Microsoft's Chanel No. 5 Moment
Microsoft announced its expected restructuring plan.
1. Engineering (OS, Apps, Cloud, Devices)
2. Marketing, Business Development and Evangelism
3. Advanced Strategy and Research
4. Finance, HR, Legal, and COO
Microsoft has something of a reputation for breeding infighting and interdivisional rivalries.
In a 2010 New York Times editorial entitled "Microsoft's Creative Destruction," former company Vice President Dick Brass had this to say:
Internal competition is common at great companies. It can be wisely encouraged to force ideas to compete. The problem comes when the competition becomes uncontrolled and destructive. At Microsoft, it has created a dysfunctional corporate culture in which the big established groups are allowed to prey upon emerging teams, belittle their efforts, compete unfairly against them for resources, and over time hector them out of existence. It's not an accident that almost all the executives in charge of Microsoft's music, e-books, phone, online, search and tablet efforts over the past decade have left.
As a result, while the company has had a truly amazing past and an enviably prosperous present, unless it regains its creative spark, it's an open question whether it has much of a future.
So hopefully, the new structure will have people more focused on the big picture in battling rivals like and Apple and Google, instead of on competing with other product groups within Microsoft.
But again, bigger picture questions remain -- namely, why does Microsoft change with the world?
Wouldn't it be better if it was like the 1980s, when Microsoft was itself driving the change?
I'm looking at an accompanying press memo, a letter from CEO Steve Ballmer, who says the following:
With the more recent growth of broadband and the mobile Internet as well as the development of newer devices such as tablets and smartphones, consumers' experiences and use of technology have fundamentally changed again. We have entered an always-on, always-connected era that holds new promise for what technology can bring to people's lives and to businesses everywhere on the planet. And this gives us an opportunity to help people lean in and do more in every part of their lives.
A few years ago in a speech I gave at CES, I observed that there was a shift underway. We were headed from a phone, a PC, and a TV to simply three screens and a cloud -- and over time, a common software-based intelligence would drive all of these devices, bringing them together into one experience for the consumer.
As well as this:
We will strive for a single experience for everything in a person's life that matters. One experience, one company, one set of learnings, one set of apps, and one personal library of entertainment, photos and information everywhere. One store for everything. Microsoft has the clear opportunity to offer consumers a unified experience across all aspects of their life, whether the screen is a small wearable, a phone, a tablet, an 85-inch display or other screens and devices we have not yet even imagined.
The problem is that these statements are sideways-looking, not forward-looking. Microsoft was very much late to the Internet and mobile device booms spearheaded by companies like Google and Apple. Unlike the 1990s, there is now competition for a "common software-based intelligence." As shown in the chart above, Google Android is outselling Windows, with Apple's iOS not far behind.
It all sounds like market research, as if the company's business plan can be distilled down to smartphone + tablet + cloud = success. It's not that these markets aren't important. But a true resurgence for Microsoft requires a step beyond simply fighting for the markets that are popular today. It means creating markets important enough that Apple turns around and says, "We need to get in on that!"
Now did Apple invent the smartphone market? Literally, no. Practically, yes.
Has Microsoft come remotely close to doing that with any recent product?
No -- and I'm not sure how this reorganization changes that.
One interesting thing to watch out for is how Microsoft changes its financial reporting methodology.
There is an awful lot of speculation that the company's going to re-jigger things to hide its poor results in the online services division, which includes the Bing search engine.
This article's grown a heck of a lot longer than I expected, so I'm going to wrap it up here.
I'm not saying that Microsoft's not going to continue making a lot of money, and I actually have no current opinion on the stock.
I'd just like to see Google and Apple put back on their heels for a change, and as a shopper, I just want to be excited.
Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.