    Server & Tools will eventually hit the same wall when all the IBM/Oracle/SAP takeaways are finished. (Might be 10 years, might never happen because of bad execution.)

    My point: If Microsoft wants growth, Microsoft has to invest in new businesses. Now, execution of those new businesses has been middling-to-poor across the board--and you're correct, M&A has been abysmal--but your recipe seems to be no recipe at all.

    Same with your criticism of MS Research. $500m a year seems like peanuts compared with the free cashflow generated by Windows and Office. And its track record isn't as bad as you make it out to be--SQL Server has come out of nowhere in the last 15 years largely because of contributions from MSR. The Windows Media platform (codecs, DRM) is decent technology--used in service of a misguided strategy (make the PC the home entertainment hub...oy vay). Desktop search--better than Google's or Yahoo's. Internet search--still lagging, but not bad for starting from scratch in three years. (Blame MSN's leadership for missing the opportunity back in 1999.) SharePoint--watch as it eats the markets for enterprise search (Autonomy) and Web management (Vignette) over the next five years. All of those products were incrementally improved by contributions from MSR.

    3. I think I've commented before about how the Xbox is a success, but only if you look at the "secret" metric: drive Sony under. It's happening as we type.

    Notice PS3 launch Europe launch week? (Uh, neither did anybody else.) How about Stringer's subtle "this company's fundamentally fucked, please fire me now" comments? (http://www.slate.com/id/2161136/)

    Now, MS can't reveal this metric because of antitrust reasons, but I think $5B to clear the living room of your main competitor is money well spent.

    UNFORTUNATELY, MS's strategy to take over the living room--PC as center--was so flawed that another competitor, Apple, jumped right in. Credit to Apple, for sure.


    Other than that, I agree with your post. Particularly about online services execution. The worst. Just the worst. They should have folded up shop years ago--imagine how much more infrastructure software they could have sold to AOL, EBAY, AMZN, GOOG, YHOO, etc., over the years if these companies hadn't been scared of MS as a threat. But they keep doubling down. I don't understand the strategy, I've never understood it, and I'd love to hear Gates explain it in his memoirs someday.

    By Anonymous Anonymous, at 1:08 PM  

  • "Wow. You basically seem to be saying "milk the last cash out of the monopolies, don't build any new businesses, and let--even actively encourage--those monopolies decay."

    Not at all. In fact, I think I was pretty clear that the legacy businesses need to expand their market definition while doing more innovation (you seem to think those opportunities are largely exhausted - I don't), and that the company needs to make better/smarter/more-impactful non-legacy investments/acquisitions.

    Re: your point #1, yes, Linux on the desktop has taken a long time with only modest share gains to date. But I think you seriously underestimate what could happen when it eventually reaches critical mass. Remember Gates: people tend to overestimate the ST and underestimate the LT. What then - ignore it? BTW, Vista's current "issues" are likely accelerating the number of folks doing a more serious compare. WRT cannabilization of Windows, that's a function of justifying the extra cost via additional value (see my point about "better together"), and will happen (if MS fails to do that) whether MSFT embraces Linux directly or not. Also, keep in mind that many commerical distros charge (so maybe it doesn't have to be free), and that MSFT only makes ~$60/PC for OEM Windows and upgrades are averaging 3-5 years (you don't have to charge much for advertising to replace that revenue stream - if you can figure out how to sell advertising).

    Re your #2, as above, I think you missed my point. I don't disagree at all with most of your comments in that section - which is why I think better/smarter investments are required. Re MSR, valid counter points, but are you saying the product teams are incapable of generating the same IP? Regardless, what's your explanation for the massive R&D differential between MSFT and AAPL (for example) cited in my post?

    Re your #3, I don't disagree that SNE is in major trouble. But how does that help MSFT? Is MSFT in better shape because SNE is distracted and AAPL has been able to do what SNE used to be able to do with consumers? Because the PS3 drives Linux into the home? By burying a PC OEM partner? You argue that it clears the livingroom for MSFT, but that assumes numerous things including that no one takes over SNE's centerpiece gaming business (unlikely), that Nintendo doesn't continue to outsell Xbox, and that AAPL doesn't come up the middle with their offerings. IMO, you can't "clear the livingroom" of competitors. Either you ship products/services that consumers want, or you don't. This isn't the enterprise with tons of built-in "stickiness" and "dependencies". If a consumer doesn't like something, they toss it and pick up the next flavor at Best Buy/other. Look at the stories just today about apparently 1M phone in inquiries to AT&T for the iPhone. Not bad for a heretofore non-player in the space. That's the difference between pushing something, versus building something people demand.

    By Blogger MSFTextrememakeover, at 2:42 PM  

  • That relative R&D stat is a real eye-opener. What was your source?

    By Anonymous Anonymous, at 8:30 PM  

  • That Sony comment can be summarized as:

    'We are trying hard to kill our competition, so why don't the customers like us? Never mind, one day they will, they won't have a choice!'

    A corporate culture of an insecure psychopath on a thrill ride, completely missing the point that killing the competition is not what making customers happy is about.

