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"

Comments

$300k per employee?

[Sadiq]

$300k per employee? I wonder how much of that is in weed.... could explain alot of things...

Pretty high cost

[777333ddd]

Includes stock?

Re:Pretty high cost

[LostCluster]

$300k per employee is a high stat, but the typical office worker costs a company $100k-$150k a year when things beyond salary such as the cost of supplying that employee with the office space and supplies needed to do their job, insurance costs, administrative expenses, and other such costs are factored in.

Re:Pretty high cost

[EvilTwinSkippy]

That is high. They have to be including marketing into the mix. There is no way every Tom, Dick, And Harry at micrsoft is earning 6 figures.

Unless of course they are top-heavy in the VP of VP department. Overlycompensated execs do tend to skew stats.

Re:Pretty high cost

[N3WBI3]

You would be surpised, my last job I was making 52K a year, but the cost to my company was on the order of 80K per year (benefits and ss add quite a bit). Now my salary is still well below 100K but my cost to the company is a touch over that.

Re:Pretty high cost

[TopShelf]

The problem is the way they word the statistic, "$300,000 in annual expenses per employee." This could entail both fixed and variable costs, meaning that simply eliminating an average employee wouldn't shave $300,000 from the bottom line. If you're looking at employee-related expenses overall, SRC (Salary-related costs, such as benefits) would normally run something like 30-50% over and above the employee's salary. Of course, since they're in the Seattle area, who knows what their average salary is...

Re:Pretty high cost

[FauxPasIII]

> Overlycompensated execs do tend to skew stats

-nod- As is often said, I and Bill Gates make an average of 2 billion a year, each.

Re:Pretty high cost

[tekunokurato]

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.

Re:Pretty high cost

[KilobyteKnight]

$300k per employee is a high stat, but the typical office worker costs a company $100k-$150k a year when things beyond salary such as the cost of supplying that employee with the office space and supplies needed to do their job, insurance costs, administrative expenses, and other such costs are factored in.

Often one department in a big company "charges" other departments for accounting purposes. Perhaps the additional cost is the inter-department cost of licensing only Microsoft software.

Re:Pretty high cost

[Anonymous Coward]

Most larger US high tech companies have expenses of more than $250k per employee. This refers to taking the total expenses of the company (which not only includes salaries, but facilities, equipment, IT, benefits, insurance, ... everything) and dividing by the number of the employees.

Usually the average salary is about 40% of the expense. In this case average employee salary of about $120k. That is probably close.

Re:Pretty high cost

[Mongoose Disciple]

I can believe it. The working conditions for developers at Microsoft are incredibly beyond anything I've personally seen at a company of any size elsewhere.

I did an interview there back when I was in college. Mind you, I didn't like a one of the people on the team I'd have been working with, but beyond that I was just blown away. Developers in large, comfortable, well-furnished (and, importantly, to their wishes rather than a corporate mold) offices rather than cube farms. Employee cafeterias which blew away any cafeteria or buffet-like restaurant I've ever seen.

For me, the really painful thing to pass up was the free beverage package. Sure, some of the places I've worked have had something like that. The words don't really describe Microsoft's setup. Imagine a huge wall of soda fridges like you'd see at most gas stations, except on a grander scale -- imagine they have every brand or flavor you've ever heard of, including some you were previously pretty sure they didn't make anymore. Imagine there's one or two of those on every floor on every building.

You can say a lot about Microsoft's business strategy, ethics, products, etc. But as far as working environment goes, it's hard to beat. They mean to provide an environment that no competitor (as in for hiring their developers away, not as in for the marketplace) can match. I can believe the high price tag.

Re:Pretty high cost

[rmarll]

Not too high, don't forget they're temps.

Re:Pretty high cost

[SoSueMe]

"The median expected salary for a typical Programmer III in Seattle, WA, is $73,392."
Found it here

Re:Pretty high cost

[Vlad_the_Inhaler]

You are forgetting the cost of the software licences for all that stuff they have installed. Most of that software will be from Redmond, but some will be from SCO (hey, they paid a lot for those licenses so someone must be using something).

Re:Pretty high cost

[silentrob]

I concur. I've seen the free soda area myself in thier Dallas branch when I was there taking SQL 2000 Clustering training. Thier cafeteria is sweet too.

Too bad the training sucked. There were problems with it(no printed materials and the lab computers weren't set up at all). We were eventually refunded for the course, mind you, but it was still a wasted trip to Dallas, IMHO.

Where I worked, everyone had to be clean shaven and wear a suit and tie. Kinda made me jealous when we saw long haired employees wearing t-shirts and shorts.

I bet it would be sweet to work for Microsoft.

Re:Pretty high cost

[killjoe]

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.

Re:Pretty high cost

[toopc]

> Overlycompensated execs do tend to skew stats

-nod- As is often said, I and Bill Gates make an average of 2 billion a year, each.

Bill Gates is paid no where near $2 billion a year from Microsoft though. No stock options either. He (and now Balmer) are actually some of the lowest paid CEOs.

C|Net: Gates, Ballmer get slight pay raises

CEO Steve Ballmer and Chairman Bill Gates each received $551,667 in pay and $313,447 in bonus last year, up from $547,500 in salary and $205,810 in bonus a year ago.

While Gates and Ballmer received no stock options, other Microsoft executives did:

Re:Pretty high cost

[danheskett]

That's an utter lie. I defy you to find anyone who is "forced" to work "60 hours a week" minimum at Microsoft.

Read the developer blogs over at blogs.msdn.com. These people love their jobs, but they all have vibrant social and family lives.

Maybe 5 or 10 years ago things were different, but I know by e-mail and by longtime friendship several developers across the MS board and NONE work a regular work week more than 40-45 hours. Around shiptime do they work some long hours and short weekends? Yes.

