Sunday, February 20, 2011

New Microsoft

What is wrong with Microsoft? That's question many wants an answer for. This is one of many possible ones...

I started working in Microsoft 10 years ago. I am one 20,000+ hires who joined Microsoft then. I never became manager or Senior (I guess I didn't drink enough cool-aid), so I am still lowly IC here... Doesn't mean that I do not have opinions. You may have wondered why MSFT stock is lagging behind Apple, Amazon, Google, etc. I wonder, too, and here is my answer.

In short, current leadership does not have a focus. They are spreading us too thin to matter in any of areas. I think only exception is Xbox, where, I think, we executed great and that shows. It is also not coincidence that Xbox was built at Millennium campus, just few miles away from main Microsoft campus - it seems that that team needed to distance itself from remainder of the corporation, to be able to change ways how things are done. It is not accident that most innovative parts of the Xbox division refused to move to Studios campus and elected to stay back at downtown Redmond location. But I digress...

I tend not to fret about MSFT stock price, mainly because I do not hold any... I sell my stock awards approximately 3 months after I receive them. At first, it was out of necessity of paying bills and mortgage, but in that process I learned to take first small spike after September and sell then. I sold my options at $37, and I see all those my friends who believed in Microsoft selling them these days for a pittance... However, stock price is good indicator of something else: How people at Wall Street see Microsoft. What they see, in my opinion, is commodity supplier. Quite good one, but still commodity.

If Microsoft intends to stops its way down to oblivion, it has to change that. We should not sell commodity operating system, we should sell great experience and great ecosystem. Not coincidentally, Apple does exactly that and they are vastly profitable and darling of the Wall Street. They may have 10% market share, but they are extracting the maximum of the consumer surplus there...

I think that it is time for strategic retreat - Microsoft should use next versions of its various operating systems (desktop, phone, Zune, Xbox) to create new ecosystem, compatible in legacy mode with old one, but delivering unique experience, which is sound alternative to Apple sterile-white vision. We may loose market share in the process, but my gut feeling is that we should be able to retain at least 40-50% market. Let IHVs fight for crumbles in the remainder (we should still sell them Win7 licenses).

Imagine that we have provided our vision of the three screens (it is actually four, as I see tablets as separate experience), but on our terms, without relying on partners. Our phone, our laptop, our media center hardware, our tablet. Everything works seamlessly. We have concept of family ID and all devices know which family they belong to -- no this big mess we have with LiveIDs which are per individual. Both my laptops belong to all of us in the family, as well as Xbox, cable box and Zune. Even phones (WP7s, see I am loyal employee) are used by our kids and shared. Imagine that my phone has RFID and my laptop has an RFID and my media center has RFID, and when I set the phone down few feet from laptop, it just appears as an item on the desktop where I can drag'n'drop things back and forth. Imagine that my phone has an media center remote app which works with my TV when in living room, but when I am in the den, it just works with other TV there (it knows which TV is in the same room). That level of experience simply cannot be delivered if you do not control everything, from hardware to software to cloud storage. We are missing control of the first one.

Defenders of current course say that people want choice, and that's where they are utterly wrong. People want things which just work, where most of the choices are done for them by somebody else. They can probably choose between more screen or less screen, but they do not want to compare processors and graphic cards (Even I, who used to put together computers from the scratch, am confused when researching laptops -- modern processors brands/names are so obfuscated that there is nothing to latch as single indicator of performance). We can provide that for them.

Remember when IBM was selling their consumer hardware division and Lenovo bought it? We should have took it, just to obtain hardware engineers and supply chain. We should have bought silicone manufacturers in China and Taiwan, we should have bought LCD/AMOLED screen manufacturers, we should have bought/invested in plastic mold shops. You do not have to buy everything, but enough to be safe from whims of other buyers. It seems that Apple is doing exactly that -- investing billions of dollars in securing supply of retina-displays for next five years. That seems like long term thinking.

Somebody would ask what about Office, business solutions, server business, online business... Well, there is place for that. Nobody said that we cannot provide same unified experience on corporate level. We can sell servers, clients, everything neatly packaged with all our business stuff. It just works. You need more clients, just buy another Microsoft-branded desktop and just join it to given corporation ID. Allow Microsoft laptop/desktop to belong both to your family network and your corporate network.

