

Microsoft’s best hope after Ballmer? A break up - newsign
http://www.washingtonpost.com/blogs/innovations/wp/2013/08/26/microsofts-best-hope-after-ballmer-a-break-up/

======
brudgers
_" To me, Microsoft seems like the former Soviet Union—Politburo, five-year
plans, and all."_

Here is the essence of a horseshit analogy. Microsoft is compared to an
oligarchy - the Politburo [1]. And then by magic transformed into the entire
Soviet Union. This allows the advancement of an argument for breakup based on
shortcomings in the delivery of consumer goods.

 _" That’s why Steve Ballmer’s replacement should not be one executive but
should be a number of people who have experience in different domains and who
can run independent operating companies."_

Mr. Wadhwa, how did that work for ATT? The article is utterly bereft of
intellectual coherence. Microsoft is far more tightly focused than Samsung or
Siemens and more profitable to boot.

[1]and what corporation couldn't be?

~~~
ChuckMcM
I agree with your essential claim that it is poor reasoning to support a pre-
disposed view, but sometimes folks reason backwards to see if they can justify
their opinion.

Microsoft is clearly a complex place, and huge in ways that are hard to
comprehend. But it is also conflicted. The 'essence' of the breakup argument
are that the company's business units need to be able to execute on their
objectives independently of the other company business units. And that is true
for companies of this size. When it doesn't work well, which we saw in AT&T
and Sun Micro, it causes internal friction and damage, when it does as IBM and
GE have shown it can, it really does allow for getting more stuff done over
all.

There are lots of ways that Microsoft could go, personally I think they would
do well to create three 'views', Microsoft Consumer which presents the
'Surface' operating system to end users, Microsoft Developer which presents a
developer focussed system to end users, and Microsoft Enterprise which
presents a managed infrastructure to Enterprise customers. Each view has
goals, but they grow from the same roots.

~~~
brudgers
I agree that we often reason backward from our conclusions - I'll even admit
that sometimes an analogy is a useful way of explaining our reasoning.
However, even were the analogy to the Soviet Union presented coherently, the
interpretation of the benefits of its breakup require glossing over two
decades of economic turmoil, repressive governments, loose nukes, the
collusion of government officials in the pillaging of national assets and
ghastly breakdowns in the rule of law in both Russia and the other former
republics [and satellite states]. Lots of really bad shit happened after the
wall came down [yes, and before it came down].

But, for the sake of avoiding speculations over counterfactuals and arguments
over what counts as better, let's suppose that the analogy has some merit and
that there is a case for breaking up Microsoft. Let me further suppose that
that case is not based on traditional antipathies, and is instead founded upon
a business case analysis.

Under these suppositions, why is there a case for breaking up a very
profitable Microsoft, but not one for breaking up the far less profitable and
vastly less focused Siemens? [software, light bulbs, trains, power plants,
MRI's, financial solutions]

The other thing that needs to be provided are cases where a large profitable
company with minimal physical assets was successfully broken up.

Absent a well reasoned internal business case for breaking Microsoft up, I am
of the opinion that the business case is external: the possibility of breakup
(or even the mere suggestion thereof) creates uncertainty -> creates
volatility in the share price -> creates opportunities for arbitrage. Until
there's a business case based on profits put forth, that's the only money
trail I can follow.

------
cygwin98
Don't be silly. We're having a world war in the IT scene at this moment among
a number of monstrous companies: Microsoft, Google, Apple, Amazon and their
allies. This proposal is like suggesting of partitioning the Soviet Union in
1942.

------
macspoofing
It makes no fuckin sense to break Microsoft apart. Microsoft is actually
highly focused. There's synergy between every division, whether on the product
side (e.g. hotmail/outlook accounts used in Windows, Office, Xbox, Internet
services) or the backend/platform side (e.g Windows kernel powering PCs, Xbox,
Tablets, Phones. Or the Azure cloud powering Office 365, XboxOne Cloud, and
miscellaneous Windows SAAS, in addition to providing web-services AND also
pushing and marketing the Windows and Xbox development platforms).