Re:Pretty high cost

[AK Marc]

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.

Re:Pretty high cost

[Frizzle Fry]

You would be surpised, my last job I was making 52K a year, but the cost to my company was on the order of 80K per year

How did you find out/ figure out what your cost to the company was? I'd be interested to know mine.

Re:Pretty high cost

[Kickstart70]

Paper towels!?

Three jobs ago I work for a VP for complained rather bitterly about the amount of toilet paper we were using. While making sure to look directly at the two women in the office (out of about 15 guys), he warned quite seriously that "theft or overuse" of toilet paper would cause him to restrict what was made available.

Was very glad to leave that place.

KS

Re:Pretty high cost

[N3WBI3]

There is a general rule of thumb that with minimal white collar benefits its about a 30-40% increase over your salary, I got mine from a manager who told me under the table..

Re:Pretty high cost

[Bingo Foo]

In my company the average per head is $140.

So how are things in the Bangalore call center?

Re:Pretty high cost

[wideBlueSkies]

Very good. Thank you. We only think in Java here, and this is fine.

We are currently creating a critical banking application out of parts we're reusing from other customers products, and open source solutions. We decided to skip several key requirements because we don't understand why the users would need them, and implementing them would not allow us to meet our deadline.

The reused parts, don't exatly fit the remaining requirements, and thus we're modifying the requirments to fit the components.

Just as long as we get a good build on August 1 all will be well. Thank you.

Cheers.

------------
Not far from the truth over there.

wbs.

Re:Pretty high cost

[killjoe]

It was a few years ago, it was in chicago. I don't remember the guys name (who would?) but he told me minimum 60 hours. I turned down the job. Got a higher paying job two weeks later at a big company working 40 hours and was happy. Boring work but it paid well and had sensible hours.

Knew it was coming...

[Anonymous Coward]

Perhaps Gates knew exactly when the right time to leave was :)

Re:Knew it was coming...

[CodeWanker]

Bill Gates and a small boy were walking through the woods. "It sure is dark and scary in here!" the small boy said. "How do you think I feel?" replied the Bill Gates. "I have to walk back all alone."

Re:Knew it was coming...

[Citizen of Earth]

Perhaps Gates knew exactly when the right time to leave was :)

He didn't exactly leave, but he could indeed see the writing on the wall. He handed off to Ballmer so that five years from now when Microsoft is a pale shadow of its former self, Bill will be able to say, "See, it wasn't me! This other guy came along and ran the company into the ground. How dare he betray me and murder my child!"

But why?

[jdhutchins]

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.

Re:But why?

[lucabrasi999]

I know, I know, it's big business and stock price, but still, it's not like they're running out of money.

You are correct. Even if your company makes money, Wall Street look at the rate of revenue and income increase. Wall Street also sees the $50 or $60 Billion in cash that Microsoft has and asks "Hey, where are our dividends on the stock?" A $0.16 per share dividend isn't much when you have $60 Billion in the bank.

Re:But why?

[daveo0331]

Microsoft made almost $10 billion in profits last year. If they can cut $1 billion in expenses, they will be making 10% more profits assuming they don't hurt their revenues in the process. Since investors tend to look at price/earnings ratios when deciding what a stock is worth, we might expect a 10% increase in profits to translate into a 10% increase in stock price. If you own large quantities of Microsoft stock options (as I'm sure everyone in Microsoft senior management does), you'll make a lot of money if the stock price goes up 10%.

Re:But why?

[afabbro]

Because wasting money is never a good idea, no matter how rich you are.

Re:But why?

[johnnyb]

This is the point where Microsoft investors figure out just how diluted Microsoft stock has really become. If I read the numbers right, they have 11 Billion shares outstanding. Which means that, after 30 years of doing business, they have only made about $6 per share (which costs $27.89).

This is the problem with companies not giving dividends - it really distorts the amount of money they are making, and distorts the purpose of the company. Microsoft wants to hoard the money so it looks better on paper, rather than give the owners of the company their profits, which will reveal that wild investing in disparate projects which make no money but undermine competitors does not do much to shareholder value.

This is part of the problem with option-granting programs - it dilutes the stock significantly. When companies give dividends this is more obvious (hey! my dividend went down this year!). When they don't, the stock price is a lot less attached to reality.

It's kind of interesting how much of Microsoft's quarterly revenue comes from investments rather than direct earnings.

I'm not saying they aren't a strong company - they are. However, their stock price is WAY over what it should be, and their performance-per-overpriced share isn't what it should be, either. Their large bank account has helped justify their stock price while spending rediculous amounts of money keeping the competition away.

Re:But why?

[tekunokurato]

Insightful?? What? You divide the cash earnings this year by the number of shares, factor in a market growth rate discounted for the cost of capital, and add in the $60b of cash (which soaks up $7 or so of the stock price right there) and you pay for the stock easily (with maybe a little up or downside depending on what you think growth will be).

Why are you using the historical income to value the stock?

I'll give you $5 every day, starting today, if you pay me $25 for it. Tomorrow morning, you will have spent $25 and only made $5 back. Are you saying you're getting screwed? It doesn't take a genius to figure it out, man. Investments are what make our economy go around, and what drive the development and proliferation of the technologies that improve our quality of life. You, my friend, are an idiot.

Re:But why?

[johnnyb]

You're missing the point. They've NEVER issued a dividend, and after 30 years they have only made, TOTAL, $6 per share.

Let's assume, just for a moment, that Microsoft has the potential in the future to make as much as it has in the past (I doubt this highly, but let's go with it). Let's also say that they spent their first 15 years in "growth mode", so they really made their $6 per share in the last 15 years. That means it will take at least 60 years for it to earn it's share price.