Contrary to many opinions among Mini-Microsoft participants, I do not think that you have to start slashing and killing products to become more profitable. This is always short term gain and long term loss. Provide better experience and synergy by owning all parts of it.

Forgive me for haphazard writing and incoherence - I typed this in less than hour, just to dump down all this thoughts I had swirling in my head. It is just that I am battling my inner conflict: On one hand, I cannot be really bothered with Microsoft direction. This is just a job, and nobody asks me for an advice on corporate governance. I should just let it go and look for another one, where I can meaningfully contribute. On the other hand, I can see tremendous potential Microsoft has, and pains my heart to see it squandered like this.

Well, what do you think?

38 comments:

Anonymous said...

Way too much text. No focus. Good luck.

Anonymous said...

I think not having a Windows tablet in the retail channel for 18 months! should get a few GMs and a VP or too a pink slip on April 28th.

Anonymous said...

I think that it is time for strategic retreat - Microsoft should use next versions of its various operating systems ... to create new ecosystem, compatible in legacy mode with old one, but delivering unique experience,

Sounds like the Win8 strategy. That's not going to work, either.

New Microsoft said...

True, there is not much focus. I just needed an outlet for my grievings :)

Also, come here to discuss things when Who da'Punk goes on sabatical... I'll try to keep comments unmoderated.

Anonymous said...

Here's one possible contributing factor in Microsoft's demise: illiterate employees.

Dost said...

Not sure about your suggestion of going into the hardware business.

It can only be done by acquiring a hardware manufacturer. It would be futile to try to start from scratch.

It would also immediately alienate the Hardware OEMs: Dell, HP, etc, and push them towards replacing their Windows solutions with Linux, WebOS, Android based solutions.

There would be a large drop in revenue as a result, which would not be offset by increased hardware sales for several years.

This would cause profits to drop, and the stock would be in the teens.

DrRamRao said...

The success of the Windows/Office duopoly has resulted in Microsoft painting itself into a corner. Almost any major axis of innovation (e.g. success in tablets) will result in a cannibalization of revenues from the Windows/Office duopoly. Investors only look short-term, and are going to be extremely displeased if this happens, with consequences on the stock price. Hence management, rather than incur this displeasure, will continue to ride the cash cows till they stop producing. At which time, it will be too late to branch into other fields.

Anonymous said...

I laugh every time I hear Xbox described as a “success”. The thing has been an unmitigated disaster. Sure, it managed to bring back an air of coolness that Microsoft had long lost but financially speaking the Xbox initiative dug a hole that will never be filled.

Estimates of the money lost on Xbox go as high as 8 billion dollars. Let’s be generous and count 6. The E&D division, on a good quarter makes about $300 million in profit. Let’s again be generous and assume it’s all from Xbox (and in doing so let’s conveniently forget that the Max B.U. was folded into E&D a few years ago in order to shore up its financials). This means Xbox will take 20 quarters just to make its money back.

The problem is, Xbox doesn’t have 20 good quarters ahead of itself. The current hardware is grossly obsolete. MS is trying to squeeze a couple more years out of it by releasing add-ons like Kinect (and notice Sony is doing the same with PS3 and Move) but eventually they’ll have to move on to the next generation. That means increased costs and vanishing profits. The new hardware will be expensive to manufacture and probably sold at a loss (just like Xbox and Xbox 360 were at first). After partially filling the hole for the few years when 360 was profitable, they’ll start digging again.

It’s a vicious cycle. The only way out of it is to control costs. Notice that the Gamecube made money for Nintendo despite being by far the least popular platform of its generation. Why can Nintendo do it? Because they don’t have armies of PMs and managers busy producing PPT decks. Unless MSFT can learn how to be lean and efficient, it will keep losing money in the game console business.

Anonymous said...

Part of the problem is that Bing is primarily run by people who can't communicate in English. This means that no native English speakers want to work there.

How enjoyable is my job if I have to ask someone 3 times for clarification every time I talk to them. And even after all the clarifications, half the time I think I understood what they said and I repeat it back to them, and they nod... and then I realize the next day that they were trying to tell me something completely different!

With Google's aggressive hiring and far superior salaries, Bing is slowly progressing towards being staffed by mediocre Engineers who can't communicate. It can cost for a while on the current infrastructure, but it's going nowhere.

