Slashdot Mirror
Microsoft's Midlife Crisis
pillageplunder writes "This article from Businessweek covers the recent memo sent to all Microsoft employees by Steve Ballmer. Interesting tidbits through-out: how Microsoft will try to cut a Billion dollars in expenses, and its cost per employee is about $300K"
Why do they need to cut a billion in expenses? Sure, they spend a lot of money, but they are making a profit, and I'll bet a billion out of their yearly profit is a drop in the bucket.
I know, I know, it's big business and stock price, but still, it's not like they're running out of money.
...or you may just be holding microstock and the one left holding the bag...
My stock and desktop GUI is now in Apple. And who doesn't love a cute penguin?
Microsoft's major problem is that it's been a long time since they've released a totally new line of products that has been sucessful. Aside from Open Source, Microsoft also has to compete with its own prior versions... Why does somebody who has Windows 2000 need Windows XP? Why does somebody who has Office 2000 need Office XP?...
Um, and the iPod is competing against what current Microsoft product, exactly?
That was part of the article's point. Microsoft missed that boat.
I live ze unknown. I love ze unknown. I am ze unknown.
Microsoft's problem is not competition. In most markets, they own a huge share. So Mac's ~5% and Linux's small share are not the problem.
The problem is that innovation (?) is getting more and more expensive. And in order to keep revenues up, they need to spend huge amounts of money on advertising, etc.
The low-hanging fruit has been picked, and now they need to go after new markets, new products, and the more difficult dollars.
No reason to lie.
I wonder if Bill Gates and the rest of the guys at the top were considered in that $300,000 figure. Seems likely, since that wage seems ridiculously high.
This is why statistics are often meaningless, or the meaning isn't clear =).
- I am a viral sig. Please copy me and help me spread. [strain #2] Thank you
Those whom the Gods would destroy they first give a vision statement to.
If brevity is the soul of wit, then how does one explain Twitter?
...for backwards compatibility. I think they use a lot of their manpower to maintain backwards compatibility for not only their own software, but other high profile apps that run on Windows. I dont really have a solution for them, just felt like pointing that out :)
Most of MS costs are labor - people. How you reduce labor costs is to pay less and pay fewer people.
Expect cuts. All this talk about how MS is no longer going to pay for shiatsu massages for your 'animal companion' is just their way of saying "Hey dickheads the 90's are really fucking over". Next stop - "Microsoft is just like everyone else, move to India or get fired!"
Well, the last time I checked, that was roughly how much they'd lost over the previous four quarters on the XBox venture... and roughly how much they'd lost onthe XBox venture over the four quarters before that...
In a company where pretty much everything except Windows and Office is the company just tossing money at an unprofitable venture for the privilige of having a product in that area, finding a billion dollars to cut shouldn't be that hard...
Irritable, left-wing and possibly humorous bumper stickers and t-shirts
Or lay off 3334 employees...
-- My hovercraft is full of eels.
Just do the math... Will cutting down costs per employeee be their goal or will it be cutting down on employees? (or both) Hmm...either way, they're going to have to make a decision: dominate everything (then start underpaying) or dominate one/two things with less resources. This must be a shock to their corporate culture....
> Linux and open source will never beat Microsoft. Microsoft will crumble from within, and beat itself.
Just like the USSR collapsed from within.
But it wouldn't have happened without the economic pressure of competing against the US (military spending).
Likewise, it won't happen to Microsoft without the pressure of competition from Linux (and Open Source, and Apple, etc).
- For the complete works of Shakespeare: cat
yes, we really needed an industry comparison for that number to mean anything at all. even not an industry comparison, just a comparison... tell me how much it costs Ford per person even.
The article seems to imply that Microsoft needs to find a new and interesting way to innovate.
It's hard to do something they never did. Microsoft doesn't innovate, they copy or buy.
Unless over the last 13 years you have used your immense cash stockpiles to hire people for the sole purpose of research.
My beliefs do not require that you agree with them.
Exactly, Microsoft has to start competing with themselves instead of trying to shove every idea anyone gets into one of their existing products. They're too big to live off a small number of products.