    Assuming that Microsoft is staffed with insecure people thinking that way like the anonymous poster did, no wonder it's not doing very well.

    cheers,
    dalibor topic

    By Anonymous Anonymous, at 10:36 PM  

  • Now, Linux on the server and in embedded systems is proven. But there, Microsoft should imitate--hell, steal if necessary--the features that customers find appealing in Linux and put them into CE or Windows Embedded.

    CE is dead meat except in the sense that it imitates Windows. The most important criteria in an embedded OS for many applications is cost per unit, even at the expense of up-front NRE costs to make it do what you want. Nothing can compete with free.

    Server has similar problems, but we have a better chance of improving it enough to stay ahead. Stealing features from competing OSes is way overdue. (Why the hell did it take so long to get a real shell?) Neither of us has caught up to Solaris yet but I think we're in a better position to absorb the right lessons from it.

    By Anonymous Anonymous, at 11:41 PM  

  • great post. I hope ivory tower #34 reads it.

    By Anonymous Anonymous, at 11:41 PM  

  • "What was your source?"

    A MSFT slide from the last analysts meeting. I don't have the link handy, but you can find a discussion that includes it here:

    Microsoft's Anti-Google R&D Argument

    where Kedrosky cites it, and then compares the R&D spent by MSFT and select competitors to marketcap generated. Although I'm a shareholder, I think Revenue and Earnings generated is the more valid compare. Either way though, MSFT comes off looking ridiculously ineffective.

    By Blogger MSFTextrememakeover, at 11:57 PM  

  • What is MSFT's process for ongoing training and development? Does it exist? Especially within the leadership ranks, it appears to be ineffective or non-existent...to create a successful management development curriculum patterned after GE's...Maybe this process has begun - I don't know, but the results aren't yet evident in overall execution

    There is such a program under way. It has been going on for over a year. Unfortunately, it is completely unsupported by the exiting management of the product units. The skills, outlook and culture taught in the training goes unrewarded, and occasionally punished, at review time. The managers in place, who control promotions, rewards, and ultimatly long-term career trajectory, stress individual contributor behavior and simply do not value management skills or time invested in management activity. They do not spend their own time on management, and do not reward employees who do. Simply having a program in place does MSFT no good, since the existing management hierarchy of the company is unwilling to change.

    Remember, Jack Welsh fired 12 out of 14 executives very early in his tenure. MSFT needs to do this, only on a much broader scale. Several strata of management ranks are completely ineffective and unable to alter their behavior. I believe the new MSFT CEO needs to fire 80% of all managers in the company above 2nd level managers. This will be a horrendously disruptive bloodbath, and the company may not survive it. But it won't survive with the current people in place either.

    By Anonymous Anonymous, at 12:06 AM  

  • "3. I think I've commented before about how the Xbox is a success, but only if you look at the "secret" metric: drive Sony under. It's happening as we type.

    ...

    Now, MS can't reveal this metric because of antitrust reasons, but I think $5B to clear the living room of your main competitor is money well spent."


    The problem isn't so much that clearing the room of our main competitor. The problem is we're clearing some room that we've previously had no interest in, just because it has some toys we think we like in it, except that we aren't sure that the toys are worth the effort of getting into a fight with the guy in there. Sony was largely irrelevant as a competitor until MS got into XBox. Is it worth it? Maybe in the long long run. In the meantime, sure looks like it's more trouble than it's worth.

    By Anonymous Anonymous, at 12:59 AM  

  • Everything written here is right, but ...

    I used to think that complaining and calling for jumping off the cliff is a productive thing and that senior management would listen.

    I think I was wrong.

    An extreme makeover will only get you new boobs and a richer husband.

    To turn 180 in the death spiral you must initiate change from within and iterate, celebrating small successes. Instead, you're trying to push a mammoth. You're calling for a revolution. Where's your Aurora cruiser?

    By Blogger dB., at 7:36 AM  

  • "An extreme makeover will only get you new boobs and a richer husband."

    LOL - thanks for the chuckle.

    "Where's your Aurora cruiser?"

    I don't have one. It will take a major institutional shareholder with some courage, general shareholders finally having had enough, or MSFT eventually having a bad year financially. Sadly, the latter is the most likely catalyst imo. Meantime, I add my voice for whatever that's worth. Thanks to your Aurora link though, I get to learn something I didn't know before along the way.

    By Blogger MSFTextrememakeover, at 8:35 AM  

  • Great post, as usual. Though I do disagree with some points. The one I have the most disagreement with is the whole "cloud" OS, or as some like to call it WebOS. It is patently obvious to anyone who has deployed a distributed service that the Internets are in NO shape to support that kind of paradigm. It's a nice fantasy for people whose only interaction with the `net is HTTP. The demands of real-time applications are considerably different.
    You can point to any number of web-hosted offerings, but the fact of the matter is that the fat client on the desktop will beat them for features, ease of use, and most importantly, reliability and responsiveness.
    Most PC users get the PC from an OEM. We should use that channel more than we do. My personal thought is that we should concentrate on making our products a lot cheaper (perhaps as huge discounts when you buy our OS). Asking for $400 for Vista Ultimate is just ridiculous. It stinks of desperation. Like they're trying to grab as much loot as they roll over and die.