In some ways, I suspect Google is happy to let Microsoft keep plugging away at Bing, throwing away billions every year, because they know that ultimately Bing (and MS) will end up in history's dust bin.

Anonymous said...

"I think not having a Windows tablet in the retail channel for 18 months! should get a few GMs and a VP or too a pink slip on April 28th."

GMs and VPs? What about the board and CEO? Do you understand the threat this now poses to MS's future? Have you added up the shareholder value destroyed last year and again this year as a direct result of investor concerns in this area?

Anonymous said...

http://www.esldirectory.com/

Anonymous said...

"I think not having a Windows tablet in the retail channel for 18 months! should get a few GMs and a VP or too a pink slip on April 28th."

Yeah, it's a total dereliction of duty. And what really bothers me is that Ballmer sold 20% of his shares in December knowing that MS would still have nothing by his CES keynote in January. No external watcher expected that. Everyone thought MS would at least have something to show by then. So he basically used his inside knowledge to front run the selling in MS stock that he knew would result. Slimy.

Anonymous said...

If getting MSFT streamlined is the goal, bring Mark Hurd in as CEO. He will whip the overweight sluggish hulk into shape. A lot of add-no-value management will disappear.

Mark Hurd would only be of use to MSFT for a few years though. Once the organization is streamlined, a more visionary CEO is needed.

Anonymous said...


I think not having a Windows tablet in the retail channel for 18 months! should get a few GMs and a VP or too a pink slip on April 28th.

I think management realizes that Windows on a tablet is a losing proposition:
1. It is far far more resource hungry than the competition, forcing the price up and the battery life down
2. It is not finger-friendly

To get into the tablet space, if Windows is a non-starter, what is the alternative? WP7? Android? WebOS? some other Linux derivative? None of these bring the application base on Windows PCs forward to the tablet space. Investing in any of them will only cannibalize the existing Windows on PCs sales.

Management is between a rock and a hard place. Hence the inaction.

Anonymous said...

wow, the arrogant Microsoft commenters come out of the gate.

Anonymous said...

I wonder if Microsoft will ever consider starting fresh with it's code and make a break from legacy compatibility? Similar to what Apple did when Apple switched to Unix based OSX. By starting fresh they could build tablet and phone friendly touch navigation into the core of it's OS. Re-brand it and ditch the Windows name.

Anonymous said...

You mentioned Microsoft getting into hardware. Well the Xbox 360 was rushed into production in order to beat Sony to market and reliability suffered because of it. The RROD was a huge disaster. Let's hope that never happens again with the next version of Xbox.(420 or 720 or whatever its to be named.)

Anonymous said...


I wonder if Microsoft will ever consider starting fresh with it's code and make a break from legacy compatibility?

Legacy compatibility is both a blessing and a curse. It is a blessing in that it drags along a massive ecosystem of applications. Breaking this legacy compatibility means Microsoft will have to compete on the merits of its product offerings, and not rely on its ecosystem, something startups tend to be good at, and not middle-aged overweight companies like Microsoft.

Anonymous said...

A useful blog; Mini certainly appears to have run out of patience for his - and the infrequent examination shows.

I highly suggest blog posts that have particular foci. An open discussion on Microsoft is generally too broad to follow.

You might consider offering guest blog posts from others, assuming that they meet your level of acceptability. I'd certainly be willing to write one on a very narrow topic.

Making such a blog a success takes quite a bit of dedication; Mini had moderation on for a reason. Without it, you'll receive racially charged ethnic slurs, advertising, psychotic ranting, etc. If moderation becomes too much a hinderance, you might also consider taking on volunteers to moderate.

I agree that it's time to let 'da Punk' close up shop and spend his time doing his 'other' kind of writing. His heart clearly isn't in it any longer, and I suspect he's maintaining the site from a misguided sense of obligation.

Best wishes.

Anonymous said...

There is no reason to give Microsoft more attention than it deserves, even if you happen to work there. The job market is on fire right now. If you believe that Microsoft is doomed to become irrelevant, put your resume up on Monster.com and within a week or two you'll have interviews scheduled. Assuming you're not one of those pathetic Powerpoint gurus, you'll have no problem landing another job and you'll probably end up making considerably more.

The only ones to agonize over Microsoft's fate are those who know that they are unemployable anywhere else.

As for the rest of you, Microsoft might die, or it might live, and it won't make a lick of a difference to you.

