Tuesday, September 20, 2005

Microsoft: reorg, reshuffle, consolidation?

Thank goodness, I felt like we've at least been thrown a bone. Microsoft certainly needed a reorg - something like a good, vigorous shaking of one of those snow-globes. Now, how it's all going to play remains to be seen. But I hope that as part of the good shaking that some of the cruft breaks off and gets swept out and some of the cream rises to the top.

(Believe me, that's a much better metaphor than the enema one I initially started with late last night based off of the initial reorg disclosures in the comments here.)

And Jim, on your slow, shuffle out, don't let the door knob hit you where the dog should 'ave bit you (loud electric guitar chord with some wow-wow). Jim's continued participation in managing Vista just really doesn't make sense to me but I guess it's some kind of face-saving move vs. a public chewing out based on what happened with OS formerly known as Longhorn.

My only cynical take on this reorg is that it can be used as a Three Card Monty to break the continuity of accountable and hit a reset button to start the clock ticking all over again. Is it just shuffling the chairs on the deck of the Titanic (or HMS Blackcomb)? It certainly makes me want to shut up and stop typing and just play a wait and see. One comment from last night had a great insight regarding some of the background to the reorg:

And contrary to others on the board - I actually believe that our challenge in leadership is not having too few people who understand technology - in fact I believe we have too many people who have never had to run a business or figure out a P&L or find a new profitable business venture - JimAl? He probably can't even tell if a P&L is upside down! BrianV? I think the world of him in terms of being an engineer, but understanding how to run a business and make money doing it? He's out of his league. KJ, Raikes, Robbie Bach, Orlando, BillG & SteveB are really our only broadly effective business leaders - I believe we need more of these kinds of guys not less. You'll recall, that as much as BillG is technically smart, he is even more "business smart". He invented an entirely new business model (independantly purchased software) and built a huge partner ecosystem to make that model succeed. Steve knows this and that's why we have a new COO from Walmart and why tomorrow's reorg is going to put business leaders running our businesses rather then techies. We need more business savvy people like Bill and Steve, not less.

Regarding Ballmer & Gates' take on the reorg: why does it all have to be forward looking, positive reasons for doing the reorganization? What's wrong with a little bit of backward looking honesty as to why it was best to do a reorganization? Was Windows a mess? Was MBS adrift and in need of a strong Office integration strategy? Were mistakes made? Admit at least there were and are problems and that the reorganization is going to be effective in dealing with those problems and that executive management will be held accountable for making sure that is so.

At a high level, the reorg appears to be musical chairs at our to be very, very well compensated executive level that really don't have a lot of impact on the hard work of designing, implementing, and testing great products. Now's just a fine time for ripping through some of these orgs and unleashing our old-time promoted-up-through-the-ranks Microsofties into our more dubious product groups just to get them back on track or out of here. But right now, I have zero idea how this affects anyone other than those few individuals mentioned in the reorg today. I have hopes, but not much more.

So, I can't look at this reorg too cross-eyed because we've been overdue. It seems subtle, though, and not as sweeping and drastic and as, well, innovative as it could be. But now, wow, you've really got my attention for the Company Meeting this Friday.

I watched the webcast. My first feeling, after it was over, was: You know, if they did something similar to this every other month or so, I don't think I'd feel all that much like posting here. There's a level of disconnect, a gap, between us and leadership that something like the employee webcast helps to close. Some old-timers have been posting comments here and to their own blogs noting all the times they've met with Steve and Bill and how incredibly impressed they are with their smarts and abilities. I'd like to see that more often than to rely on their public facing interviews which seem so disconnected from reality it makes me wonder which company they are working for.

So, at around thirty-nine minutes into the webcast, SteveB talks about the negative press from Business Week and Forbes. Snippets near that:

  • "This is a great company. This is a company, though, that can and does and needs to improve. It's a company that has always needed, could and did improve."
  • "We shouldn't undersell what we have here."
  • "Last week, or last weekend, was not - it wasn't my most fun time of my twenty-five years at Microsoft. But at the same time, what did it say to me? Okay, for the first time in twenty-five years, all of the discussions we've had internally, about how we go be better, now the press wants to kibitz on. That's okay. As long as we do what we do best. We go out, as we keep improving. Just keep improving. Driving harder. And when we look back, a year from now, after this incredible pipeline has come to market [...] we'll be in a very different spot. [...] Do we have a corporate culture problem? No."

BillG's comments were more around the long perspective that we've been underestimated before and Microsoft perseveres and gets back on top. But what's coming to the rescue? The innovative pipeline. Chances to improve what delayed loading up that innovative pipeline and become leaner and efficient? Unknown.

I want to believe.

p.s.: with a small bit of attention (15 minute count-down clock is around 1:17) some offensive and just way off topic comments have tripped my Bozo meter. I will clear those out, over time, just to reduce some of the noise.

