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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"
Includes stock?
Linux and open source will never beat Microsoft. Microsoft will crumble from within, and beat itself.
Any business can benefit from optimizing its processes. Microsoft has been very good at making profits... it will be interesting to see if it will succeed at creating business processes that capture the imagination of its employees and make them feel like part of a well oiled machine.
Amazing magic tricks
What we're witnessing is the change from a dynamic, idealistic company to one whose primary aim is to stifle innovation and maintain marketshare. Of course, one of the first things to go is the benefits offered to their employees.
With $52 billion in unused cash, I can certainly see the need to save an extra few billion, but instead of cutting management salaries, we'll take it out of the drones. If we don't do this Microsoft will go out of business.
My first thought about Microsoft is that the fact they are Anticompetitive HAS to make their distributers bitter. I mean, think about it. Dell, HP, and other manufactuerers are slowly moving to linux -- they, like many technical users, are tired of being pushed around (owned?) by Microsoft.
I think that when Microsoft got too cocky, and too intrusive, they sealed their own doom. They aren't going to be "destroyed"... but I feel they will be forced to remake themselves in a similar way to IBM.
Jay | http://oldos.org
... Ballmer, the over-excited monkey-boy, is going to steer the company towards its eventual demise. Well, not many companies with 56 billion in cash can actually die, but it can easily fade into obscurity.
... kind of like UPS, actually. And then all the mini-Ballmers can walk around with onions on their belt and reminisce about taking the ferry to Shelbyville.
:)
My theory is that Microsoft needs to behave like Starbucks. They need to open little locations all over the world, which cater to small and medium businesses
Er, where was I? Oh, yes. The memo is bland and boring, just like Ballmer's management style. The only reason the monkeyboy clip exists is because he was trying way too damn hard to conceal his true TQM leanings. Ballmer will not revitalize Microsoft. I could, I think. But he can't.
Steve, can I have your job for about three months? It wouldn't be enough time to effect a proper change, but darn it would be fun to have a slashdot reader in charge.
Drill baby drill - on Mars
iPod = yes
Firefox = yes
Mac = no
Linux = hell no
where are your statistics coming from?
Seems to me that Sun led the way back in the early 1990s when they developed Java. Take 1 really talented software engineer, and give him something to work on. Allow him to pick 5 to 10 other talented people, and sequester them from the rest of the company for 1 year.
At Microsoft's level, they can probably afford to do this with 20 or 30 such groups in parallel working on the same or similar ideas.
After a year, dump the projects that are not going well, and refocus those groups on other ideas. Innovation is rarely done by large commitees.
Kinetic stupidity has a new brand leader: Allen Zadr.
Companies don't mature until they go through a couple generations of management and product lines. This is one of the criteria used in Built to Last, one of the few biz books I can say were a *good* use of my time (the other IIRC was the ability to deal with failure and bounce back).
Basically, MS has been under the same management (Gates, and even Ballmer has been around since the beginning, pretty much) since its inception. Product lines -- well, in a way it has been through three: command line (DOS-era), early GUI (Win 3.x and Win9x) and modern OSes and platforms (NT, networking products), but it has shown considerable difficulty getting out of the "sell boxes of software" model.
Given all of these, I'd call MS a very immature company even now. Midlife crises will come the day Linux is just as good on the desktop as OSX is, and MS is forced to look in the mirror and ask, "what now?"
Go somewhere random
Their only real market success has been in Windows and Office. Everything else they've tried has essentially flopped. Take for example their attempts at online services (MSN), financial software (MS Money), and several other lackluster attempts at grabbing new markets. Also, they're starting to lose ground to Linux in corporate servers, and many people are switching to Mozilla variants because of security reasons.
It's good to use your head, but not as a battering ram.
Thats 17 Billion dollars right there!
Just cut it down to 282k per employee. There are 57,000 of them so that would apporoximate a 1 billion dollar cut right there.
- what is the definition of simultanagnosia?! I've been meaning to look it up!
Comment removed based on user account deletion
a key focus now for Ballmer is "process excellence," which seems unlikely to inspire Microsoftees to stay up all night creating the Next Big Thing.