    Oh, and by the way, I PRAY for the day when apple or anyone else has even 10% of the consumer market. Only then will they feel the pain of actually supporting people who buy your products for convenience, not for cultish fanboy reasons.

    (at the point, you could say "oh, but enterprises use Linux for servers. that's not for fanboy reasons." The fact of the matter is that Windows Server 2003 R2 is one of the best things out there. We are going to deploy a large, exciting service around that platform. And the company choseeit not because they're a bunch of Microsoft lovers. Far from it. But they know a good thing when they see it. There is a lot of ignorance/prejudice about Windows from sysadmin types. I have no good ideas on how to counter that though.)

    Sorry about the rambling rant. I left MSFT a year ago, and would never go back because I was never a good fit there. However, I still would use an MSFT product over the alternatives, because our software mostly works right.
    Have any of you every actually used Adobe software ? They are the Real Networks of the new millenium. Craptastic products, huge mindshare, and a blame-Microsoft-for-my-incompetence mentality.

    Oh, and sorry, but your Global Windows Update service is nothing but a nice pipe dream. Vista has been available to ISVs for a few years, and Sony still can't get their notebook software working with it. I dont think OEMs and ISVs are going to sign up to march to MSFTs tune on updates.
    Windows is unfortunately a victim of its own success. I can't wait for apple and red hat to be big enough to have to deal with bullshit from 3-rd parties on their platforms.

    By Blogger 64bitter, at 9:17 AM  

  • Regarding XBOX
    >Now, MS can't reveal this metric because of antitrust reasons,
    >but I think $5B to clear the living room
    >of your main competitor is money well spent.

    Would not it have been better to spend $15 billion in 2003 and acquire Google? I think MSFT will spend much more playing the catch up game.

    By Anonymous Anonymous, at 9:51 AM  

  • Your comments about E&D are not well thought out. The consumer device market is a very tough consumer space. Even more of a reason to earn the #1 spot by integrating through innovation.

    Re: XBOX and Zune, so we're suppose to just sit back while Sony and Apple extend their devices and services into our platform. Give up the new 'office', the living room. If we did we'd look back, it would be too late, and Windows would lose. The best offensive is a superior defense.

    By Anonymous Anonymous, at 10:37 AM  

  • Re: XBOX and Zune, so we're suppose to just sit back while Sony and Apple extend their devices and services into our platform. Give up the new 'office', the living room. If we did we'd look back, it would be too late, and Windows would lose. The best offensive is a superior defense.

    After a ghastly amount of money spent, MS still can't figure out how to turn a profit on this new "office" of the future.

    The current plan of:

    1. Sell Xbox and Zune
    2. ???
    3. Profit!

    Seems to have a step missing.

    By Anonymous Anonymous, at 11:57 AM  

  • I'm the person who posted that 2nd post about where I agree with MSFT.

    To boil it down, there's only one way I can see to manage a company with two immensely profitable monopolies. Milk the monopolies as long as possible and obstruct anybody who might be get in the way. Meanwhile, invest in new businesses until you find one that hits.

    I think your problem is that you believe they are milking too long, and that milking is distracting them from the urgent task of finding new businesses.

    Conservative. Boring. Utility-like. Completely at odds with the executive talk of innovation. (But how else you gonna motivate 70,000 employees?)

    The trouble is I don't see the new businesses from anybody else either. I see a lot of one-trick ponies--Google and paid search advertising, Apple and the iPod. I see a lot of vague ideas (Web 2.0) or organizations with no long-term sustainable business model except "hurt Microsoft" (FOSS).

    Of course there are big untapped businesses out there. Virtualization--OK, important opportunity. Unified communications--important opportunity. MS is chasing these as well, but they don't get nearly as much press as the consumer stuff.

    I personally think Microsoft has as good a chance finding the next big sustainable business as anybody else.

    As an aside, I really do wish Microsoft would have left the "OS in the clouds" talk to the Web 2.0 academic types. What exactly is in the cloud? Drivers? Data storage? Where's the security model? Why should I even care about this? What benefit does it bring to me?

    Or is this just another way of saying "thin client browser accessing server-based apps over HTTP"? That's OK for some apps (particularly consumer ones where reliability doesn't really matter as long as you can deliver an ad impression--Gmail anyone?), but is this really a quest that deserves the attention of Ozzie, Cutler et al?

    Please bury Hailstorm once and for all and rake salt over the grave so nothing ever grows from that dank hole again. Let Google spend their cash chasing this incomprehensible illusion.

    By Anonymous Anonymous, at 12:02 PM  

  • "Your comments about E&D are not well thought out. The consumer device market is a very tough consumer space. Even more of a reason to earn the #1 spot by integrating through innovation."

    Huh? The decision to be in that space has already been made. WRT earning #1 spot, MSFT isn't going to unseat Logitech, for example, nor are they on a path to even attempt doing so.

    "Re: XBOX and Zune, so we're suppose to just sit back while Sony and Apple extend their devices and services into our platform."