Look at any really big corporation. They all have multiple lines of products, many with overlapping niches, and they don't try and figure out how to shove dual exhaust supercharged engines and oversized spoilers in Cadillacs or ship a combined oven-cleaner-floor-wax-drain-unclogger. Even when *their* cost is thousands of dollars per unit in materials they have lots of different lines.
When Microsoft comes up with a new product, everything about it is channeled into "how do we make this support Windows and Office".
They crippled the Pocket PC to make it an adjunct to a "real" Windows box. I mean, sheesh, an iPaq has more RAM, a faster processor, and MORE DISK SPACE in those flash cards than the laptop I was running a full copy of Word on 10 years ago. It's got a smaller screen, to be sure, but within the limitations of that screen it should be able to run the equivalent of Word 6. They even stripped functionality out of Windows CE when they made the Pocket PC: the version of Office that ran on the clamshell Windows CE boxes was a lot more powerful than the one on the PPC.
You see the same thing over and over again. Look at Internet Explorer. It's been turned into a virus-ridden interface to Windows instead of a decent program. The version on the Mac is a much better browser, because it has to stand on its own two feet.
And then there's all the products that never show up at all, or get sidelined for years. You don't innovate by not shipping product, Microsoft, so why not give it a try?
The cost per employee at msft is high, partly due to some of the best working conditions in the industry - love 'em or hate em', msft is consistently voted as the best place to work, at least here in the UK, but i'm pretty sure the states is more or less the same. Ballmer (if he would have had hair) is a typical PHB , in that he thinks that cutting costs in some of these "extra's" will make the company "perform better", but usually, the opposite is true. Ballmer and his yes-men probably have not heard about some of the modern management techniques that disprove this single-minded vision of manageing a company. The free Coke's are probably next to go. Along with a fair chunk of employee productivity, no doubt.
People who think they know everything are a great annoyance to those of us who do.
No, it's more as if the only succesful cars Ford ever made were the Model T and the Model A, and every other car they ever made -- every single one -- lost them money, and yet people kept buying Fords and praising the company as the leader of the automotive industry.
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.
Dear Steve,
If you had really paid attention in your Harvard business classes, you would have learned the story of Standard Oil. A big monopolistic oil company that was finally forced to break up into pieces. Mr. Rockerfeller was sad until he suddenly discovered his stock portfolio went through the roof. Apparently, when Standard Oil became a bunch of smaller companies, they grew the market and their collective market capitlization was far, far greater than they were in one company.
You've had the opportunity several times now, and the last time had the feds suggested it too. But maybe it's not too late. It's time to knife the baby and split Microsoft into two or more companies. Split applications from OS. Create an Internet technology group separate from the others that encompases IE as a pluggible component for Windows or any OTHER Operating System, and provides search, MSN, Instant Messaging, VOIP, etc.. Move the Entertainment group into its own company and let it succede or fail on its own, and more importantly, let them have the freedom to chose the technologies involved. XBox has fans now, and it has a bright future. But only if the XBox division is no longer distracted by trying to save the OS group.
Come on, Steve. You know the time is right, and this is so the right thing to do.
The bitter lessons of a veteran coder: http://bitterprogrammer.blogspot.com
Yeah--cost per employee is a common stat used to demonstrate the general average force an employee has in the business. Another common one is revenue per employee. High cost per employee frequently shows that a company is working hard to expand, spending a lot of money on something (whether it's R&D or plant infrastructure) to build capacity, technology, etc. It's good that ms is doing this--if they cut that much, the employees will, on average, not be as empowered to expand. Don't forget that microsofts market cap still assumes pretty high growth rates compared to the average (i.e. high P/E).
Simple math would answer your question, too: the article says 57,000 employees, so do 57k * 300k and you come out with $17bb in expenses.
Read jack phelps dot net
Mid life crisis is exactly the right term. Please look at the following template, and see if it fits Microsoft.
When a man reaches 40 or thereabouts, they suddenly realize their mortality. They suddenly realize that all those dreams they had and plans they made in their twenties are not going to happen. They aren't going to be able to build all of the software libraries they were imagining even in their early thirties. Furthermore, they find that the number of times per week that they have sex is less than the timer per DAY when they were ninteen.