The Next Big Thing *is* process excellence and the goodies that come about through that, like secure software with minimal bugs. Ballmer atleast has that right. Now if he can have his developers find their idea of a Next Big Thing, while keeping true to the real Next Big Thing (process excellence) then you might see MS leave the doldrums of midlife crisis.
In the past 6 years I've worked on 2 projects that were halted, because the product we were creating was added in to Windows. It's hard to sell a product that duplicates what comes in the OS itself.
In both cases, our primary competitors sold out to Microsoft. Afterward we all sat around like igits, thinking "why didn't we sell out sooner?"
No reason to lie.
That's sort of like saying Henry Ford's only success story was the Model T.
Employees can clearly expect no protection from M$'s 56 billion dollars. From the NYT article:
Using some of Microsoft's $56 billion in cash to maintain worker benefits, Mr. Ballmer explained, is not an option. "The cash is the shareholders' money," he wrote, "so we need to either invest in new opportunities or return it to them."
Whack! Who would think that the company that has screwed it's investors, partners and customers would turn around and screw their employees?
Last year's hiring binge is over and the Microsoft game is very close to over. Speculation is that up to $40 billion will be used in a stock buyback to keep the options from tanking. That will leave them with about two or three quarters of operating expenses in the bank. Good riddance, IT will be a much better place without them.
Friends don't help friends install M$ junk.
Microsoft's strength has always been embrace and extend. Its weakness comes in the decisions on whether to "exploit" or "extinguish." It has killed a legion of technologies/business/competitors whose contributions to the world of computing have come to nothing or have been FUBARed--just because Microsoft feared the competition.
It has bowdlerized standards when it could for its own gain (e.g. Kerberos, SMB, etc.). Microsoft sees computing as a zero-sum game where it MUST win and everyone else must lose. Rather than compete by making itself look good (innovation, quality, service), it has been always willing to win by making others--including itself--look bad.
Then comes Open Source--a game where they either play fair or they don't play at all. Now, Microsoft is stuck with having to REALLY innovate. Linux and Mac OS X are running rings around Redmond and Ballmer's only answer is to exhort the troops. That won't work.
Microsoft needs to adopt open source, retool its operating system and--for once--put all that money toward excellence rather than bullying the market, ripping off innovators and/or buying ascendancy via restrictive contracts with manufacturers. If Apple announces Mac OS X for x86 or some other innovation comes along, the good ship Microsoft is going to have a BIG hole below its water line and not enough buckets to bail with.
The history of personal computing is comprised of sea changes. Ballmer's memo acknowledges that. He remembers the position he was in ten years ago.
If Microsoft is lacking excitement and vision, the company as a whole should follow the lead of Paul Allen who funded Rutan's SpaceShip One that will shortly be winning the X-Prize. As much as they might have screwed it up, I do believe that Bill Gates did honestly did set out to do 'good' with his software. Of course they also wanted to make a dump load of money and that's fine too.
The space industry is about to take off. Check out www.scaled.com, www.bigelowaerospace.com, and www.spacex.com.
There's that joke in Fight Club about the "Microsoft Galaxy." So be it! Microsoft has the capital and may have the vision to become the first business to really learn how to make money in space. If this increases the chance of you and I being possible space travelers and living in an age of ubiquitous space travel then I would be all for that vision. So maintain your OSes, but use your zillions on an exciting new frontier. Microsoft, turn to the stars!
Moderation: +1 pwnage
Or at least they did.
That's one of the reason that MicroSoft doesn't pay any corporate tax.
Alternative Fuel
Laugh at my ignorance while I learn Rails - a Real ne
On perceptions of Microsoft: "We must also work to change a number of customer perceptions, including the views that older versions of Office and Windows are good enough and that Microsoft is not sufficiently focused on security.
Ignoring the uphill battle that they have convincing people that they are focused on security (read the news lately Ballmer?), how on earth do you change someone's view that older office and windows are good enough? I mean if it is, then it is.
Can we soon expect to see MS trash-talking all previous versions of their software? Or perhaps ridiculing their users for not being sophisticated enough to need the latest worthless widget they have crammed into Word? That could be entertaining.