    No, you're meant to be laser-focused on the customer, and adding value (initially, and via ongoing innovation/improvement) where that can be successfully and profitably delivered. It's called Business 001.

    By Blogger MSFTextrememakeover, at 12:23 PM  

  • Have any of you every actually used Adobe software ?

    Yes. Every day. Your assessment is wildly inaccurate, at least on the Mac platform.

    Adobe's software on the Mac (Creative Suite 2, e.g.) is pure joy. It's stable, fast, and makes those who use it very, very productive.

    Even Microsoft makes decent Mac software. Office 2004 on the Mac is a great.

    With that being said, you need to reexamine your issue to determine root cause... perhaps it isn't the software you're running, but the OS you're running it on?

    By Anonymous Anonymous, at 2:46 PM  

  • Say what you will about other areas of Microsoft, but their hardware is top-notch, in my opinion. The exception seems to be when they rebrand someone else's garbage (eg., wireless).

    By Anonymous Anonymous, at 5:37 PM  

  • Look, it's going to be harder and harder to create compelling new versions of Windows and Office. Those products are mature, as you've noted.

    Nonsense. It's this kind of thinking that has pervaded and ruined Microsoft--thinking that our products are "mature" (read: done) and that the only thing we can do now is trick customers into paying for them again by rearranging their buttons and making them shinier.

    I am tired of this bulls***. It is lazy, unprofessional, and not a little dishonest. It is always hard to produce a product that customers WANT to buy. Let's take this challenge head-on, instead of declaring that we're in a special, exempt situation.

    I can think of a million delighter features for Windows. Example: drivers and software built-in so that I can plug in my random dumbphone and transfer pictures/contacts/ringtones/etc. Example: a functional Bluetooth stack so I can bond with a cell phone headset and use it as an audio device for VOIP. Example: nice, helpful UI to let me have more control over my machine--e.g., which programs run at startup, which icons are polluting my start bar, etc. Example: a way to set up a shared folder between several computers (desktop, laptop, etc.) that is automatically synchronized whenever possible.

    I have tried to get features like this made but all of my suggestions get lost in the bureaucracy.

    By Anonymous Anonymous, at 9:34 PM  

  • Don't look to HPQ and Mark Hurd as a model for anything. MSFT may be dysfunctional, but let me tell you, so is HP. All that Hurd has done as CEO is cut expenses (fire people) while milking one profitable business (printer ink). It also helps that a major competitor (Dell) shot themselves in the foot and is limping around right now. Hurd's cost cutting has gone way beyond fat, and is well into muscle and bone now. It isn't sustainable.

    By Anonymous Anonymous, at 10:18 PM  

  • I think the meat of this post is that Microsoft should get a strategy. The strategy should outline what Microsoft should be doing, but more importantly what is SHOULD NOT be doing.

    We can try to be everything to everyone, but that isn't a strategy, just reaction.

    By Anonymous Anonymous, at 5:43 AM  

  • A comment on the zuneinsider blog:

    Woah, good link there slash and grab. This link should be shown to anyone who is doubting microsoft's long term commitment to zune! That is a lot of extra staff they are going to employ!

    The link in question.

    Sounds like the Zune team is ramping up hiring.

    By Anonymous Anonymous, at 8:59 AM  

  • > Linux Business Unit

    As "insider" I think MSFT need to port its server software to Linux. Because this is what's most often requested in OSS.

    OSS on server side really lacks good competition. There are solutions for everything - but finding one decent working for most of the situations is challenging.

    Taking on OSS desktop is way too challenging. You have here crowds of enthusiasts who went Linux precisely because they wanted "something different". M$Office might be good idea - but at it's actual price point it would be truly marginal product.

    IOW, MBU v. LBU is unjust comparison. Macs are very desktop oriented while Linux at moment way too much biased toward server side. (And very few companies with all the competition now can make money on server side. Too risky.)

    Though, I welcome MSFT to change that and turn Linux into desktop. I might not like Windows as desktop (I hate it to be honest) but competition is always good.

    By Blogger Ihar Filipau, at 10:37 AM  

  • Before I begin, small background on me: I've been a computer tech for 11 years, working on both Macs and PCs.

    I have Macs at home because I don't like dealing with computer issues. I deal with computer issues at work and that's enough. (Not that Macs don't have issues, mind you; they just have far less.)

    Anyway, for those of you still reading, as a multiplatform user and supporter, I don't understand all of this talk of "Apple fanboys". You speak of all Mac users as if they didn't have the same choice you all did. Personally, between OS X, iPod, iLife, (coming soon) iPhone, and Apple hardware that runs Windows within its own environment, how can you NOT be a fan? Apple continues to change industries, something Microsoft was famous for way back when. The only problem is: time's have changed. You are all Microsoft people because that's what you grew up with. Basically, they're your team! Like comparing Red Sox fans with Yankee fans: I was working in Boston when the Sox won the title and the city went crazy, which only deepened the hatred between the two clubs' fans. However, most people just shrugged. Baseball season was over for them, can't wait until next season. Same thing here is happening with Microsoft vs Apple these days, except the shoe is on the other foot now: it's the other team doing well now. Right now it's Apple doing great.

