Slashdot Mirror
Microsoft: The Faint Smell of Rot
happycorp writes "A business reporter for ABC/Fortune
is asking whether Microsoft is poised to collapse, based on years of industry observation
(with successful calls in the past, he notes) rather than
purely technical considerations.
A short read, with this favorite quote:
"if you sniff the air, you can just make out the first hints of rot.""
This kind of "insight" can be applied to almost every company, and it's about as good as Colin Fry's cold reading ("wait, I think I smell something back there...").
It will however be interesting to see if Microsoft may one day break up voluntarily into different operating units, and thrive in different areas independantly.
Rock that crushes, Paper & Scissors that don't matter.
I won't believe it until Netcraft confirms it.
"The faint smell of root" :-D
Sig Nature
Um, I bet the shareholders would like their money invested somewhere else if the company stopped making profit. That scenario of spending all the cash reserves to keep going for several years just for the heck of it thus isn't likely.
I'm sorry. That was me.
Five years ago it was a source of pride to go to work for the Evil Empire -- now, who cares? It's just Motorola with wetter winters.
Umm... no. Definitely not.
As I went from the latter to the former, I can tell you there's a lot of difference. Motorola is bogged down, lacking excitement in teams that should be excited. The place was being "SEI/CMM Level 5"'ed and "Six Sigma"'ed to death. The personality of the employees and teams was as interesting as the endless rows of slate gray cubicles. And it was horrid to take an internal class on Perl, and see experienced software developers that couldn't finish a simple basic program in 20 minutes that I had finished before the instructor was done explaining.
At Microsoft, I'm excited about my job and the product I'm working on in ways I never was before. I'm more impressed by both the knowledge and passion of the people here than I ever was at Motorola. It's nothing like anything I saw in my 6 1/2 years at Motorola.
I don't mean to sound like a MS cheerleader here, I just want to make it clear that this is definitely not a valid comparison to anyone who has spent any significant time inside the two companies.
Oh, and the winter here is a hell of a lot better, even if it wetter. And the summers... wow.
"You know your god is man-made when he hates all the same people you do."
The situation for Microsoft is somewhat worse than GM in our example. Consider Microsoft Word 6.0. Unlike an automobile that wears out, breaks down, and needs to be replaced, Word 6.0 has eternal life. It does not ever wear out. After you have used Word 6.0 for 15 years, Word 6.0 works just as well as it worked 15 years ago.
So, you have no need to replace Word 6.0 unless you want to upgrade. For most people, the upgrade is unnecessary because Word 6.0 already has all the features that you need.
Other software programs have the same "problem". Microsoft has so relentlessly added feature after feature to its products in order to capture most of the marketshare that most consumers now have no further need for additional features.
The only way for Microsoft to grow is to enter into other markets. Hence, you see Bill Gate's fist print in the gaming market as Microsoft pushes the XBox. Unfortunately for Microsoft, there is no guarantee of success in markets beyond the computer-software market.
As a side note, Microsoft will continue to invest heavily in R&D in order to enhance the likelihood of success in those other markets. I would not rule out the possibility of buying Bell Laboratories.
As soon as the market opens on Monday, I'll buy a few hundred shares, and watch the tumble.
Get out while you can.
DT
Is this thing on? Hello?
Microsoft is where IBM was in the old days. The excitement that lures glamor-seeking job applicants can't last when you've already grown to fill your entire ecosystem. Ditto the press buzz.
In other words, where Malone sees senility, he may actually be looking at maturity.
Of course, Microsoft is too big for that to happen. But "collapse" doesn't necessarily (or even usually) mean total disappearance. It more often means mass firings, loss of market share, plummeting stock price. As happened at SGI.
Speaking of SGI, I worked there during their waning days as a graphic workstation powerhouse. When people talked about where the company went wrong, a common theme was this: Wall Street fell in love with SGI and threw money at the company. All that cash helped them avoid measuring risks carefully or look for efficient ways to do things. By the time money ran short and it was obvious SGI had to reform, it was too late to claim a permanent place in key markets.