If you think that Microsoft is going to take off again and all-of-a-sudden go back into boom mode, by all means, it would be a great stock. But the fact that after 30 years it has only netted $6 per share for a $27/share stock, I think you're putting your money in the wrong place. Microsoft is way over-diluted, which is one of the ways they made such a large cash position.

Re:But why?

[sphealey]

You're missing the point. They've NEVER issued a dividend, and after 30 years they have only made, TOTAL, $6 per share.

Microsoft have been paying quarterly dividends for about 2 years now. Not much, but they are making a cash payout.

sPh

Re:But why?

[I8TheWorm]

after 30 years of doing business, they have only made about $6 per share (which costs $27.89).

Actually, you don't read it right. Microsoft's stock has split 9 times, and 1 share in 1987 would give you 288 today. The value of one share on Sept 18, 1987 was $114.50, and the value of one share on Feb 14, 2003 was $24.96. Given that you would have 288 shares, your beginning value of $114.50 would have ended up at $7,188.48.

A quick trip to CNNMoney's Financial Calculator will tell you that's an annualized rate of return of 44%. The historical average of the DOW Jones is about 10%, the S&P 500 12%, and the NASDAQ about 14%. I'd say MSFT would have been a worthwhile investment until February of 2003.

MSFT's P/E is 40.76, while the S&P 500 is 19.4, definitely a much higher price to earnings. However, Microsoft was traditionally a growth stock, not a dividend payer.

Conclusion - MSFT may not be a great stock to own now, but it was a great stock to own for 16 years or more.

Re:But why?

[tzanger]

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?

Re:But why?

[johnnyb]

"Actually, you don't read it right. Microsoft's stock has split 9 times, and 1 share in 1987 would give you 288 today. The value of one share on Sept 18, 1987 was $114.50, and the value of one share on Feb 14, 2003 was $24.96. Given that you would have 288 shares, your beginning value of $114.50 would have ended up at $7,188.48."

I agree with you that Microsoft used to be a great stock to own. I would also agree that, if Microsoft could persue the same growth that it has over the past 30 years, it would also be a great stock.

My contention is simply that Microsoft will not see the growth it had in the past, and therefore its _current_ stock price is unjustifiable.

"Conclusion - MSFT may not be a great stock to own now, but it was a great stock to own for 16 years or more."

I agree with that wholeheartedly.

Re:But why?

[johnnyb]

I'm talking about a share you buy today. I think some people mistook what I was saying and thought I was saying that if you bought MSFT a loooong time ago, you weren't making money.

What I was saying is that Microsoft has so diluted it's stock that 1 share of today's $27 MSFT stock has only reaped $6 in its lifetime. If you bought a share a long time ago, you did quite well. My contention is that Microsoft does not have the future potential that it had in the past, so it's unlikely that the share of stock that has only made $6 in its lifetime will be able to make much more than that in the future.

Re:But why?

[bobllama]

Please tell me you are kidding - I'm no MSFT fan, but let's take a look up and down the balance sheet shall we?

According to MSFT's last balance sheet filing (3/31/04), they had current assets of 65 Billion. Now these are things that reasonably can be turned to cash if the need arose in fairly short order. So based on just that number, yes, they have about $6/share. However, the company also has about 25 Billion more in Long term assets (the building(s) they own, any longer term investments, etc).

Now balanced against that is about 19 Billion in liabilities, showing that the net assets of the company is about 70 Billion (also known as shareholder equity).

However, even using that value is a really bad idea for valuation. Unlike manufacturing companies, MSFT can't actually put its biggest asset on the balance sheet - it's intellectual property! GAAP say that only IP that is BOUGHT can be put on the balance sheet, and that which is internally developed cannot - take a look, and MSFT only has 600 MM in intangible assets. This means that the IP value of Windows, Office, etc, etc, etc, is nowhere on the sheet. Now, however much we may agree that they don't make the greatest software, you'd be hard pressed to find someone who thinks that having all that IP isn't worth some major bucks. Add all that back in, and the cost of MSFT stock doesn't look that bad at all. After all, do you think everyone who owns the stock is stupid?

Disclaimer- I do not own any MSFT stock, nor do I plan to buy any in the near future - index funds rock!

Re:But why?

[drawfour]

Correction: Microsoft has paid dividends twice in the past year and a half. The first dividend was paid Feb 19, 2003 (one day after the Feb 18 2:1 split), and was 8 cents a share (16 cents a share pre-split). The second one was Oct 15, 2003, and was 16 cents per share.

At 10-11 billion shares outstanding, the first payout was $800-880M, and the second payout was 1.6-1.76B.

You can verify these claims here (dividends) and here (outstanding shares).

mid-life crisis

[Coneasfast]

i think steve ballmer reached his mid-life crisis long ago.

Re:mid-life crisis

[selderrr]

you're confusing midlife crisis with puberty :-)

Then again, midlife crisis is something associated with family life, which we nerds are ... um.. not hindered by ?

Re:mid-life crisis

[RonXX]

"i have four words for you! 'I love this company, YESSSS'" -Steve ballmer when you cant count the number of words correctly, can you be expected to make things to work well?

Re:mid-life crisis

[chadjg]

So, does this mean that Win XP 2006 will get a Harley and start humping BeOS behind Ballmer's back?

going to hell now...

Re:mid-life crisis

[RobKow]

Since when was necrophillia associated with mid-life crises?

Re:mid-life crisis

[ReelOddeeo]

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.

Re:mid-life crisis

[CaptainCarrot]

You don't seem to understand the syndrome very well here.

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.

be careful

[krray]

...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?