Usually, this results in: the sudden need for a boyfriend/girlfriend that is half their age. The kind of toys that they wanted at age 20 (usually a certian kind of mp3 player, 3D graphics card, or sportscar). I remember a dear friend describing the waitress he was dating, and one of the plus points was "well, she's at least almost half my age!".
Different people have different views on what follows. I'll express my own view. This is highly personal. And not all people agree. I perceive that part of the issue is whether you have your eyes focused on this life or the next one. Since my real hope lies in what is to come, and not is what is present, I have not had, and don't expect to have a midlife crisis. Someone said something like: "where your stock options are, there your heart will be also.". Although I don't want to hasten the event, I'm ready to go, and frequently think about it.
Back to the subject. So does this sudden middle age realization of ones own mortality seem to fit Microsoft? In other words, they might have as many years still ahead, as they have behind them, but suddenly, there is the realization.
Those who would give up liberty in exchange for security and DRM should switch to Microsoft Palladium!
The dilemma that Microsoft is in is a natural consequence of relating success to dollar amounts rather than the feeling one gets when one puts out a quality product.
Corporations are really a kind of abomination. They embody only one ideal; greed. They are financial black holes sucking up all available wealth. It's there only purpose of existence. The problem is that once the entire market is consumed what then? Either enter into new markets or start squeezing their own workers of course! Cut benefits, wages and any other expenses.
People, we need to wake up and consider where the world is going. After considering what a corporate world will be like do we really want to allow that? The natural conclusion of a world where corporations own everything is simple. Two classes. The few very rich and the modern day peasants.
The race isn't always to the swift... but that's the way to bet!
They clearly know how to run a business -- nobody's denying that. But the way they run that business is to make two products that pretty much carry the rest of the company, even though those two products, in and of themselves, aren't especially good. The mystery is not what they do, but why everyone else lets them get away with it.
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.
Does that average include Bill?
DISCLAIMER: I work at Microsoft as a developer. Nothing I say here is official company stance. This is just my personal opinion based on my time both before and after joining Microsoft.
Microsoft's main problem is a refusal to take quick action by trusting in common sense and instinct.
For example, it took upper management over a decade to finally see that users didn't trust Microsoft products. The rest of the world knew it all along, but management had to wait for mountains of hard data to come pouring in before taking any action. The Trustworthy Computing effort is genuine, sincere, and effective, but it's also about fifteen years overdue.
Do you think Bill Gates wrote BASIC for the Altair, or pulled off his buy-an-OS-and-name-it-MS-DOS move, based on mountains of official market research and hard data telling him that it's what people wanted? I'm betting he didn't. I'm betting he did it because he was smart and trusted his own instincts -- just like a professional chess player who doesn't realistically have the time to scientifically evaluate every possible move at every turn.
Microsoft isn't a bad company. People here really do care about satisfying customers and making the best stuff in the world. I really hate the false accusations so many people make about this company. But I also have to say that this company has grown timid and too slow to act, and that is our real challenge.
Moderator hint: a comment is neither "Flamebait" nor "Troll" if it is true.
Nothing solves 'big company' ills quite like
actually being a little company.
Had Judge Thomas Penfield Jackson exercised a little more restraint in his emotional venting and the Justice Department actually gone through with a breakup into smaller companies that really compete, those companies, in aggregate, might well be doing much better than the whole of Microsoft is right now.
"Provided by the management for your protection."
Microsoft's problem is not competition. In most markets, they own a huge share.
Their problem is competition, in a way. Has been for years. Competition of older versions of their own product, that is. Windows XP isn't selling as well as they want to, because of the Windows 2000 that people already have and that does what they want.
I believe posters are recognized by their sig. So I made one.
Not too high, don't forget they're temps.
Please... no one will buy longhorn for at least 2, perhaps even 3 years AFTER it's been released. Hell, I know lots of people who are still chuging along with Windows 95... the PC desktop is flat, one might even say that it's dead. Sure, it'll be around for a long time, but win32 will be firmly entrenched for a long time too, not this "longhorn" crap... it's all pie in the sky.
What is this, a troll? We had this crap all through the 90s boom.