    I guess what I'm saying is that many people don't care what it is they're using: OS X or Windows. Most people have heard of Windows, but now they're becoming savvy enough to understand choice. That doesn't make them fanatics just because they don't make the same choice you all did.

    I've read through most of these posts and I've found that it's the Microsoft fans that are coming off extremely defensive, like Macs users were ten years ago when Apple was not doing well.

    So, careful when you call those that choose Apple 'fanatics.' You're saying that towards a company that has a history of creating products that change the course of the computer industry, most recently with iPod/iTunes, with iPhone (which isn't even OUT yet!), and potentially with AppleTV. That's not even mentioning their core business, which is Macs. There is a college that literally dropped all of their PCs and bought Macs because Apple's machines run both OSes!

    The company is doing well. Calling the people who buy the products because they work well on their own and work great together 'fantatics' just makes you look like a hater. A bitter, angry fanboy whose refusal to acknowledge the truth screams of true fanatiscm.

    :)

    a multi-platform supporter

    By Anonymous Anonymous, at 5:13 PM  

  • Hey multi-platform supporter I am pretty much a Mac-only user and I didn't really notice any superdefensive toward the Mac (not on this page anyway). Just PC users talking amongst themselves about what's wrong with their company (since something is obviously very wrong right now). Note that us Apple fans had a lot of very similar discussions in the mid-90s.

    By Anonymous Anonymous, at 10:12 PM  

  • Hey, anonymous. Someone wrote this:

    "Oh, and by the way, I PRAY for the day when apple or anyone else has even 10% of the consumer market. Only then will they feel the pain of actually supporting people who buy your products for convenience, not for cultish fanboy reasons."

    That's what I was commenting on, specifically. To that poster: I've read all of the posts on this site and there are many interesting points being discussed, but that's not one of them.

    Here's another quote:

    "The trouble is I don't see the new businesses from anybody else either. I see a lot of one-trick ponies--Google and paid search advertising, Apple and the iPod"


    ........ One trick ponies? Apple? NOW THAT is a Microsoft fanboy, one who refuses to see beyond what he wants to see.

    Again, don't mean to say anything except Apple is really making their presence felt, and they're doing it with excellent stores, and catchy ads that speak for products that just work, and better yet, work better together. By spreading the word as they are, they're reaching past their initial customer base (which has remained consistent since the early 90s, despite their troubles even then) and the results have been catching people off guard. Apple is everywhere these days.

    You can't offhandedly dismiss 'the other team' just because it's not your team. That's TRUE fanboyism.

    Have a good one!

    - multiplatform supporter

    By Anonymous Anonymous, at 5:33 AM  

  • Masterful work with many sound ideas and insights. I liked your ideas to handle MSR and MSN. You didnt covere two behemoth bureaucratic organizations, HR and Finance.

    By Anonymous Anonymous, at 8:02 AM  

  • What's the real story with Vista sales? Microsoft says sales meet expectations, but PC manufacturers disagree? From Gizmodo

    By Anonymous Anonymous, at 9:22 AM  

  • "Frankly, I think IBM, Oracle, HPQ, SUN, etc. were always significantly more experienced in selling to the enterprise and maintaining high-level relationships."

    As someone who regularly competes against Microsoft on enterprise high-level relationships, I'm afraid I can't agree. They are VERY good at maintaining those high-level relationships. To the point now, actually, where the only rational explanations for a number of CIO decisions is outright kickbacks. Whatever it is that the Server division people are doing, I don't like it, but it's definitely working for MSFT right now.

    "Somewhere along the line, MSFT seems to have fallen into the IBM trap of trying to please corporate IT departments instead of users."

    Interestingly, IBM is making a MAJOR push to remedy this with their end-user products coming out of the Lotus division now. Improving the end user experience is an enormous focus in that group, and there's a giant collective grin among their existing customer base about it that could easily translate into interest from non-customers.

    By Anonymous Nathan T. Freeman, at 10:46 AM  

  • Before I begin, I'd like to say that I'm a long time lurker, and typically try to weed through non-MS posters. So I'm a bit of a hypocrite for posting this... Sorry.

    @64bitter

    I can't wait for apple and red hat to be big enough to have to deal with bullshit from 3-rd parties on their platforms.

    You mentioned that you worked internally for MS. I have not. But I have done 3rd party work, and I can assure you the disdain for bullshit is more than mutual.

    As an aside I should say that I don't direct any ill-will towards MS programmers. As a programmer myself I can appreciate the difficulties developing and documenting Windows.

    But I would be remiss if I didn't mention that the difficulties Windows developers have are felt outside of Microsoft.

    Any piece of software with the size and complexity (not to mention the number of developers involved) of Windows will not only have bugs, but documentation problems as well.

    Now what happens when you are a small 3rd party and stumble upon a poorly documented interface that you need? Or worse, a bug.

    Well, consider being a first party for a moment. If you are really lucky you have access to the code, or you may even have access to a developer.