Gotta innovate, not replace

[LostCluster]

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?...

Re:Gotta innovate, not replace

[Pharmboy]

Why does somebody who has Windows 2000 need Windows XP?

Twice the eye candy, and its so much more powerful, you get to reboot twice as often.

Re:Gotta innovate, not replace

[pavon]

Exactly. And it is not just Microsoft - it is a general weakness in the shrink-wrapped software business model. In that model you depend on sales of the previous version to fund additional features for the next version which in turn drives sales, and the cycle continues. The problem is that at some point your product becomes mature, and you have already implemented 90% of the features that 90% of the people want. Now there is still alot of potential functionality to be added but, each feature will appeal to only a small audience. Therefore even though you may have done as much work between versions 5 and 6 as you did between 2 and 3, you have deminishing returns on the number of purchases. Lastly, ever since the dot-com boom ended the number of first-time purchases (as opposed to upgrades) has been going down dramatically as well, so you are much more dependent on upgrades sales, which we just determined will also go down with time.

So basically the shrinkwrapped software business model sucks for mature software. Unless you can keep improving the software in a way that appeals to a large number of people, you will not be able to generate enough money from sales to continue development at your current pace. Then your product will stagnate, and newcommers who focus on different niche features that you don't have will eat away at your market share.

Once your software becomes mature, you really need to move away from the shrinkwrapped business model to some type of service business model. Interestly enough, OSS kicks ass in just about any service business model. If you are being paid for the act of writing and deploying software, rather then selling it as a product, it doesn't matter if you control the software or not. It just matters that you have the experience and talent to improve an existing piece of software (ie helps alot if you wrote the software to begin with).

OSS has the opposite problem - it is easy to get paid to improve mature products, but getting a piece of software to maturity is harder (financially).

Re:Gotta innovate, not replace

[dasmegabyte]

So maybe, once products reach a certain maturity level and sales have dropped off to the point that support costs outweigh sales, they should be open sourced.

A development model that plans on handing over the keys to users at a certain point is an interesting twist on both the traditional model and OSS. You'll get a bunch of early adopters willing to pay for features. And you would attract those who will only use OSS because they want assurance against your company's collapse.

This model has already been used on such commercial cum open products as Netscape and RealPlayer. But it wasn't PLANNED. If I could call potential customers and tell them that, in five years or if my company goes under, they'd have a "trust" in place to give them the source and they could to hire someone else to maintatin and extend my software, they would be very interested -- turnover is a deadly problem in my industry.

Re:Gotta innovate, not replace

[rewt66]

No, it can be fine, if you realize that you are in a mature market. See, once you have almost all the features anyone will ever need, you can get rid of most of your developers. Just add a few new features every so often, port it to the next rev of the OS, fix a few bugs. That's all. You won't have that many sales, either, just sales at the rate the market is growing. But if the expenses are down, you'll do all right.

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...

Re:Gotta innovate, not replace

[Mr_Huber]

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.

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 .foo framework that you must have to run Microsoft Bar(tm), you'll just have to upgrade, won't you?

Dear Microsoft

[arieswind]

Dear Microsoft,

Welcome to the real world, where your stock does not grow 10,000% in a matter of a few years, and companies have to *gasp* cut costs, or perhaps even *bigger gasp* innovate, to keep their companies from falling flat on their face.

With much love(sorta),

The World

Re:Dear Microsoft

[Daniel Dvorkin]

No shit.

I love this bit from the article:

Does Microsoft's midlife struggle signal that the glory days are over for tech? Not a bit. While industry revenue growth is slowing, there's still plenty of innovating to do. Microsoft just has to figure out a better way of going about it.

No, it means the rest of the tech world will go on innovating, and Microsoft will go on copying, and make money -- not insane shit-tons of money, maybe, but plenty of it -- just like always. They've never innovated anything; they've always made their money by being clever businessmen, not brilliant inventors. Nothing has to change.

Re:Dear Microsoft

[GoofyBoy]

Dear World,

You've been saying that for the last 10 years. Since then we've grown bigger, have more cash than the total worth of third world companies and are still own a huge percent of many software categories that others would die to have.

See you in 10 years from now,
Microsoft

Re:Dear Microsoft

[Mr_Huber]

Oh, dear. This just flashed into my head...

Bill, lying naked on a table: "Why do my dividinds hurt?"

Linus, looking down, sad and concerned: "You've never issued them before."

Re:Dear Microsoft

[gilroy]

Blockquoth the poster:

or just sit back and collect monopoly rents.

which are, remember, twice the printed rent of the color group. Unless you build houses or hotels. :)

I'll go for $270K

[gr8_phk]

They can keep all thoses perks and crap.

Re:I'll go for $270K

[sploo22]

It has to be said...

$300K should be enough for anybody!

Re:duh!

[hondo77]

Um, and the iPod is competing against what current Microsoft product, exactly?

That was part of the article's point. Microsoft missed that boat.

Re:The Focus of a Business in Decline

[Neil Blender]

It looks like the beginning of the end for the Redmond Gang.

Yes. If you use a geologic timescale.

Re:duh!

[bigman2003]

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.

solution:

[blue_adept]

immediately discontinue the "one dollar for each reported bug" program.

Re:solution:

[CriX]

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!

Pit stains

[bujoojoo]

Maybe if Ballmer wouldn't charge his dry cleaning to his expense account, they wouldn't be in such dire straights...

DEVELOPERS, DEVELOPERS, DEVELOPERS!!!!

It just goes to show you.

[Omni Magnus]

Linux and open source will never beat Microsoft. Microsoft will crumble from within, and beat itself.

Re:It just goes to show you.

[hoggoth]

> 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).

Was Bill Gates and the rest considered?

[aquishix]

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 =).

