Posts tagged with ‘microsoft’
Ben Thompson thinks the only jhope for Microsoft is a break-up, This is in parallel with what I have been saying: if Microsoft is to grown into a modern enterprise software player, Nadella will have to jettison Windows.
Here’s Thompson’s take:
Ben Thompson, It’s Time to Split Up Microsoft
For all the talk of moving beyond Windows (and Windows Phone), I am deeply skeptical that Microsoft can truly pursue its potential as a software and services company as long as Windows is around. Culture is developed over years, and for decades everything at Microsoft was about Windows. Read again Ballmer’s statement:
Nothing is more important at Microsoft than Windows
The problem for Nadella and Microsoft is that ultimately this wasn’t a declaration of strategy; it was a declaration of fact, and facts don’t change by fiat.
In other words, keep Windows as a cash cow, but be explicit that the future was in cross-platform services. Unfortunately, this was before the Nokia deal. The effects of that deal – and understanding why it was made – have convinced me that Microsoft cannot truly reach its potential as a services company as long as Windows and the entire devices business is in tow.
In short, it’s time to break Microsoft up.
I would create two companies: the devices side, which includes Windows, Windows Phone, and Xbox, and let them do the best they can to grow that 14% [the percentage of total devices running Windows COO Kevin Turner talked about last week]. Heck, make Kevin Turner the CEO. Windows profits will keep the company going for quite a while, and who knows, maybe they’ll nail what is next.
The other company, the interesting company, is the services side – the productivity side, to use Nadella’s descriptor. This company would be built around Office, Azure, and Microsoft’s consumer web services including Bing, Skype and OneDrive. These products don’t need Windows; they need permission to be the best regardless of device.
Of course, the Windows company does need Office, and Azure, and all the other Microsoft growth engines, and this cleavage would likely hasten Windows’ decline. But that’s exactly why a split needs to happen: anything Office or Azure or Microsoft’s other services do to prop up Windows – that focuses on that 14% – by definition limits Microsoft’s opportunity to address the far bigger part of the pie that ought to be the future.
We’ll have to see if Nadella does any of this, but so far all he has done is announce layoffs and cancel the Android experiment on Nokia phones.
Will Nadella be a Tim Cook or a Marissa Mayer? Will he have the courage and vision to steer a post-Ballmer/post-Gates Microsoft into a new future, or will he lose years fiddling at the margins and ‘building culture’ while Apple, Amazon, and Google come to dominate the enterprise space?
In Stephen Elop’s breezy and somewhat callous email to former Nokia staffers at Microsoft (‘Hello there’ is a poor start to firing 12,500 people), he showed that he’s continuing the losing play of fighting against Android+Samsung (and hundreds of other Asian-based competitors with Windows+Nokia. Of course, Elop might be a bit blasé since he’s fired 50,000 since taking the job as CEO of Nokia.
Elop wrote in that memo,
In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest growing segments of the market, with Lumia.
Om Malik is merciless in a recent post, pointing out that this strategy has been failing since Elop — that lunkhead — wrote the 'burning platform memo' three years ago, and pushed Nokia to drop its own Symbian OS and MeeGo activities, and adopt Windows.
Nadella’s strategy is more nuanced. He wants Windows phones to be the leader in dual use: when users need business and personal capabilities on the same phone. You don’t hear that nuance in Elop’s memo.
I bet that Elop will soon be out, and Nadella will put one of his more trusted and less tarnished executives in place.
The other day, Satya Nadella releases a sprawling memo, ostensibly to clarify Microsoft’s strategy under his leadership, and it positions the company as a ‘productivity and platform’ company, not the ‘devices and services’ orientation that Ballmer introduced in 2012, and reorganized the company around.
As a result, we should expect another top-to-bottom reorganization of the company, but Nadella only hinted at that, not really revealing any specific plans. And not announcing a departure from any line of business, either (see Satya Nadella wants to focus on the core of Microsoft’s business, which is… everything).
Jean-Louis Gassée took a look at the memo, and tried to break it down, and he found a lot of smoke but little fire. But then he tried to decode it:
Tortured statements from CEOs, politicians, coworkers, spouses, or suppliers, in no hierarchical order, mean one thing: I have something to hide, but I want to be able to say I told you the facts.