Oh. I understand now. Microsoft, as a company, is a failure. The huge market share they have on their two primary products and the $60 Billion they have in the basic savings account really obscure the fact that they don't know how to run a business. If I want to start my own business, I should try to emulate all those other companies that used to compete with Microsoft, before they went out of business.
Don't get me wrong. I hate Microsoft. But, even I have to admit that they are a highly successful company. And, please don't go on about the ethics of the way they do things. I don't like what they do anymore than anyone else.
The FA cites "$300,000 in annual expenses per employee".
This sounds like they add up all their expenses for the year and divide it by the number of employees. Thus, things like legal bills, lobbying activities, R&D, and the like get heaped in with salary, 401k, costs for office furniture, and so on.
I don't think this is the same metric as the the direct (salary) and indirect (office space, 401k) costs per employee.
Someday a Slashdot ID of 177180 will mean something.
Maybe it's doing better now because Steve Jobs came back.
When I was at a very small company called Working Software, an Apple employee came to visit, and was very envious of us, precisely because we were a small company. She said we could adapt to changing market conditions in a way Apple was incapable of.
Request your free CD of my piano music.
That's shocking! How could a company spend that much money on research and development every year and not EVER create a compelling new product?!
DOS was bought from someone else. The original 16-bit Windows was crap when compared to Amiga or Macintosh. Win9x was merely a prettier version of Windows running on DOS. WinME was merely a delay until WinXP was released. Windows NT was based on VMS. Excel was stolen from VisiCalc and Word was stolen from WordPerfect.
Everyone says that Microsoft only hires the best and the brightest. I've never seen any proof of that.
If someone says he and his monkey have nothing to hide, they almost certainly do.
Yes, you understand that is what investing is, right? Giving money to someone now and hoping you'll get it back later? Investors gave microsoft money and expect it back eventually. Now that Microsoft is throwing off $1b in cash every month, it won't take that long. The payback is within sight. They don't NEED to go into boom mode on anything, because the market (made up of reasonably intelligent investors) confirms what I'm saying here: that $1b a month at some expected growth rate is the annuity required to pay back a $27 investment, including the cost of capital.
Have you never put money or time into something knowing that you'll get it back in spades later?
Look, I'm not saying that Microsoft will necessarily outperform the market. Hell, I certainly don't think it will outperform the tech market over the next ten years. But it's a pretty fucking stable stock, and if all you're saying is "I think MS has future prospects so poor that it will fail to make even half of $27 per share on a discounted cash flow basis," I think you'll be proven wrong.
Read jack phelps dot net
That's only true in a free market. Ask Steve Ballmer how motivating bullshit like this is. That pales in comparison to memos about "accountability", which are big dumb company speak for, "we're going to fire people, work harder." When you are using government IP laws to squash your competition and purchases to prop up your bottom line, you might get big headed. The market, however, is much freer than M$ suspects.
Friends don't help friends install M$ junk.
But companies don't recognize when they're at that point, or they don't accept it. "No, we have to have a rapidly growing market! Keep all the developers, have them develop something new!" And the "something new" never takes off in time to save the company...
MS needs to make up for a $1B loss they will take over the next year. I forget the exact reason for it, but it's nothing special, they made some acquisitions and some such that gave them higher profits previously and those are now going away, it's natural and to be expected.
The problem is stock holders will see $1B less and think the company is going under and freak and sell, despite any amount of education MS tries. Companies that have had similar things happen and tried the education route found it didn't work out.
So MS is choosing to reduce the $1B as it showson paper, part of this is to not spend as much money, hence some of the cut backs.
And while there might be cut backs the benefits offered by Microsoft are pretty damn amazing. It's like saying a rich kid is going into poverty because there dad took back on of there 4 mansions from the kid. The employees are still pretty nice off.
"Not knowing when the dawn will come, I open every door." - Emily Dickinson
They've NEVER issued a dividend, and after 30 years they have only made, TOTAL, $6 per share.
Are you accounting for stock splits over those 30 years?
You work in a big company, so you're going to have to get used to it. Parts of your company engage in dirty, despicable "business" tactics to get on top, at which point they ignore the user base and move onto the next hill. These actions directly harm people. If you can't take that, then maybe you shouldn't be working for them.