Re:Was Bill Gates and the rest considered?

[arieswind]

if you paid attention, you would notice that it in fact says it costs MS 300k for each employee, and only part of that cost is their wage. Other things are factors, e.g. their computers, company cars, lunches, all the toilet paper they steal from the bathrooms, etc

process optimization

[rnd()]

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.

$300K Not Unusual

[4of12]

If you've costed in the salary of a professional, fringe benefits, vacation, employer's contribution to social security, etc. and then add in a multiplier to account for the infrastructural overhead services (people in accounting, facilities maintenance, management, etc.) in a large corporation or university, this figure is not at all unusual.

That said, however, Microsoft enjoys a surfeit of talent that, like ATT Bell Labs in its day (when it, too, had a monopoly) could afford to do lots of interesting work.

Unfortunately, the need for innovative work to reinforce and expand the existing business model and never ever undermine it is constraining and prevents the company from releasing the full talent of its employees.

So what you see instead are people leaving Microsoft to start entirely new ventures.

Re:$300K Not Unusual

[happyfrogcow]

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.

Lets help these guys out...

[cOdEgUru]

Now..now..play nice.

Everyone look at poor M$ in the corner, dying a slow death for the lack of another Billion in the bank.. Lets not let that happen..shall we..being the good neighbours we are..

So here is what I recommend.. The slashdot community will, painful as it is, will map out the various product lines of Microsoft with their perceived value, which needs to be truncated or snuffed out completely. Once we are all in agreement as to the total worth is a Billion, Cmdrtaco, the chosen representative, will submit said list to the powers that be (read: Balmy Balmer) for review and acceptance.

So get your thinking caps out, check your emotions , pay no heed to the thousands of M$ programmers who will obviously hate you for nixing their much loved products, let reason run rampant..and lets choose what Microsoft needs to put another Billion in the bank!

Vision Thingy

[Shadow Wrought]

What the company needs is a new vision of itself

Those whom the Gods would destroy they first give a vision statement to.

Anti competitive == bitter distributers?

[oldosadmin]

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.

Midlife crisis...

[Zorilla]

In other news, Microsoft is nearing the release of their two newest products: Microsoft Combover and Microsoft Penis Car

Sacrificing Innovation..

[kevin_conaway]

...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 :)

Costs catching up?

[Dark Paladin]

I wonder if this is an example of Microsoft trying to be the "end all, be all" of everything, and it's finally catching up with them.

So far, they have 4 sources of real revenue:

Windows OS/Server
Office
Development Tool Sales
Some hardware (mice, keyboards, etc)

Everything else that MS is involved in has been money losing ventures. Cell phones, PDA, cable TV, "Ultimate TV" - heck, the "raging successful Xbox" has lost over $2 billion for the company (and if that's success, I'd hate to see what failure is).

MS has $56 billion in the bank (some cash, some investments), and so far, revenues are still outstripping costs. But I think Ballmer can look ahead and read the writing on the wall. Other than the MS tax on computers (yes, it exists, deal with it), people aren't rushing out to upgrade with every new OS release. Lots of folks are still on Windows 98/2000 Server and Office 95.

So what will be cut away? WIll they just reduce the number of employees? Shift more developers to India? Or cut on some projects and say "OK, so we're not going to take over the cable market."

The Xbox2, for example, is being retooled not to be "successful" (as in "Beat Sony!"), but "profitable", which should be their focus: making a game system that is cheaper to produce, harder to hack, and even if they aren't #1 in the game industry they can make money at it (wait - that sounds like another console company out there). Why be #1 in the home media player market when sometimes being #2 makes money too?

Odds are, MS is, as the article mentions, just going through a "mid-life crisis". They'll either recoup, tighten down, and keep chugging along - or just proceed with "business as usual" for all their talk, then wonder 5 years from now why all of the business are running Slinux (simple Linux - easy enough for Grandma to figure out how to change the screen resolution) or Apple OS X instead of Windows.

Re:Costs catching up?

[gilroy]

Um, revenue is distinct from profit. It doesn't help to revenue of $500M is your costs are $750M. After a year of those "good" quarterly numbers, you'd be one billion dollars in the hole.

I couldn't find the report you mention, so maybe it's really profits. But I don't think so -- almost every business story indicates that Xbox is at best a loss-leader.

excerpts from the memo

[hoferbr]

excerpts from the memo (not included in the businessweek article):

On growth and costs: "We have as much opportunity to grow as any other company in the world. That's a big statement, but the opportunities we've scoped out are very big. Make no mistake -- we must grow our revenues to grow profits. We cannot just cut costs. At the same time, we must ensure a competitive cost structure, or competitors will offer prices, services or innovations that we cannot afford to match. Other companies have been severe in tightening costs the last few years -- layoffs, major benefit reductions, etc. We have not done those things and want to be prudent now so we avoid severe measures later."

On the need to innovate: "The key to our growth is innovation. Microsoft was built on innovation, has thrived on innovation, and its future depends on innovation. We are filing for over 2,000 patents a year for new technologies, and we see that number increasing. We lead in innovation in most areas where we compete, and where we do lag - like search and online music distribution - rest assured that the race to innovate has just begun and we will pull ahead."

On Microsoft's share price: "Obviously, we all want to increase the value of our stock, and we have the best opportunity to do that since the end of FY98. Our stock was around $25 then, as it is now, and we have more than doubled our operating profits since. Shareholders then were betting we would work hard for all these years to make the company worth that mid-98 stock price. We have done so."

On aiming products at various markets: "Our products must also be better segmented for different users with different needs. And we must evolve marketing to focus more squarely on the value proposition throughout the product lifecycle, not just at launch. So many customers have yet to deploy our most recent advances, so we must not only help them understand why to deploy, but also demonstrate the benefits of deploying before we reach the Longhorn generation."

