Tuesday, January 11, 2005

Whoa, Maxi-Microsoft?!?

Is it ego-surfing when your ego is being soundly bashed? Anyway, John Gossman put up two interesting posts on Sunday, the first one being anti-everything I post for (!).

Lies, damn lies, and statistics (my pot calling his kettle quite black). Looks like John's first in line to drive the bulldozer through the ball fields to make room for the new buildings to host the legions of qualified Microsoft hires we're so likely to find.


Anonymous said...

"Silicon Valley in a box" seems to be missing a major point about how the Valley is different from MS. The startups in Silicon Valley are -independent- and -small-. That means they don't have to try to integrate their products with each other, they don't employ thousands of people, and, as a consequence, they can actually move fast.

In contrast, a lot of the waste at Microsoft comes mainly from the fact that either

a) you're working on a gargantuan effort like Windows, Office or Visual Studio, with their insanely-long ship schedules and many thousands of people
b) you working on a project that has to integrate with one of the aforementioned colossi. That means that you're tied to their ship schedule, have to ask "how high ?" when they say "jump" and, in general, waste lots of time and energy paying the "strategy tax" of integration.

I understand the desire to integrate products, I just think the pendulum has swung too far towards that side.

As far as the Maxi-Microsoft post goes, I would argue that, in some ways, how Microsoft compares to other companies in terms of earnings/employee etc is irrelevant. Yes, we may be doing better than just about everybody else, but the more important question is: how well could MS really do ? How efficient is it compared to the past ? I have a hard time believing that anybody who's been at MS for, say, 5-6+ years would say that the company is as efficient as it used to be.

Anonymous said...

Gossman's criticism and analysis is ignorant imo. First of all, comparing MSFT's emp/rev figures vs others is patently stupid since MSFT's OEM-heavy model is a fluke of history and obviously hugely leveraged. As competition heats up and MSFT can no longer depend on OEM exclusivity, that historical leverage will begin to dissappear. Indeed, MSFT's revenue/employee has been decreasing for some time. A more valid comparison would have focused on revenue growth, earnings growth, margins and ROE. On those criteria, MSFT would have fared far less favorably than many of the company's mentioned. Indeed, MSFT is about the only company who can claim that over the past 5 years they've increased sales by 50% and yet failed to translate any of that to the bottom line:


That imo is a large part of why the stock has gone nowhere over this period and why the market is so concerned now that revenue growth itself is becoming anemic.

On a concluding note, I guess the future looking so bright is why Connors decided to leave? Please. The bottom line is that currently, the company is not performing well on either revenue or earnings growth and the stock is a 5 year market underperformer. Against that backdrop, I'll take mini-msft's rally for change/efficiency even if occasionally overdone vs folks like Gossman's complacent "we're great and getting better...honest".