    If you don't have either of these, then you scour google/books, test or reverse engineer and pray like hell that there isn't an edge case that you haven't realized. In any case, this wastes time that could be spent improving other areas of your code or interface(s).

    Of course, the last paragraph doesn't lead to ideal solutions, in fact, it leads to terrible and buggy third party software.

    Now I'm going to put my optimistic hat on, and say that the open source nature of Linux and OS X (Darwin anyway) will make the job of 3rd party developers easier (by giving them the option of discovering what is happening 'under the hood') and less error-prone.

    I know you may be tempted to mention Microsoft's Shared Source program. But I am among those who fear becoming "contaminated" meaning that I cannot contribute to any other OS (without fearing legal repercussions). I could just be paranoid, but I don't trust the legal system.

    So I suppose this leads me to a question I've been wondering for quite a while. How do MS programmers deal with documentation problems internally? Do you get to go to the person who wrote it and bug 'em for help? Do you have access to all relevant source code?

    So third parties may have bugs in their code, but remember that as a host platform any problem Microsoft faces is also faced by third parties down the line. Plus a few more for working with someone else's code.

    And I hope your attitude isn't common within MS, or there are deeper problems there then I thought.

    Above all, please notice that I use the word "problem". I haven't (intentionally) assigned "fault" to anyone. I assume that all programmers try to make the best programs possible for their clients, and that problems evolve over time and multitudes of people.

    Again, sorry for posting when I'm not an MS employee. But I felt that the perspective of at least one, among many, third parties should be shown.

    -Stephen

    By Anonymous Anonymous, at 12:44 PM  

  • "You didn't cover two behemoth bureaucratic organizations, HR and Finance."

    Good point - thx. It was already becoming War and Peace as it was, so some important things got omitted. For example, I also didn't cover the Board and their role - though I'm noodling a potential post currently :-)

    By Blogger MSFTextrememakeover, at 2:26 PM  

  • The not-an-Apple-fanboy wrote:

    ...Apple is really making their presence felt, and they're doing it with excellent stores, and catchy ads that speak for products that just work, and better yet, work better together. By spreading the word as they are, they're reaching past their initial customer base (which has remained consistent since the early 90s, despite their troubles even then) and the results have been catching people off guard. Apple is everywhere these days.

    Sure, they have some cool products that work well together (Airport+iTunes is my favorite example) and really nifty advertising and retail stores, but what about their actual business? You know, where they make real money?

    From my reading of their financials, nearly all of their growth--their recovery from their late 90s near-death--has come from the iPod. There's some recent halo effect--iPod people beginning to rediscover their love for the Mac--but their market share for PCs has barely moved.

    (See http://news.com.com/Measuring+the+iPod+effect/
    2100-1041_3-6138711.html).

    In addition to selling only about 1/30th of all computer OSs, Apple's not even competing in online services, game consoles, enterprise software, server operating systems, mobile software, desktop productivity software, and on and on.

    That's what I meant by one trick pony.

    P.S. John Dvorak's right, the iPhone is unliikely to be a big success. They may sell a bunch out of the gate, but it won't be a business like the iPod because of razor-thin margins, fickle consumers, and insufficient relationships with carriers. He may be trolling for Apple fanboys--as he always does--but he's actually correct this time.

    And Apple TV will be irrelevant unless they (a) buy TiVo or (b) add CableCARD and Satellite TV support to it, or to a FrontRow-enabled Mac.

    By Anonymous Anonymous, at 3:45 PM  

  • Okay, that's a wrap on the less than productive AAPL vs MSFT battle that's developing here. My fault for letting one comment through because I felt it had some otherwise redeeming value. If the comment is material to the discussion, I'll approve it. Otherwise, your eloquence is going to be lost to GOOG's bit bucket (or, more concerning, maybe it won't and will live on forever and ever - just not here!).

    By Blogger MSFTextrememakeover, at 6:04 PM  

  • RE: How do MS programmers deal with documentation problems internally?

    The (few) good ones, work with the writer who is responsible for that topic (and, hopefully, not a million other ones) and file a bug. The good writers (who don't have a million other things to do), will research the code and update the documentation.

    But,

    For the rest of the programmers, they don't seem to give documentation a passing thought. To them, the code is the documentation. "Just look at the function prototype, stupid! Don't you know how to program?"

    But, for the average writer who really does have a million other APIs to document, well, they do the best they can with what little time and developer access they can get.

    Bottom line, documentation is, at best, an afterthought, if it's a priority at all. Basically, the documentation (or lack of) of Microsoft products is, from what I can see, simply another opportunity for third-party writers. To me, as an MSFT-ee, I think we should be ashamed of any MSFT product that relies on Google to find the third-party blogs and other sources for its product documentation.

    That should be grounds for the immediate termination of a Dev Lead or a GPM of that feature or product, IMO.

    Bad or non-existent documentation is NOT a feature of world classs software.

    By Anonymous Anonymous, at 10:30 AM  

  • Didn't mean to start a flame-war, I was just trying to offer a different perspective.