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. We must emphasize key positive perceptions of the strong manageability, and developer and information-worker preference, for our platform."

On avoiding the trappings of size: "Nothing solves 'big company' ills quite like a strong focus on accountability for results with customers and shareholders. Innovating, growing share and profits, and serving customers all ensure that we have no time for wasted motion. To do this, we need to prioritize the things that matter the most with our customers and for the company, and then be accountable for executing on those choices."

Re:excerpts from the memo

[finkployd]

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.

Re:excerpts from the memo

[finkployd]

rest assured that the race to innovate has just begun and we will pull ahead.

Hold the phone, did MS just admit they are behind at innovating?

Also, I'm glad innovation is now measured in how many times you can patent someone else's idea. How many of microsoft's recent patents are actually "innovative"?

They could save about $800 per employee

[Anonymous Coward]

By switching to Linux and OpenOffice/KOffice on their desktops. Not their development or testing machines, but just their accountants, security team, and call centers.

Dang! Wait a sec...Windows and Office are free to them, so it only saves on the cost of anti-virus + downtime/patch maintenance, so that's probably only $50 per user or so.

Re:They could save about $800 per employee

[happyfrogcow]

so this is where the SPA and BSA get their numbers! of course! MS probably has hundreds of thousands of copies of MS Outlook, WinXP, Win2k and everything else installed that they didn't pay for.

for shame, all along blaming p2p...

MS News?

[fiannaFailMan]

You hear about wonderful things in Microsoft's lab. One project, called News Junkie, sifts through articles on the Web and presents to you only the ones you haven't seen before.

I think the google news service is pretty hard to beat.

Re:troll fest

[tatsu69]

You suck at trolling and even starting a troll... You have to do it right.

I use Microsoft everyday and love it. I want Bill Gates to have my baby and Linux sucks.

Microsoft's Solution is simple

[Allen Zadr]

The article seems to imply that Microsoft needs to find a new and interesting way to innovate.

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.

Too early to talk about mid-life crisis

[bheer]

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?"

Offshoring my Boyos!

[gelfling]

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!"

Re:duh!

[raider_red]

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.

300k Per Employee?

[mattyohe]

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.

Cut a billion dollars in expenses?

[mcc]

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...

Re:duh!

[One Louder]

One of the problems they face is that Microsoft's primary source of "innovation" (other companies) has dried up because of the "chilling effect" of their dominance.

It's increasingly tough to get funding for anything truly innovative because the investment community understands that Microsoft will "innovate" the idea into their operating system franchise if it has the potential to be successful.

Re:No wonder!

[big_oaf]

Or lay off 3334 employees...

(300K-??) * 57k or 300k*(57k-??)

[MixmastaKooz]

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....

next big thing

[happyfrogcow]

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.

Re:next big thing

[asr_man]

What is this, a troll? We had this crap all through the 90s boom.

The Next Big Thing *is* $MANAGEMENT_FAD and all the goodies that come with that, like $SOFTWARE_BUZZWORDS.

"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.

Re:$300k per employee!?!?!?

[Morpeth]

Most HR people I know tell me that cost per employee rougly equals the employees salary x 2. So assuming it's true, they're saying the average income runs $150k. I think 150K as a average, taking into account VP, CEO, etc. type salaries sounds in the ballpark

Also don't forget, it's not just health insurance, it's physical office space, utilities, provided hardware (PCs/laptops, phones, pagers, etc), training, business insurance, biz expense accounts, and lots of other non-tangeables that go into employee costs. If you look at it that way, you can see how the numbers can add up.

Rerelease of the classics

[thpdg]

Coming off the heels of Nintendo rereleasing Super Mario Bros 1, and Zelda, I think we need to see the same from Microsoft. Who here wouldn't lay out $19.99 for a copy of early DOS and Windows. And hey, no fair answering if you've still got the install floppies on your desk. Atari and Activision have those game controllers that hook to the TV and have like 10 classic games in them. How about a keyboard that has Word 5 in it? A USB port for a keychain on the side. I bet we could have it running Linux in no time. Imagine a beowulf cluster of THOSE!

Ok, ok, enough joking around. I hate to say it, but Microsoft needs to learn how to make a buck off of Linux. They could create their own distro and do their own API and app porting to it. For the same reason people love that OS X is built on *nix, people wouldn't mind a Windows built on it. The best of both worlds. Sign me up for that.
Thanks, you can have the podium back now.

Re:duh!

[bigman2003]

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?"

Netcraft confirms...

[MoOsEb0y]

Microsoft is dying.

Re:duh!

[lucabrasi999]

Their only real market success has been in Windows and Office. Everything else they've tried has essentially flopped.

That's sort of like saying Henry Ford's only success story was the Model T.

I have a solution!

[weeboo0104]

Quick! Someone send Steve Ballmer a TCO study that shows how much money they will save if Microsoft migrates to Linux!!!

MS has been trying to innovate for 13 years

[gosand]

Unfortunately, the need for innovative work to reinforce and expand the existing business model and never ever undermine it is constraining and prevents the company from releasing the full talent of its employees.

Unless over the last 13 years you have used your immense cash stockpiles to hire people for the sole purpose of research.

Microsoft Penis Car?

[Anonymous Coward]

Well, that explains where the name "Longhorn" came from...

Re:Marketing

[argent]

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?

stock included, game soon over.

[twitter]

The NYT and Register also are running storries about Ballmer's unusual memo. Stock option discounts will be reduced to 10% from 15%.

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.

Re:stock included, game soon over.

[BdosError]

Then both of you should go back on your meds.