With all this in mind, let’s see if we can restate Nadella’s message to the troops:
This is the beginning of our new FY 2015 – and of a new era at Microsoft.
I have good news and bad news.
The bad news is the old Devices and Services mantra won’t work.
For example: I’ve determined we’ll never make money in tablets or smartphones.
So, do we continue to pretend we’re “all in” or do we face reality and make the painful decision to pull out so we can use our resources – including our integrity – to fight winnable battles? With the support of the Microsoft Board, I’ve chosen the latter. We’ll do our utmost to minimize the pain that will naturally arise from this change. Specifically, we’ll offer generous transitions arrangements in and out of the company to concerned Microsoftians and former Nokians.
The good news is we have immense resources to be a major player in the new world of Cloud services and Native Apps for mobile devices. We let the first innings of that game go by, but the sting energizes us. An example of such commitment is the rapid spread of Office applications – and related Cloud services – on any and all mobile devices. All Microsoft Enterprise and Consumer products/services will follow, including Xbox properties.
I realize this will disrupt the status quo and apologize for the pain to come. We have a choice: change or be changed.
With or without the clarity that Gassée would have him use, Nadella definitely has something up his sleeve, and he only hinted at it so far. But this is going to be a rough time to be a Microsoftie, I bet.
Panos Panay, cited by Nick Summers, regarding the new Surface Pro 3 tablet/laptop hybrid, especially with regard to the trackpad in the Type Cover.
They can’t win the battle with a better trackpad, no matter how much I agree with the quote.
If ever there was one imagine to encapsulate the entirety of the Windows 8 shitshow, this is that image.
Windows 8 is being rejected at such a scale that one of Microsoft’s largest partners is being forced to advertise the “return” of an older OS.
And it’s a long wait for Windows 9 sometime in 2015. Windows 8 is turning out to be Vista, all over again. As I recently wrote at GigaOM Research in What we can learn from what didn’t happen at CES:
Two comments: 1/ [Windows 9 release in 2015 will be] Way too late to stem the defections of Windows users to iOS and Android tablet, and 2/ this is a canonical example of a dominant company being disrupted because it cannot stop trying to support the past successful model. If Microsoft is going to hold onto *any* territory in office applications — Word, Excel, Powerpoint — they need to get them on other platforms ASAP, and not pretend that companies and individuals will wait until April 2015 for Microsoft to really fix Windows 8.
This could be the end of Office, and that completely undercuts Microsoft’s potential role as a leader in the work management marketplace.
Steve Ballmer, cited by Monica Langley in Steve Ballmer on His Retirement as Microsoft CEO
Ballmer might have used the Steve Macone quote: A tradition is a habit whose logic has faded. He created and managed over a long series of behaviors at Microsoft that are so embedded in the culture that it may take years to counter them, many of which have little logic to them anymore, if they ever did.
Getting rid of stack ranking is one such step, but the fastest way to make Microsoft competitive again is likely to involve selling off all the parts that are not essential — like Bing — and spinning off the consumer businesses: xBox, notably.
My bet is that won’t happen with the the next CEO, but perhaps the one after that. The next one will have a very difficult time to come in and make real changes given the half-completed reorg, the acquisition of Nokia’s handset business, and Chairman Bill and the other longtime board members that want a Microsoft that is fighting in all sectors, just doing it better.
People don’t want Word, Excel, and Powerpoint, per se. In fact, those apps are generally considered bloatware, with confusing, UX-challenged, and overwrought design. What people want is something that doesn’t exist, but which Google and Apple are moving toward. People want to be able to view, edit, and create documents that are largely compatible with the de facto core standard of Office documents, the basic 20% of the three apps. And they want those documents to be sharable with other people, no matter what solutions those other people are using.
The big shift here is that in this era, the hegemony of Office is not going to dictate hardware decisions. People won’t put up with the limitations of Windows-based tablets from Microsoft or Nokia because they are the only place to get full-fidelity Office. And the simple reason is that people don’t want full-fidelity office, really.