    Brands and teams aside, I can't wait to see how the next few years develops. I was always a huge Star Trek fan growing up because of all the cool gadgets they had at their disposal. Made me fall in love with computers, and now it feels like that future (the one with flying cars and flat tvs everywhere)... it feels as if we're on the brink of that. The potential for where we go with all of this technology is amazing, and that's why I think it's a bit narrow-minded to dismiss the competition.

    The future is upon us all and we're all going together. Does it really matter who's driving?


    :)


    -multi-platform supporter

    By Anonymous Anonymous, at 12:23 PM  

  • My suggestion: hire a Chief Quality Officer. If MS already has one, replace him/her. Blame Ballmer or blame Gates or blame trying to keep up with Google, but since the re-org the functionality and interfaces have been fine but the bugs and breaks in both hardware and software have are legion, and unless MS makes a commitment to fixing these along the lines of its security initiative, it will never catch up.

    By Anonymous Anonymous, at 10:42 PM  

  • Actually, you are a bit misinformed. MSN as a product unit has been profitable in the last few years. The problem has been in the whole Windows Live space--especially Search--which has been hemorrhaging money and dragging down MSN. The only portions that have made their financial targets are those portions (Hotmail, Messenger) which were rebadged from MSN.

    By Anonymous Anonymous, at 11:44 AM  

  • Extreme said: "If MSFT truly believes in "Your potential. Our passion", then it needs to do more than just pay lip-service to it. It needs to open itself to all that that entails (cross-platform support, not playing lock-in games, etc.) and deliver against it."

    Amen to that.

    I have not purchased any download media yet. Now that EMI is releasing its catalog DRM free, that to me is an attempt to compete. They will have my business though I will wait a while to see who pops up to offer competitive pricing on the downloads. One thing for sure, it won't be Microsoft. Don't trust them. Trying to create a download business based on DRM is just corporate theft to me. Same reason I will not be upgrading to Vista and I may even go back to original disk Win 2000 or Win 98 offline so I can use my existing legally purchased media library without the nausea. Maybe Linux. Whichever works best, but it won't be Vista or any XBD products--wrong philosophy, wrong attitude toward customers.

    Not an abm'er, just an honest home computer user trying to get by.

    By Anonymous Anonymous, at 5:05 PM  

  • As far as documentation goes, msdn finally has the ability to added community comments directly in the pages.

    For example:
    http://msdn2.microsoft.com/en-us/library/system.drawing.imaging.metafile.metafile.aspx

    A good internal developer finds the answer, contacts the UE (user education), and adds a community comment.

    By Anonymous Anonymous, at 8:55 PM  

  • Bad or non-existent documentation is NOT a feature of world classs software.
    Ha! Wow...this is a good one! What made you think Microsoft wrote "world class software"? Doesn't anyone remember that Microsoft pretty much won the client because it was the cheapest option? By undercutting all the actual "world class software" makers, and driving them out of business, does Microsoft somehow magically become the provider of such software? Quality has always been an afterthought, it's been all about volume and Developers, Developers, Developers (mind share).
    I wish things were different--I help out my Doc team when I can--I consider them true "Rock stars" in the product development cycle.
    To close out this ramble, let's look at the product documentation of the future...the MSDN WIKI!
    "Please contribute your content to the Visual Studio SDK documentation!" (from http://msdn2.microsoft.com/en-us/library/bb166441(VS.80).aspx)
    Gee...maybe if we tap into this "wisdom of the crowds", somebody else smart on the internet will understand how our software works and document it for everyone else.
    (Ok, kind of a cheap shot...at least it's a start at getting some reliable documentation on MSDN. Feel free to trim/cut comment as appropriate, thanks.)

    By Anonymous Anonymous, at 10:01 PM  

  • An all around excellent synopsis of Microsoft's strategic and tactical positions. I've had similar thoughts for some time, though not as well organized and without your inside perspective. While laudable goals, here's my own outsider's perspective of the obstacles facing a turnaround.

    1) Microsoft likely faces damaging distractions from further antitrust actions and infringment lawsuits.

    2) The OS architecture has become so bloated with application layers, partially replicated and implemented APIs, and intertwined special-case workarounds that the OS has become difficult to fix or enhance reliably, cleanly, and quickly. This complexity makes re-architecting cost-prohibitive, and increasingly only high-priority patches will be justifiable. Nusiance reduction or anything with a user-workaround will not get approval or attention.

    3) That OS bloat in turn overloads the source management, build and QA processes, and retards the releases of application stacks which have hard OS dependencies. Patch and product releases will slow down further and fix fewer customer problems.

    4) Ill-thought out application stacks are so intertwined and entangled that a customer pretty much has to buy everything to run one thing. This is cost-prohibitive for entry-level customers and a cost-reduction target for existing customers, especially in view of competitive offerings.

    5) Streamlining and rearchitecting the OS and application stacks to make them cost-competitive will take years, even assuming Microsoft wanted, but such a redirection flies in the face of the prevailing tactic to lock-in every customer to some piece of the OS.

    6) Rising customer dissatisfaction with Vista. Slow uptake of Vista due to driver & app incompatibilities means Vista is not being widely deployed, which means bugs aren't being discovered and reported.