Microsoft's Turning Circle

[MacDaffy]

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.

Pretty stupid solution

[passthecrackpipe]

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.

Re:Pretty stupid solution

[Manip]

Actually cisco was voted the best place to work in the UK. Microsoft was in the top 20 but not top 10 in the UK.

Re:Pretty stupid solution

[plj]

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.

Re:duh!

[Daniel Dvorkin]

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.

MicroSoft Counts Options as an Expense

[kallistiblue]

Or at least they did.
That's one of the reason that MicroSoft doesn't pay any corporate tax.

Alternative Fuel

Midlife Crisis Toy

[cynic10508]

So, when guys enter their midlife crisis they go out and buy a Porsche. Does that mean that Microsoft will go out and buy Porsche?

Re:Longhorn

[robochan]

...The big thing is going to be Longhorn--that's why it's taking so long. WinFS, Avalon, whole new interface called Aero Glass, an entire .NET-based OS that replaces Win32, and so on...

I hear it's going ot come bundled with Duke Nukem Forever too.

Refuse the IT guys overtime...

[gatkinso]

...when they work nights and weekends patching wormed systems.

Dear Steve: It's Time to Split the Company

[MagikSlinger]

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.

A natural consequence...

[Eric Damron]

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.

Re:duh!

[Daniel Dvorkin]

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 problem with Microsoft

[c0d3h4x0r]

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.

Re:The problem with Microsoft

[burns210]

"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."

It is only 'untrue' if the accusations aren't actually factual... Microsoft, I truly believe, has some of the smartest engineers in the world, and many if not most of good intentions. HOWEVER, that does not mean that, time and time again, Microsoft as a company has not done unethical, illegal, underhanded or otherwise non-nice things to bolster its position in a given market while supressing the competition...

Microsoft is not hte only company that has done these tactics, many, many companies do. Microsoft has done it most recently, most blatantly, and in the most hurtful way, and the stigma of poor security and ethics about Microsoft are fully justified as a whole.

Re:The problem with Microsoft

[dbarclay10]

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.

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.)

Re:The problem with Microsoft

[scrytch]

Microsoft took their sales upstairs. Welcome to the world of sales, any good salesman will go to the person making decisions as far up as they can go. The sales tactics you outlined sure as hell are NOT limited to Microsoft, it's just that MS can afford the sort of potlach that selling to the top execs takes. As head IT guy, you have to wade in to some of those politics yourself, or at least get the CIO on your side. Ultimately either your execs respect your technical acumen, or they don't and it's time to find another shop.

I would submit however, that "threatening" to move to Linux as a defensive move against a sales tactic does nothing to sell a Linux solution within your company.

Re:The problem with Microsoft

[c0d3h4x0r]

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.

Re:The problem with Microsoft

[dbarclay10]

Microsoft took their sales upstairs. Welcome to the world of sales, any good salesman will go to the person making decisions as far up as they can go. The sales tactics you outlined sure as hell are NOT limited to Microsoft, it's just that MS can afford the sort of potlach that selling to the top execs takes. As head IT guy, you have to wade in to some of those politics yourself, or at least get the CIO on your side. Ultimately either your execs respect your technical acumen, or they don't and it's time to find another shop.

I would submit however, that "threatening" to move to Linux as a defensive move against a sales tactic does nothing to sell a Linux solution within your company.

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 :)

Re:The problem with Microsoft

[dbarclay10]

I agree about the bundling. I really don't like that it's an either-or thing. Unfortunately, these laws exist because in a "Free Market", a monopoly destroys things. Thus, when you reach monopoly status, since it's not a free market any more, you don't get to go by free market rules.

A better example would be the mandatory bundling rules. Microsoft is a monopoly. They can shut down OEMs at whim. With this power comes responsibility - you're not allowed to squash competitors by telling retailers that they're not allowed to provide those competitors' products to customers.

If it were a free market, then it wouldn't be a problem - retailers would be able to safely say "fuck you" and Microsoft would just have to deal with it. It's not a free market though, there's a monopoly in that market. Thus retailers cannot, in all honesty, say "fuck you" and continue to do business. The market isn't allowed to decide, because the market doesn't exist - or, if it does, the market *is* Microsoft.

Re-Innovate Idea

[sleighb0y]

This is pure gold, so if this shows up on store shelves you heard it here first.

Re make Microsoft Bob! Excpet don't give it the same name or tag on an "XP", that would be a give-away.

How about "Microsoft Ballm"

Your interface is a broken-down old house where Ballm (the monkey) helps you find your documents and applications.

You need Ballm's help anyway, because the house was built with non-standard building materials. So there are locks that take keys that only Ballm has that you can't get anywhere else. Also if you want to try and fix the house up, its got screws and other fasteners that take tools with odd-shaped bits that you can't buy anywhere. But luckily Ballm is there to "help" you upgrade you to fasteners that take new tools. Which Ballm will rent(license) to you, he is really strict about not trying to duplicate the tools though.

Will your belongings be safe in your home? You bet! Ballm left all sorts of holes in the walls so you can see anyone who wants to come in. So you don't have to be ever vigilant over your belongings, Ballm offers to help keep the holes safe too. He doesn't really watch every hole though, just waits until someone tries to come/peep in one of them then decides how long he'll wait until he patches up that hole.

The funny fickle Ballm!

hmmm, maybe I will go patent this concept. Surely there is nothing in existance such as this!

On avoiding the trappings of size:

[4of12]

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.

Switch to Linux...

[mrscott]

Microsoft could save a lot in licensing fees if they just switched to Linux and OpenOffice.

Re:Switch to Linux...

[geeklawyer]

Microsoft could save a lot in licensing fees if they just switched to Linux and OpenOffice

Not really. SCO would sue them.