That's different from Microsoft, of course, since MS's pile of cash comes from their tithe on every PC sold. But the effect on corporate culture is the same. Cash can be toxic to a good organization.
... here..
... He explained that Microsoft carried on its books no value at all for its software. Assets like Microsoft Windows or Microsoft Office, which might be given some book value and depreciated over time were carried on the books as valueless. This contrasted at the time with IBM, which valued its software assets at billions of dollars.
Basically discussing accounting shenanigans before the bubble burst, and I remember reading it at the time (though this comes from this weeks' article links)..
"The late Frank Gaudette was Microsoft's first-ever Chief Financial Officer. He was also Microsoft's first head of Human Resources, first head of Facilities, first at running just about every department that had to do with operations but not product development, sales, or marketing....
My question was based on the idea that nothing goes up forever and there must come a time when even Microsoft is no longer a good buy. How can we tell when that time has come?
"Watch for any changes in our accounting," said Gaudette. "If I need to I can start, depreciating the software and maintain earnings growth for years on flat revenue. Watch for the accounting changes, wait for the next uptick in the stock price, and then sell.""
Read the whole thing, very interesting stuff...
You've forgotten the reason why Microsoft existed in the first place: To *make* a lot of people a heckuva lot of money.
If Microsoft sees no future in its business, it will liquidate its assets and pay off its investors. Sure, it has billions, but if it can't find a way to turn those billions into trillions, then it will be sold and the capital invested somewhere else. This is the core of capitalism.
Companies are the sum of its investors, and nothing more. They can come and go pretty much as they wish. What do you think "corporation" means? It means something made out of many parts, those parts being actual people and their fortunes.
Companies don't collapse. They are abandoned. That is what is happening to Microsoft *right now*, and he sees it.
The radical sect of Islam would either see you dead or "reverted" to Islam.
Ronald Reagan was right, and elite wisdom was wrong. The Soviet Union was already decaying from within, and all it took was a few firm pushes (IRNMs in Europe, aid to the Mujahadeen, SDI) to help push it over the edge.
So it is with Microsoft. Besides Windows and Office, what products do they have that are profitable? Story after story comes out about how Microsoft is going to take over this or that sector of the industry (MSN, WinCE, WMP), but they never seem to turn a profit. Like the Soviet Union, they've overexpanded, they have a restive population tired of chaffing under their iron bootheel, and a few pushes (Linux, iTunes, etc.) may be enough to push them over the edge.
To put it another way: It's no accident that both the Soviet Union and Microsoft are called "the Evil Empire."p.
Lawrence Person (lawrencepersonh@gmailh.com (remove all "h"s to mail)
http://www.lawrenceperson.com/
On October 5, 2000, Mr. Malone predicted the end of Apple and the PC.
a lone.html/
But with falling profits and plummeting stock, and having hastened the end of the desktop PC era, Steve Jobs has put Apple again in a precarious position.
http://www.forbes.com/columnists/2000/10/09/1005m
Microsoft may have a few years left too.
Microsoft has as far as I understand two cash cows: Microsoft Windows and Microsoft Office.
Now both of those are being challenged by open software.
Microsoft Windows is being challenged by both Linux and Mac. Windows is still king, but Mac is gaining popularity and Linux is becoming ever easier to use. I think Windows will lose substantial market share over the next 3 years or so.
Microsoft Office is also being challenged. Open Office has come along nicely. A main threat here is the fact that users don't use more than a few percent of all the functionality within Microsoft Office. They pay for stuff they don't use or need. Once Open Office comes with some really slick templates and default fonts, I bet it will gain popularity. I think Open Office will start stealing license money in the not too distant future. The 2.0 release is coming up, and then that will become really good after a few minor updates.
Once profits decline for Office and Windows, Microsoft will lose a lot of its current freedom to waste money. They will need to be more focused. Given the impression they have a nasty case of infighting already, this focusing will not happen. They will instead continue to decline.
Stop the brainwash