Anonymous said...

Everyone will soon be required to speak hindi to stay at Microsoft. It is like watching en episode of outsourced.

New Microsoft said...

You might consider offering guest blog posts from others, assuming that they meet your level of acceptability. I'd certainly be willing to write one on a very narrow topic.

Sure, send me an e-mail to newmsft@gmail.com and I can post it as full post.

I created the blog when I was frustrated with Mini's glacial comment moderation pace.

So far, there is no spam (yet), and I didn't have to delete any comments.

New Microsoft said...

There is no reason to give Microsoft more attention than it deserves, even if you happen to work there. The job market is on fire right now.

Right. I am quite sure that I will leave Microsoft in next few years. Simply, I do not see much future here (at least for me). As you can see at the top of the post, I didn't made any career inside, and I highly doubt I will. I started working on some side projects, in order to sharpen my skills, which are starting to fade...

Anonymous said...

All the innovative thinking at the executive level went down the tubes when BG left. All MS does now is counter punch and they do a poor job at best. If you haven't been to a Microsoft store you should go. It's quite embarrassing what they have done. They copied Apple store layout completely. It's time to step down and give the innovators the keys.

Anonymous said...

Assuming you're not one of those pathetic Powerpoint gurus

I laughed out loud when I read that. I work at a US Gov't site. The US military couldn't live without powerpoint.

Anonymous said...

Microsoft is like a large ship in the ocean that is slowly taking on water. Some people on board see the leak and know that they ship will sink before it reaches shore. Wall Street are the passengers that see this happening, which is why the stock does not move despite strong revenue performance. They know that revenue alone will not stop the leak – the leak being competing in a non-PC world. A small number of employees see the leak and are leaving the company, especially with the current toxic culture. The vast majority of employees, whether they see the leak or not, refuse to acknowledge it, so they choose to ignore it thinking the ship will reach the shore and not sink. Real panic will not set in until the ship takes on enough water where high- to senior-level leaders have to make changes, which will come in headcount reductions, further benefit cuts, vendor utilization, etc. Better yet, the board will have to act because of institutional shareholder revolt, which means Ballmer must go. After the ship sinks, an outside leader will have to salvage the wreck, raise it to the surface and reposition the ship for sailing. The ship will look much different this time around though. Much smaller. Much nimbler. Much less reliant on Office and Windows. It will be much faster to compete with its faster, younger and agile competitors.

Anonymous said...

Microsoft became a stagnant brand. Everything they do now is copy other company's ideas. I gave Bing a shot. They miss the mark pathetically. I always go back to Google. Google knows what I want from a search.

Anonymous said...

Profits is a by product of innovation. Microsoft has none. Engineers rule at Google not the PMs or bookeepers.

Anonymous said...

As the spouse of someone involuntarily severed from employment at MSFT last summer, I would like to say this to all other such people, or those waiting for the boom to fall:

It isn't you. It's them. You're not alone, you're not to blame, you're not responsible for bad reviews or being 'managed out' or 70 hr work weeks that aren't good enough. It's not you, it's them.*

*Unless you got hired by mistake. Which doesn't seem likely to happen, does it?

Anonymous said...

Here's one possible contributing factor in Microsoft's demise: illiterate employees.


Hey, ass face, try:

One possible factor that is currently contributing to the demise of Microsoft is employee illteracy.

Anonymous said...

Any ideas on why Mini has stopped posting and moderating almost completely?

New Microsoft said...

Any ideas on why Mini has stopped posting and moderating almost completely?

I think that he is tired. He may had lofty goals in the beginning, but he lost the faith along the lines.

I do not have high hopes for the company, but I still think that forum for anonymous discussion should exist, even more now that InsideMS is quietly turned off and deleted from corpnet.

Anonymous said...

Here's another factor contributing to Microsoft's demise:

> Fuck off dick face
> Hey, ass face, try

Pathetic and comical. With intellectual giants like you and monkeyboy Ballmer, Microsoft's future is grim. Microsoft's era has come to an end.

I credit Bill Gates with helping to make PCs ubiquitous. Beyond that, Microsoft has been a disaster for computing, technical literacy and corporate ethics. Richard Stallman and Linus Thorvalds have made far greater contributions to mankind. Empowerment rather than servitude.

Mock that concept at your peril. I'm enjoying watching you all squirm, and loved reading minimsft.blogspot.com. Obviously, I'm not alone.