What a terrible article.

~~~
revscat
> There's synergy between every division

I disagree with this claim, and offer as proof the lack of Office on any of
MS's mobile devices. Compare with Apple, who had versions of all of their
iWork apps available on the iPad when that device launched. Further, Office
has its own UX norms which frequently contradict the Windows norms.

I do not claim the article was high-quality, but I to take issue with the idea
that there is intradivision synergy at MS. The opposite seems to be true, at
least for now.

~~~
mynameisvlad
> lack of Office on any of MS's mobile devices

WP7 had Office. WP8 has Office. Hell, Office for phones started as Pocket
Office in 1996 for Windows CE 1.0, and has been updated all the way until
Windows Mobile 6.5.

>who had versions of all of their iWork apps available on the iPad when that
device launched

Furthermore, the iPhone existed for 3 years before iWork was released for it.
Since we're talking about mobile devices, it's only fair to use the original
iDevice for comparison, since Office for Mobile is available for phones.
Office for RT was released, and _built-in_ to the OS, for free.

Office Web Apps for SkyDrive was released 3 years ago. iCloud's iWork
implementation is still in Beta.

>Office has its own UX norms which frequently contradict the Windows norms.

It's generally followed Windows UI style. Windows 7 brought in Ribbon in some
built-in apps, and Windows 8 extended that even further.

You can try as hard as you want to diss Office, but their product offerings
have been top notch across devices.

------
canistr
Wadhwa mostly fails to address that Microsoft (prior to a couple of weeks ago)
was already "broken" up and organized by business groups (or customer
segments) in much the same way he is proposing (Xbox = IEB, Online Services =
Bing, Windows = Windows, Office = Office, etc).

I realize he is proposing an entire break-up, but I would have liked it if he
had approached the problem providing the context of the difference between his
proposed plan and the business unit separation. Afterall, Microsoft is famous
for teams fighting each other for power and resources and meanwhile still
requiring cooperation.

------
acomjean
This is like Deja Vu. They said the same thing about IBM last century (I was
an employee at IBM yorktown for a couple years). IBM was dying, the PC (clones
mostly) won the day and was in offices everywhere. The plan was to split IBM
up into lots of little companies.. They brought in a CEO (Gerstner) who
basically said, don't split it up, being big is a benefit and lets leverage
that. It worked, and the company started doing better.

oblig wiki page:
[http://en.wikipedia.org/wiki/Louis_V._Gerstner,_Jr](http://en.wikipedia.org/wiki/Louis_V._Gerstner,_Jr).

~~~
sgift
Your link doesn't work - HN doesn't make the last . part of it:
[http://en.wikipedia.org/wiki/Louis_Gerstner](http://en.wikipedia.org/wiki/Louis_Gerstner)

~~~
acomjean
Thanks!

------
radley
HA ha ha ha. No way. Don't discount M$. They have a very solid track record of
coming late to the game, failing, flailing over and over... and once a market
matures they move in hard and take it over.

~~~
mrdodge
They haven't been able to do that for a while, and their competition is now a
lot smarter and much richer than even Microsoft.

Apple's iPhone business alone is larger and more profitable than all of
Microsoft combined. Take out the iPhone and Apple is still bigger.

~~~
madoublet
I guess if you consider 2010 "a while". That is when Microsoft released the
Kinect.

~~~
freehunter
And the Xbox itself before that.