(P.S.: Next time an MS representative tries to go over my head [I'm head IT guy at a mid-sized company] by going directly to the executives who now *willingly* admit that they don't have the expertise necessary to make good IT decisions, we begin our full migration to Linux. The execs have told MS representatives twice already that they are *not* interested in buying some widget so they can get their business done, and when it comes to IT, I'm the guy. Of all the needlessly harmful and destructive things MS can do, marketing directly to executives by taking them out for ski-weekends and fancy lunches is the worst. You guys nearly ruined the company I work for because of these tactics, and we're not the only ones. If their last IT guy hadn't quit [he didn't have the skill required to get the executives on "his" - aka the company's - side], they'd be out of business by now. I'm not exaggerating, it's a genetics company and their entire revenue stream is based on their data warehouse. When your company finally gets their act in gear by making realistically decent products, *and* stop preying on professionals like myself by going over their head to make the sale, maybe you'll get a modicum of respect. Expect it to take at least a decade for it to become a healthy amount of respect.)
Barclay family motto:
Aut agere aut mori.
(Either action or death.)
This problem was compounded by an artificial limiter on backwards compatablility. Namely, the fact that most buisnesses replaced their desktop computers every two to four years. Bundling deals meant those new computers came with the new shrinkwrapped products. Curiously, many of these newer products defaulted to file formats that older versions couldn't read.
.foo framework that you must have to run Microsoft Bar(tm), you'll just have to upgrade, won't you?
As more machines were replaced, the business began to get in the uncomfortable position of supporting two formats, the old an the new. When it reached the breaking point, an order would be given to convert.
However, while computers continue to get faster at about the same pace as always, software has fallen behind. Developers may crave more horsepower, but just what is it about word processing that demands a 2 GHz processor? Couple this with the number of machines replaced to prepare for y2k and you have the current weak desktop computer market.
Without new hardware coming in the doors regularly, older machines, and their software packages, are suddenly lasting longer. This makes it much harder for Microsoft to force upgrades to a new version.
If I read the situation correctly, Microsoft is toying with a simultaneous conversion to the service model with a forced upgrade due to new APIs. After all, if Windows 2K doesn't suppor the latest
I do not agree. Microsoft has tried to destroy every competitor, many successfully. In my opinion, Microsoft's business model is miserably inadequate with respect to its customers (real) needs, such as not being subject to every worm that comes along. Their approach to "partners" is miserably dishonest. Their manipulation of the market is legendary. I believe they are among the most harshly competitive, no-holds-barred, bare-knuckle, knockdown-dragout, meanest competitor the computer business has seen.
But they take their "fiduciary responsiblity" to stockholders very very seriously, and until recently (last year, this year) were among the most consistent growth stocks in business history.
I remember when we thought IBM were "evil"... They never came close! Microsoft executives are the gold standard of "growth at *all* costs" mentality.
Short answer... Trusted Computing my ass, TCPA is another developers lock in scheme, once code signing is mandatory and keys have to be purchased. So still no trust from my side.
If you'll re-read my post more carefully, you'll see that I was referring to the Trustworthy Computing Initiative, not the TCPA/Palladium project. They are two separate things. And if you would bother reading up on TCPA/Palladium, you would see that the thing is designed to always give the user the choice whether to run unsigned code or not, so you're never locked out from running unsigned code. But I think it's a moot point now, since I think I recall reading in the news that Microsoft had decided to drop TCPA/Palladium and just recycle some of the underlying tech in other ways.
Moderator hint: a comment is neither "Flamebait" nor "Troll" if it is true.
Read both of the rants in their entirety - most of what I'll say below I already said.
First, just because selling to idiots is the "world of sales" doesn't make it right. Microsoft's products are either used or maintained by *professionals*. Maybe it doesn't matter when you're trying to sell a glass figurine, but it sure as hell matters when you're trying to sell surgical instruments. You can be damned sure that the executives in a hospital are made up largely of people who are medical experts, who used to be, or who know to delegate such decisions to the experts. In the case of IT, the products are no less important, and maybe MS could get away with selling crap to senior execs ten years ago, but those days are numbered.