With their own money...

Re:duh!

[Scarblac]

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.

Costs, expenses, and employees

[SuperBigGulp]

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.

That's the problem with every large company

[MichaelCrawford]

I observed the same problem at Apple when I worked there in the mid-90's.

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.

$4 billion?!?!

[Anita Coney]

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.

treat employees like your customers

[twitter]

... Atlas Shrugged skewed my thinking, but I typically consider capable, motivated employees to be an investment, as opposed to a financial burden.

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.

Re:Longhorn

[mslinux]

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.

Don't forget about the $1B

[Flamesplash]

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.

300K per employee

[Gorilla_Man]

It's OK though because "640K ought to be enough for anybody".

investors not screwed yet

[lenski]

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.

Re:duh!

[jmorris42]

> 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.

Another microsoftie here

[melted]

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.

Not anymore

[Anonymous Coward]

We don't really work 60 hours per week anymore. Some chose to do so, and they do quite well for it. But many work 40 hours and do perfectly fine as well. I personally have done quite well in my first few years here, and I only work 40 hours a week. Like any software job, I have worked a couple of 50 or 60 hour weeks at deadlines, but by no means is this common.

you are kidding, right?

[twitter]

But they take their "fiduciary responsibility" to stockholders very very seriously, and until recently (last year, this year) were among the most consistent growth stocks in business history.

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.

Along these lines...

[Lendrick]

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.

Well, let's go through this..

[Mongoose Disciple]

Here I am feeding a troll...

My local 7-11 is ways better, so your "grander scale" description is also BS.

I've never seen a 7-11 that had more than 2/3 of what I saw in the fridges in the Redmond campus. Your mileage may vary.

The food was okay, but to say that it "blew away any cafeteria" is simply ridiculous -- that is, unless you live on snails out in the woods or something.

You'll notice I didn't say it blows away every restaurant, because it doesn't. Every college/corporate cafeteria or similar eatery I've seen? Absolutely.

I mean, come off it. Get out of your bedroom more often and see the real world out there. Or maybe save up some money and take a trip to the city some day...

I've lived and worked in three major cities. I've certainly visited others. I'm not a world traveller, but certainly beyond your asinine accusations.

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.

No, I quite got that. Point is, it's something Microsoft does right that the vast majority of companies that employ programmers do wrong. Yes, it absolutely is in a company's best economic interest if I just grab a handy soda and go back to work without losing my train of thought, rather than walk or drive to get one. They make up the $0.50 for the soda in my greater than $0.50 value of productivity. I wouldn't be disallowed the choice to go out for a drink or for lunch if I wanted -- but I have that choice, I don't have to if I don't want to.

All things being equal, why would you not rather work for a company that makes smart, rather than dumb, choices in managing you and your work environment?

Dear Mr. Ballmer

[Pan T. Hose]

My open letter to Steve Ballmer:

Dear Mr. Ballmer,

As a scientist and developer developer developer developer, I believe I can answer some of your concerns:

We must also work to change a number of customer perceptions, including the views that older versions of Office and Windows are good enough [...]

I can sincerely assure you that I, for one, have never considered older (or newer, for that matter) versions of Microsoft Office and Windows good enough. Not even once. You can stop worrying about that.

On the need to innovate: The key to our growth is innovation. Microsoft was built on innovation, has thrived on innovation, and its future depends on innovation. [...] We lead in innovation in most areas where we compete, and where we do lag [...] rest assured that the race to innovate has just begun and we will pull ahead. [emphasis added]

Now, no matter how much you believe your developers developers developers developers to innovate innovate innovate innovate, saying the above as a company which, in fact, has never contributed a single notable innovation to any computer-related field... Well... What can I say? You are not only doomed. You are already dead.

Sincerely,
Pan Tarhei Hosé, PhD.

Workers of the World Unite

[Ralph Spoilsport]

OK, IIRC, MS has 57,000 employees. They have 52 BILLION dollars IN CASH in the bank. But they're cutting back on employee benefits? WTF???

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

Go ahead, provide an example

[kylef]

When you are using government IP laws to squash your competition...

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.

Market saturation

[tcgroat]

Microsoft's "midlife crisis" is no surprise. The days of double-digit compound growth couldn't go on forever. Essentially everybody in western countries who needs or wants a computer already has one (or two, or a garage full). The upgrade market and third-world market penetration aren't large enough to maintain the exponential growth they enjoyed during the glory days, when companies in a booming economy bought PCs loaded with Windows and Office for every employee.

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.

Mod parent down

[kylef]

This is a completely misleading statement. The fact that Microsoft expenses options is a *Good Thing* and is something that all corporations should be doing in the wake of recent accounting scandals.

And by saying "MS doesn't pay any corporate tax" you are insinuating that it somehow is hiding revenue, which is ludicrous. Recently, MS stock options have been "underwater" so they have not been popular to exercise. But any money that *is* spent on exercised option discounts is written off as additional employee salary expenses, which it is (the number of options purchased times the difference between the option strike price and the cost basis is added to the employee's W-2 taxable income total). MS should certainly not have to pay taxes on employee salaries: the employees already pay taxes on their salaries! Making the company pay taxes on the same money would amount to double-taxation. This is how all companies handle their options plans, assuming they are expensed on their books. If not, then investors beware...

Now, whether this deduction alone can wipe out the total taxable corporate net income of Microsoft is a different story entirely. There would have to be a LOT of options exercised to amount to that kind of money, and in recent years it just hasn't happened. Back in the late 90's, it's possible. MS net profit was much smaller back then. Today, with MS stock price stagnant for 5 years and profits stronger than ever, there is no way that options deductions could come close to offsetting their tax burden.