"Process excellence" in software is usually the wishful thinking of a management that believes dehumanized industrial optimization techniques apply to a creative craft practice. The "process" typically accelerates the exodus of the most knowledgeable and productive employees to less mind-numbing work environments. Show me one good process that produces excellent software despite being run by idiots. Focusing on process is what companies do when they've become so clueless they can't find their *ss with both hands. Of course, most companies enter such a phase in their evolution, perhaps it is Microsoft's turn.
"Just enough" process is the right amount. Just enough to keep release cycles sane. Just enough to keep the product evolution from becoming too unstable. But not enough to distract people from focusing on their real work, doubt their better judgement, or prevent their creative juices from flowing. Any more than that and the perpetrators should be smacked repeatedly on the head with a rolled-up gantt chart.
Free drinks are great but they don't pay all that well and make you work 60 hour weeks at a minimum.
I was interviewing there and when I heard that they expected at least 60 hours per week I said No thanks. It's just not worth it for me to spend 60 to 80 hours per week at work no matter how great the cafeteria.
It might be great for 18 year old kids though.
evil is as evil does
> Oh. I understand now. Microsoft, as a company, is a failure.
Exactly. Luck gave them a monopoly on DOS, they were clever and ruthless enough to keep that going through the transition to NT. Office was their other big idea that lead to monopoly #2. But examine their products that they didn't get a monopoly on, none are profitable. Their early success in gaining a monopoly on DOS has twisted their corporate culture such that they don't know how to compete. That is why I call them a failure, because failure is their future unless they can reinvent themselves.
Lets look at that future a bit shall we? Let us start with their present situation.
Assets:
One metric assload of cash.
Monopoly rents on Windows & Office
Liabilities:
Zero friends & allies in their industry, only enemies and slaves.
Zero prospects for growth at greater than growth in PC sales in a world where PC sales are flat.
Zero prospects for innovation, having NEVER innovated in the past and a corporate culture built around NOT innovating so as to prevent accidental damage to their monopolies by changing the rules of the game.
Several money losing divisions that can't be eliminated without scaring Wall Street.
Now we look to the future. If there is one certainty, it is that OpenOffice.org is going to destroy the revenue stream from MS Office. Whether Microsoft cuts the price on Office or bundles it into Windows to maintain their monopoly, the revenue stream from Office is going to decline faster than most analysts yet realize. Windows on desktops is probably a safe stream for 3-5 years, then it could be at risk as well. With both monopolies at risk where is the upside when assessing future earnings? Today's stock price is Wall Streets best estimate of what earnings will be in the future. For the past couple of years that estimate from the hardest assed green eyeshades money people (Wall Street investors) has been one consistent verdict: FLAT.
Publicly traded corporations are all about the share price, nothing else matters except dividends and with so many shares in circulation they simply don't have enough revenue now to pay meaningful dividends and revenue isn't going to growing much anymore, and will probably be declining 5 years out. So their future is one of pain. They are way past the size where actual failure is a possibility, yet success and growth is also out of reach so their future is a long drawn out pain until something changes the equation. See IBM in the 80s and 90s.
Democrat delenda est
The problem with this company is that you have to make a lot of random people feel good about themselves before you get a go ahead on anything. You want a permission to fart in your office? Ask a dozen other teams what their policy is, schedule two dozen meetings, negotiate, negotiate, negotiate and only then will you get a go-ahead.
You know why this is? This is because of lousy management. A lot of people have become managers at MS simply because they wanted to become managers, not because they have necessary skills or are particularly fit for the job. A repercussion from this is that there's certain lack of leadership and vision from the very bottom to the very top.
This is unfortunate, because as a company Microsoft can kick everybody else's ass. We have SIXTY BILLION bucks and the best talent in the world, yet we still sit on our butts and wait until somebody else invents something to buy the company outright.
Young men know they're mortal. It's just that their hormone-addled brains don't allow them to care much about it.
I'm in my early 40s. When I was in my 20s, there were no 3D graphics cards for the consumer market, nor were there MP3 players. These were ipso facto not things I wanted. And I had a sports car back then. It was a tad beyond my income, but I determined, correctly as it turned out, that practical considerations would mean I'd never have another opportunity to own one.