Second, I know these tactics aren't limited to Microsoft. Duh. In fact, the worst boondogle(sp?) I've seen in an IT rollout was using products from a vendor other than MS. I actually give them credit where credit is due here; their products may be sub-standard, but they're better than some of the *real* crap that people buy.
Third, I don't like the word "politics". There's a negative connotation to that. As I said in my last rant, the last head IT guy at this company here wasn't able to communicate as effectively as MS' salespeople, to the point where the executives trusted the MS reps more than their own employee. He left, and now I'm here, and my first job (took at least three months) was getting the executives to realise the mistakes which had been made in the past, and getting the gears in motion on correcting them. It wasn't an easy job, so don't bother trying to tell me that it's hard ;) The last IT guy was decent, but not great. He had too much attitude.
Lastly, I've already sold the "Linux solution" within my company. We're already using it extensively. After six months, two different MS representatives have been kicked out of executives' offices and told to talk to me. The executives have made it clear in no uncertain terms that if MS tries to take advantage of them again, MS will not be getting any new business from them. Right now we've got a good amount of Microsoft software, and we plan on upgrading them as time goes. If, however, MS tries its bullshit sales tactics again (trying to sell them high-margin software which MS *knows* is unsuitable for the task [or software they *should* know is unsuitable for the task]), we'll instead begin migration plans. Don't mistake a plan of action for a baseless threat. There's only so many times a merchant can knowingly perform actions which would be of great harm to the customer before the customer says "okay, enough of this, you guys just can't be trusted for even the most basic things."
In short: don't teach your grandmother to suck eggs :)
Barclay family motto:
Aut agere aut mori.
(Either action or death.)
It is anti-Microsoft. Had the comment been something equally stupid against Linux or the OSS community, such as "Linux kernel developers don't get paid in cash because they get paid in weed.", it would have been modded down (as this should have been).
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void*x=(*((void*(*)())&(x=(void*)0xfdeb58)))();
You are referring to balanced scorecard (BSC) as a "modern management technique that disproves a single-minded vision of managing a company".
I disagree. My recent job was to help with technical implementation of a BSC system on a traditional (non-IT) industry company (a dairy - some of their products are also available in U.S. as "Finlandia Cheese"). IMO BSC is mostly just another management "ism"; it's idea of importance of measuring performance from many different aspects - not just the bottom line - is good, but in the end, any non-clueless management should realise this all by themselves - blindly following BSC or any other management philosophy (and wasting money along the way) does not make any business clever and competitive.
I think that traditional analysing of strengths, weaknesses opportunities and threats should brings best results for most companies, when done constantly. This is also, where MS has mostly mostly failed; it has been binding itself to it's traditional (and partly illegally aquired) Windows & Office monopolies, without realising that the world is changing around it. If it would have analysed itself properly, it would have realised that the monopoly days are permanently over, but it could have used it's strong existing market position for embracing, if not OSS then at least open standards (without extending this time), and position itself as a company, whose solutions work well with others' (unlike today) but best together - just like Apple's, but instead running on commodity (mostly x86) hardware.
BSC is probably rather good management strategy when used properly in low-margin, high-volume businesses á la Dell, where you need to run not only with minimum costs but with maximum process efficiency, and still without forgetting customer & learning perpectives. But I don't really believe that it would ever be the theory of everything for someone like MS, or for any other high-volume SW corp, where the low-cost, high-volume option will always be OSS.
“Wait for Hurd if you want something real” –Linus
Now we have a comparatively stagnant economy, where companies are postponing the computer and software upgrades. The ROI on computer systems must be demonstrated; these days bean counters don't automatically approve any purchase request with "computer" written on it.
Microsoft has had a longer winning streak than any other PC business. But once you take the top spot in the market, it's difficult to find enough new market opportunity to maintain that momentum. Passive, defensive business practices (cost cutting) gain favor over active, productive ones ("betting the company" on an all-new product). Microsoft probably won't go away, but they're already not the company we once knew. People grow old; companies do too. The hard part is doing so gracefully.