Anonymous said...

MS is no longer a scrappy belligerent startup.

It's IBM or GE or Ford.

No-one cares if it's cool or not, just that it delivers reliable and valuable enterprise software and makes enough money to pay dividends.

Sadly Ballmer still thinks it's the early 90s when MS was still on the rise and had talented people taking risks.

The total failure of a tablet strategy - since BillG first demo'd a handheld computer MS the Windows and Office divisions have failed to embrace it - producing unworkable applications that required a stylus and had (at best) a couple of hours battery life with crap performance... along some Apple and the Android Tablets (and now RIM - an apparently dead company) showing us that it's all about the apps and user experience not "the platform" and MS are unable to catch up (how about sticking WP7/Metro on one of the existing Chinese ARM slates at least to get something out now?)

NoDo - the first WP7 update that was going to show how clever and agile MS were with their new phone obvious stands for "NOt DOne" - every attempt to push it out the door has failed and I know a lot of folks who were waiting to see how that would go before buying in have got Android or iPhones instead.

The continued existence of Partners, the total screw up that is the new healthcare policy coupled with management who just don't have a culture of leadership on top of the failures of strategy amd execution is why my last day was a couple of weeks ago and while the honeymoon period with my new employer is far from over even with rose tinted spectacles I don't see the same problems - but I do see how they are attracting great talent and, in their particular niche, will kick MS in the butt with a agressive release schedule and a product that is driven by customers not entitled MBA touting PMs...

Good luck

Anonymous said...

Regarding, "*Unless you got hired by mistake. Which doesn't seem likely to happen, does it?"

You're.... kidding.... aren't you?

We had at least two, maybe 3 depending on your bar for "mistake", "mistake" hires on our team. Neither was cut during a round that cut one non-performer and one great performer who wasn't popular with his lead.

In the old days, not so often were there really bad hires. 2005 and forward, especially for positions working on unexciting things or in teams with a community reputation as extremely overworked, Microsoft did hire people who shouldn't be here, because it's all they could find. It's a a need to put butts in office chairs so that a manager can say a team is fully staffed. Otherwise leads get nagged by their management for not solving the resource problem identified during the last review cycle. See it now?

That aside, spouse, good for you on not being silenced. I did not sign the severance agreement, deliberately to preserve my right to sue. I have not finalized my legal efforts yet merely due to having been warned by so many people that I need a strong support system in place to withstand what'll happen when it shifts into gear. I've had to spend a while setting that up in preparation.

Hopefully there will be a fair settlement closer to what I was forced to give up when I left than the original severance offer of under-10%-of-lost-stock-awards, which didn't even take into account time I'd be unemployed and looking for work during GFC days. If not, I have a plan B for recouping the missing dollars and right the balance of karma in the universe after I helped MS recover from a major headache and was repaid by being kicked to the curb. A book about my experiences there in a major corporate effort, along the lines of what "Showstopper" did for NT, is in the works.

Anonymous said...

I must say, I admire anyone who is willing to take on MSFT and confront them. My husband took the severance because - let's be honest - he was overwhelmed, and broken, and backed into a corner. With 4 little kids at home, and the knowledge that he simply wasn't capable of leaping back into the job market, he wanted to have that little extra cushion. It's almost gone now. But I really wish there had been some other choice than 'take the money, shut up and get the hell out' or 'just get the hell out'.

But, they lied to him. They lied about him. They set him up for failure and then kicked him when he couldn't do miracles. I wish he had it in him to take them on, but the truth is, he doesn't. What he does have in him - finally - is to get back on his feet and work somewhere else, to put the lies and the liars behind him, and move on. I'm glad somebody's going to do what you're going to do, though.

Anonymous said...

"Microsoft is among the world's most ethical companies" according to the Ethisphere Institute.

All the ethics money can buy from the Ministry of NewsSpeak.

Anonymous said...

Upon discussing how deeply the 'managing out' process affected my husband, both for the 2 years during which they created ways for him to fail, and after they 'let him go' because he had failed, my friend said
"They had a lot of time to turn him into a Microsoft Bonsai Tree. It's going to take a while to recover."

Microsoft Bonsai. Instead of 'grow where you're planted' or 'bloom where you're planted', it's 'stunt where you're planted'. Whose brilliant idea was that?