The typical dream of most young men is not to build some kind of killer software library. It has more to do with changing the world in a meaningful way. This typically requires a hardware-based solution.
The difference between the sex you get when you're 40 and the sex you get when you're 19 is that when you're 40 it involved another person. This is way better even if it's (of necessity) less frequent. You're just going to have to take my word for it if you don't know this from personal experience.
And the brethren went away edified.
Until last year, they never paid a dividend. The only people who ever made money off M$'s greed were stock market speculators. Now that the "growth" is over, they pay a pathetic little dinkle to all those who had faith. At the same time, they rewarded their executives handsomely, though their treatment of "perma-temps" is infamous. You call that responsible? That's rape all around.
When the stock crashes down to it's worth, about $6 for their assets, "investors" will be left with nothing. Don't you worry, the lawyers will get the cash. I predict that long term investors, such as pension funds and "partner companies", would have been better off with government bonds.
Friends don't help friends install M$ junk.
I'm not entirely clear about the point of buying stock that doesn't pay dividends. Seems like an expensive trading card to me. Where a dividend-paying stock has a value equal to the present worth of all the dividends it will eventually pay out, a non-paying stock has no real worth whatsoever. The only thing that gives it value is the hope that some day someone else will buy it from you for more than you spent on it.
And it looks like you missed it: the point of all their free drinks and the food court theme is to keep you THERE and WORKING, as much as possible. No need to go out for lunch (even if a brief change of scenery would be refreshing), nor even a stroll to the corner 7-11 for a soda or Starbucks for a coffee.
It looks like you missed the point. I have never worked for or interviewed with (or applied to) Microsoft. However, I've been in the buildings as guests of employees and am long-term friends with employees. They provide (or provided, I've not been in for a while) those things to give people a choice. You could go out for your hour lunch, or you could stay in. If you are on a long support call (most of my friends were in premier support, where they only talked to people with really big contracts, not any pay-per-support), you could toss the caller on hold for a very short period and get anything you needed to keep you going to do what it takes.
It is unreasonable to tell a customer with a multinational network outage to wait an hour while you took lunch, or call back in to the queue and repeat everything to someone new. It is also unreasonable to have an employee work straight through without breaks. Microsoft found a happy medium.
Learn to love Alaska
How did you find out/ figure out what your cost to the company was? I'd be interested to know mine.
I'd rather be lucky than good.
If they cut that 52 billion 57,000 ways, everyone would get $912,280.70. If you invest that and get 5% return annual, they would all get $45,614 a year FOR THE REST OF THEIR LIVES. And because it's pure interest income, and US tax laws favour those who don't work fora living over those who do, they would only pay something like 20 - 25% income tax on it.
Why doesn't MS do something like this? Because they are beholden to their shareholders who speculate on their profits, and not to the workers who MAKE their profits.
Every employee of MS should RISE UP and revolt against their masters. RISE UP!!! YOU HAVE NOTHING TO LOSE BUT YOUR CHAINS AND YOU CAN GAIN A GUARANTEED COMFORTABLE LIFE!!!
THROW OFF the consciousness that holds you down - TAKE WHAT IS YOURS - your LIFE, your LIBERTY, and your RIGHTFUL WAGE!!!
Insert (smash the state) statements here.
Insert (facts) here.
RS
Shoes for Industry. Shoes for the Dead.
I defy you to provide an example of MS exhibiting this behavior.
MS does have an impressive IP portfolio. But they have historically used this portfolio for defensive purposes only. For example, Sun sues MS over patent-infringement issues relating to the JVM. MS counter-sues with several other patent infringement issues, perhaps including for example the "Long filenames in Fat16" patent which MS holds. The resulting fray ends with a cross-licensing agreement between the two companies. Lawsuit over.
Also, as far as that stupid firing of the contractor episode is concerned, Microsoft has an unequivocal policy regarding ANY photographs on corporate grounds. Only FTE's (Full-Time Employees) are allowed to take such photographs, and there are a whole slew of restrictions on what can be done with the resulting photographs. Photographs on corporate grounds used for non-business purposes are explicitly forbidden. In this case, a "leak" of "inside information" insinuating that MS is "secretly using Apple computers" is clearly a violation of corporate policy. The guy was asking to be sacked.