    7) Assuming driver and connectivity bugs get fixed in SP1, app incompatibility bugs won't be reported and consequently fixed until SP2, and considering the internal OS layered-complexity and build-process-related problems noted, a year each for each SP seems likley at a minium. That means another two years before Vista is truly ready for prime-time, assuming the footprint and performance overhead is tolerated.

    8) Use of W2K and XP will become increasingly entrenched during the two years it takes MS to get Vista prime-time ready, and interim moves by Microsoft to 'nudge' users off W2K and XP will likely nudge them further towards increasingly acceptable non-MS solutions, including Linux, Open Office, virtualization, and Web services.

    9) Competitor advantages have not only gained footholds but are are becoming cost-prohibitive to surmount. IBM's embrace of Linux and Open Office, Sun's release of Java, Oracle's consolidation of database and business apps, Google's control of Search and web-services (even with their flaws they are vastly superior to MS's), Apple's leadership in players (and soon to be phones) all erode Microsoft's position. Microsoft's position is secure at present only in desktop OS and Office but imposition of DRM, WGA, User Account Control, unacceptable overhead and incompatibilities has opened additional vulnerabilities there as well. Per PC unit volumes are high-cost and not as competitive as enterprise transactions with high dollar volume and commensurate customer account penetration. If Microsoft can't gain or retain Enterprise and SMB customer acceptance with Vista, then those disaffected Enterprise and SMB customers will slowly migrate into other technologies giving them broader credible acceptance, which alternative technologies will in turn increasingly penetrate the home consumer market and take market share from Microsoft there as well. It is a knock-on effect.

    10) Channel partners (like Dell) are now offering and supporting OS alternatives to Microsoft (like Linux) to remain competitive. They aren't likely to chain themselves to Vista.

    11) It would seem that MS's experienced talent sees the handwriting on the wall from a standpoint of job dissatisfaction, under compensation, and product/service underachievement, and the current trickle of departees may soon become an exodus. The steady inflow of college recruits and temps only exacerbates the growing imbalance of inexperience - reinforcing a corporate culture that doesn't know what is abnormal or ineffective and is ignorant of where 'the bar is set' elsewhere in industry. It seems likely that Microsoft's exsiting management/partner personnel have locked-in comp packages which provides no leverage on their performance and prevents redirecting that compensation to new executives, managers, architects, etc (who otherwise might effect a turnaround) without serious dilutive effects. Unable to retain good people and replenish with good people, any technically feasible remediation becomes logistically infeasible in any realistic business/customer oriented timeframe as neither the competition nor customers are standing still.

    12) Microsoft lacks customer-centric vision or strategy to know what changes to make, what to discard, and how to regain lost good-will. It is not clear at this late point that even marginally improved strategies or tactics are feasible or plausible. Some bridges have been burned in the customers' perception. As new customer prospects dwindle, Microsoft field sales and support personnel will begin to depart as well.

    13) Lack of senior management experience to recognize the above, let alone fix it and turn the company around, and lack of skilled middle management to actually execute a plan, even assuming a good plan was formulated and as noted above, fewer competant motivated developers to implement any plan while overcoming the OS and process constraints, and fewer field personnel to push the result out to the customer.

    14) The investor community will not be idle observers of this malaise. MSFT will grind lower further imparing recruiting and acquisitions and quickly closing any remaining 'window' (no pun intended) to effect meaningful and corrective change. Technical product momentum (if any) can not be sustained in the face of a stock price slide. The demoralizing effects are insurrmountable. Witness the problems faced by GM in spite of the vastly improved quality and cost-effectiveness. In the face of stiff competition and sceptical customers, 2nd or 3rd place isn't good enough to maintain the status quo. Like IBM, Oracle, Cisco etc, you must be unquestionably first and excellant in your primary market to recover from a debacle.

    I suspect management recognizes problems with Vista acceptance and is wrestling with how to retain customer loyalty with W2K and XP without admitting Vista (and Zune, MS Live, MS search, etc.) are fiascos and avoid accelerating customer, investor, and partner dissaffection. But their solutions will no doubt be more of the same. It is all they know how to do, and their denial precludes fixing their inexperience and obdurate executive mindsets.

    The window of opportunity to turn MS around may already have closed, but the exec's don't see that as they just haven't smacked into the glass yet.

    By Anonymous Charles, at 9:17 AM  

  • By Anonymous Anonymous, at 10:24 AM  

  • By Anonymous Anonymous, at 12:07 PM  

  • With regard to my comment about "3rd party problems", I certainly did not mean to imply that Microsoft writes fantastic stuff and it's all everybody else's fault.
    The fact of the matter is that when you have a huge installed platform base, there will inevitably be a lot more software available, and it will inevitably have bugs. But as an OS maker, you get blamed for everything.

    By Blogger 64, at 12:14 AM  

  • Thanks for your nice post!

    By Anonymous Michael, at 3:05 PM  

  • Microsoft is dead...
    Long live Microsoft!

    By Anonymous Pratik Stephen, at 11:15 PM  

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