~~~
mrdodge
Xbox is brought up a lot in these threads although it has been a total
business failure. Even after losing billions over many quarters, making a
quarterly profit only recently, it's still in a virtual 3-way tie for the tiny
gaming console market.

~~~
mbreese
And it took how long to get this far? Console gaming is a tough industry to be
in.

------
kyllo
Well, this is wishful thinking. With their recent major re-org, Microsoft went
the complete opposite direction, and they are going to have tightly coupled,
horizontal/functionally-aligned departments rather than loosely coupled,
vertical/product-aligned divisions. Will be interesting to see how that works
out.

------
rbanffy
I too have written less than inspired articles in the past, so, I'll assume
the author was under some kind of editorial pressure and couldn't think
through the core idea.

The idea of giving away RT in order to compete with Android is only viable
financially with the multiple network effects between the products of
different divisions. If he proposes breaking up Microsoft, he should, at
least, propose a business model that would work with the broken up company.

------
mbreese
At the time, I thought that _not_ breaking up Microsoft during the monopoly
trial (a very remote possibility) was the worst thing that could have happened
to Microsoft. As a large company, they lost a lot of the tech edge that they
had in the 90's. Had they split into three groups something like: OS/
servers/dev tools, Office applications, and Internet services/Xbox(?), they
would be a much more formidable competitor in the future.

Imagine how much would be different now, had there been baby-microsofts
competing during the last ten years.

------
gutsy
Not going to happen. Microsoft will continue to make gobs of money no matter
what, just because so many users are afraid of change and learning new ways to
do things (i.e. not using Office). Until Apple products drop dramatically in
price, the average user will continue to buy PCs with Windows and other MS
products.

The phone and Surface might end up failing (which is a shame, both of those
products are WORLDS better than they ever should have been), but the classic
Windows PC will stick around for quite awhile, and Xbox isn't going anywhere
either.

~~~
gutsy
It would definitely make sense, but I don't see it happening.

------
leokun
I know it is silly, but its weird to see this post in the light of Bezos as
owner of this publication. He is not exactly neutral on this topic. AWS
competes with Azure.

~~~
astrodust
I think you mean Azure competes with AWS.

~~~
leokun
And it's not just that. The Kindle competes with the Nook and Surface RT.

~~~
astrodust
The Surface RT is not competition.

What I'm saying by all this is you only have a competitor when they're a
threat. Azure and Surface RT are not threats, they're merely nuisances.

------
crazygringo
This actually makes a lot of sense. A lot of articles have been talking about
how there's no obvious candidate for new CEO, and that it's basically too much
for any single person to take on.

But if Microsoft were split into divisions (Windows/Mobile/Tablets,
Enterprise/Office, Xbox/entertainment, Bing/Hotmail somewhere?) that could
freely compete, it's actually pretty easy to imagine suitable CEO's for each
one.

I'm truly hard-pressed to think of any value Microsoft as a conglomerate of
these divisions, actually provides, strategy- or synergy-wise -- at least
that's visible to those of us outside the company.

But is there any kind of precedent for this? It's common for companies to spin
off a division, but I can't think of any company voluntarily truly breaking
itself up like this. It's hard to imagine a board saying, "we admit we're not
providing strategic value here, let's break ourselves up".

~~~
astrodust
Remember that every division with the exception of Windows + Office has a hard
time turning a consistent profit.

XBox (independent) vs. Sony, Android and Apple is a losing proposition, they
may as well sell the division. In a high-stakes game like that, you need a
parent company with deep, deep pockets.

Windows independent of Office is worthless. There's virtually no reason to use
Windows apart from the Office infrastructure built around it, or the
entrenched base Visual Studio developers. It's somewhat popular as a gaming
platform, but as Linux starts to be reshaped into a first-class gaming
operating system, that will quickly become a non-factor.

The online division is the most troubled, basically a black-hole for money.
Surely it could be _made_ profitable, or simply sold for a massive chunk of
cash to someone like Yahoo! who could afford to pick it up.

It's not that the divisions would do better independently, but they're part of
a highly dysfunctional family that cannot survive independently.

~~~
gutsy
The average non-power user isn't going to want to learn how to use Linux,
they're comfortable with Windows so they'll stick with Windows. I predict that
they'll make two very distinct version of Windows next time, one for tablets
like Windows 8 and one a lot more like Windows 7 for the desktops.

~~~
rbanffy
The non-power user will use whatever comes with the computer, as long as it
can access Facebook.

~~~
gutsy
But if it's too different and hard to figure it, they'll deem it as crap and
that it doesn't work. That's the biggest reason why MS was so afraid to let XP
die.

------
MichaelMoser123
Not smart; Outlook is driving Exchange (or the other way round), so are lots
of other products; a breakup would not help the bottom line.