Our work communications have moved outside of the interior of documents. The pattern of reviewing a Word document with internal comments and tracking changes is being displaced by external comments — in a work media tool (Yammer, Chatter, etc.) or in a social editing tool like Quip (see I want a social editor, but Quip isn’t there quite yet) or Draft (see Draft is a small and simple co-editor). In the heyday of Office, email with attachments was state of the art. Microsoft has acquired Yammer and moved Office to the cloud with Office 365, but they haven’t seen the change that is going on the perimeter of their model of office work.
So Frank Shaw is saying that Microsoft — at least under this CEO — is still fighting the last war for office productivity, while the world has moved on to a new form factor for work, where the social interactions of people cooperating are not concealed inside documents, but are instead mediated outside of them. And, as a result, the documents themselves can be much simpler in their internal architecture. We are relying on social architecture, now, instead.
Jason Hiner suggests that Elop is not the frontrunner for Ballmer’s replacement. Why? First, he failed disastrously at Nokia losing billions and laying off 20,000. Second, Hiner says that the next CEO should be all about the enterprise.
Jason Hiner, The case against Stephen Elop as Microsoft CEO
Two Wall Street analysts — Ben Thompson and Benedict Evans — are already questioning whether Microsoft actually bought Nokia because Nokia was threatening to stop making Windows Phones, and not because Microsoft wanted Elop.
Just a quibble: If Elop and the Nokia board pulled that off, hats off to them. And don’t forget the remaining Nokia still has the right to make phones, so maybe they’ll start building Android phones now.
Another factor that works against Elop as CEO is that about 10 of Microsoft’s 16 separate billion dollar businesses are now enterprise businesses. The company needs an enterprise leader, as I wrote in the Monday Morning Opener. Elop has limited enterprise experience, other than a stint as a CIO earlier in his career and a one-year tour at Juniper Networks. He has mostly worked with end user applications at Lotus, Macromedia, and Microsoft, where he primarily oversaw Microsoft Office. Elop technically ran “business” software at Microsoft, but it was not the kind of back-end cloud infrastructure that is destined to dominate Microsoft’s future, mostly centered around Azure.
Officially, Microsoft announced Elop will now run the company’s Devices and Studios business unit, which will be beefed up with the addition of 32,000 Nokia employees. The question we should be asking is whether this move indicates that there is another shoe still waiting drop.
Yes, the other shoe would be making Elop CEO of Microsoft (or maybe President for a year, then CEO). That may be the board’s plan.
Is Microsoft planning to put its healthy, high-margin enterprise businesses at the center of the company and spin off its low-margin consumer businesses into a new venture? Making Elop the CEO of that spin-off (which would likely include phones, tablets, and Xbox) would at least make more sense than Elop as the CEO of the enterprise-heavy Microsoft as we know it today.
I think that the Azure cloud computing business at Microsoft is *not* the future for the business. That is a battleground with a bunch of other lumbering dinosaurs — HP, IBM, Cisco — chasing Amazon and never getting close. At present Azure is principally the platform used by Microsoft for its own cloud efforts, like Office 365.
The future of Microsoft is exactly the “end user” oriented enterprise software that Elop has experience with. I’m not arguing he is the best candidate, but wondering what the board is likely to do.
I maintain that spinning off the low margin consumer business would be a smart move, but I doubt the board is headed there. They are going to give another big push on the current devices and services business plan, and perhaps lose another $20B before whoever the new CEO is gets fired. Say it’s Elop, just as a strawman. Mid 2014, the board finally decides to give up on the consumer market after another year of mounting losses on Surface tablets and Nokia phones. That’s when they will finally become an enterprise software company, and spin off and shut down the rest.
The advantages to the store-as-fulfillment center plan are that Best Buy can deliver products faster and cheaply. The downside to that strategy is that Best Buy’s in-store inventory visibility isn’t good and the staff may not be as efficient as people in a distribution center.
The conventional wisdom would say that Best Buy’s stores are an albatross around their neck — much like they were for Blockbuster. But what if they can shift them into being more along the lines of warehouses — much like the ones Amazon is trying to build as quickly as possible — for fast local delivery? And what if only a small area of those warehouses were actually a storefront to show off their goods?
This would all take a lot of logistics (and possibly some re-zoning?) but it doesn’t sound like the craziest idea in the world. Again, what if your weakness is actually your strength?
Sounds like Joly might be onto something. But he can forget the ‘Microsoft Experience Stores’.