~~~
tracker1
Outlook wasn't originally part of the Office team's domain.. it was originally
part of the Exchange team. Though I do think that Exchange's integration is
second to none for teams, and that Outlook as an email client is actually
pretty good these days, and integration with Exchange, and bundling with
Office keeps it all afloat.

That said, there's no reason Office+Exchange couldn't be split off as a
separate sub-organization together, separated from the larger windows org...
possibly combined with webmail services (hotmail/outlook.com/office365),
simply using an azure org for their deployment/infrastructure.

Hardware could be spun off as well, with "special" deals with a core windows
team to be able to build on "top" of windows core.

The Windows org could be responsible for windows core, windows desktop os, and
developer tools.

There, you could then have three independant organizations within microsoft
that could utilize the core resources, while still having autonomy.

The office org could then concentrate on bringing their services to a broader
audience... not worrying if their Office for Android would cut into windows
slate sales... and the slate/devices team could expand upon their UIs instead
of having to bind into windows core.. and the core team wouldn't need to build
clumbsy desktop UIs that don't fit the patterns people have been using for two
generations.

------
devx
Perhaps Microsoft should break up - but there's a lot of wishful thinking in
there. Windows RT would beat Android in tablets if it were its own company?
How? It couldn't do that with billions of dollars behind it.

------
graycat
No, not a breakup. Silly. Throwing out the baby with the bathwater. Passing up
a great opportunity.

Review: Windows 7 desktops remain important for people running high end
applications from AutoCad, Adobe, Mathematica, Office, etc. Also developers
for code to run on Windows Server or in house Windows 7 desktop applications.

There are many client devices with many more to come.

The client devices need the Internet and servers, and as concerns about
security increase clients should just cache data, easy to erase quickly in
case the device falls into other hands, and not store the data; servers need
to be very secure; and many organizations and individuals will want their data
on their servers in their physical space protected by the Fourth Amendment.

Shrink wrapped software? Okay, have a nice application and want to write it
for sales, installation, support, and usage on all the different client
devices, Windows XP, Vista, 7, 8, smart phones, tablets? Heck no. And, for
Windows 7, etc. a user is very reluctant just to install a shrink wrapped
application due to issues of system security and stability. So, the shrink
wrapped business is in deep trouble except for the big applications from
AutoCad, Adobe, Mathematica, etc.

So, what to do about the work of shrink wrapped applications? Sure: Make them
Web apps; that is, use a Web browser for the user interface; let the browser
run on whatever client; and put the rest of the code on a server. If the
client can't run a good Web browser, then do the same thing by writing a
client app that uses a Web server for the data, algorithms, and computation.

So, we've got it: For Microsoft, push Windows Server for the servers. Push
client devices. Have really good Web browsers. And in cases where _own both
ends of the wire_ , take advantage of that for more in functionality.

Fundamental point: People using devices, including mobile, want some _utility_
, _functionality_ , etc. Since a single mobile device is quite limited in what
it can do, the device is mostly for user interface (UI) for services,
applications, algorithms, data, etc. on servers. So, the servers remain just
crucial.

Microsoft has shown that it knows how to run huge server farms, well managed,
with minimal staff. That's a huge business advantage. Computing is charging
on; e.g., there is a new solid state mass memory that can put a terabyte on
the area of a postage stamp. It's been a while since Intel knew how to put
1000 cores on a single processor. New operating system concepts will be coming
forward. All this progress will need lots of software development, e.g., for
servers. Microsoft's got the people, funds, market, etc. to do that work and
lead in it.

Mistake: Dunkin Donuts sells more donuts than Windows sells copies of Windows
8. Similarly for hamburgers at McDonald's. Similarly for smart phones from
Apple. And, for all three cases, so what for Microsoft? There may be a lot of
new client devices, but that does not mean that Microsoft has to dominate in
all of them.

All the smart phones in the world won't mean that a high end, 64 bit Windows 7
desktop system will be of no interest; a smartphone and a high end Windows 7
desktop just are not the same thing and are not really in direct competition;
even more the case for Windows Server.

Breakup? Windows Server can't exist alone and, instead, must _serve_ the many
client devices. So, Microsoft should stay in the business of soft/hardware for
some client devices. So, don't breakup.