Update: blogger seems wonky - trying to publish a second time. Okay, third try a charm?

157 comments:

Anonymous said...

Interesting that you guys are going through a reorg at Microsoft.

How often does this happen?

We've been seeing a reorg every six months or so (actually, almost like clockwork) at Red Hat.

Anonymous said...

Do a quick search for Microsoft reorg... How many results do you see? This regorg, like all past reorgs, does not change a thing. Sounds good on paper, is a great news story, but nothing will change.

Ok, so now there are 3 primary Divisions. How is this different, in a material way, than the structure that was in place yesterday. Jeff runs the business division, but what specifically didn't he run yesterday, that he now runs today? Same with Robbie, same with Jim.

This, in my opinion, is a reorg in name only, hand built for the press. You have the same old dinosaurs running the same old groups. No new thinking, and certainly no new freedom for these "presidents".

Exactly what new freedom do you think these guys will have? Do you think the Jeff will be free to pursue Office on Linux? Bet thats a decision for Bill, Steve, or the combined SLT. If Jim does not want to ship .NET framework on low end versions of Vista, do you think he is free to make that decision? Suppose Bill invents a new idea of "integrated innovation", are Jim and Jeff free to ignore Bill and run their businesses and set their priorities with complete freedom? Suppose Robbie thought that the best thing to do was to embrace Apple's format, shake hands, and ditch WMA. Does he have the authority to make a decision like that? I don't think so.

My belief is that all of the complex, strategic decision making, will continue to be centralized at the very top of Microsoft.

Why is it that folks think Microsoft has lost it's agility? My guess is that most associate the Longhorn/Vista delays with this lost agility. I think this is a cop out. The systemic constipation inside of Microsoft around Longhorn/Vista is the result of the Chief Software Architect's failure to properly design and architect his vision of integrated innovation. Bill is an architect in name only.

The only news is that Jim's retirement is official. Big deal. I thought Microsoft had some new found love of accountability. Why is Jim still allowed to work and get compensated like a king? Didn't he oversee the most poorly run software engineering project in the entire history of Microsoft? What about Valentine and some of the other cronies? What about Bill himself? He is supposed to be the "Chief Software Architect" of the most powerful software company in the world? Go look at all other architects at all technology companies, all over the world. How many of them would still have their job if the designs and systems they were responsible for have slipped by years, have been wildly over budget, and whose functionality will ultimately deliver less that 1/4 of what was originally promised.

Would you still have your job if you performed so poorly?

guitarsoftie said...

it's wah wah. cool blog mini.

hagrin said...

Uhh ... you are or you're ... not your. Sorry, half asleep here.

Anonymous said...

OK, on the Allchin thing, I don't paticularly like the guy, but I doubt his leaving has much to do with Vista.

One of my problems with him is that every OS he's tried to get out has descended into chaos from a management perspective. Windows 2000 was at least as big a mess as Vista is now. XP was basically the remainder of the 2000 feature list and it still took forever to get out.

Sure both have been technically better but that wasn't really his doing, let us not forget he also brought us the wonder that was Windows ME...

todd said...

Reorgs at Microsoft are a common occurrence. I was once reorged into a group only to be reorged two weeks later. It was quite comical when we went to a meeting with Nathan Myrvold and he told us "It's been nice knowing you". Tough way to enter/exit a division.

Anonymous said...

7 divisions into 3 should mean less redundancies and some cost savings, right - isn't that what you get when you combine combine companies such as HP and Compaq? Of course, reality depends on what has changed and the execution that goes with it. All the changes over the last 7 years has not helped the stock price - which has enriched the people in the past or at the very top but not those who joined Microsoft since 1998.

Microsoft needs to demonstrate better earnings growth, instead of the anemic high single digits or low double digits. Any changes made should be geared towards earnings growth and rewarding its employees and stockholders. Am pretty sure the board understands what stockholder value means.

Lastly, don't understand why there are no acquisitions of fast-growing companies that are relevant to any of the 3 divisons?

Anonymous said...

They may have invented a "new" way to sell software, but there are limits to what you can sell that way. General products like Word & Excel are fine that way. But now they are trying to sell enterprise software (ERP) and the model falls flat on it's face. When we had one of their partners in pitching one of their three ERP systems it was the most pathetic thing I've seen. The partners proposal was a cut and paste job from Microsoft propoganda. Even though Exchange is very popular if you try to go and find info on how to justify it, you just can't find it.

Anonymous said...

I work at Microsoft. I also work in MBS or whatever it's called these days.

I got the re-org e-mail this morning. I read through it quickly, then deleted it. It said nothing useful. It was followed up by e-mails from Raikes, Burgum and then Nadella in turn each piggybacking on the previous one and adding their own bit of praise lest anybody might have forget who they actually were.

This is a demotion for Burgum in a sense. It was clear that Burgum had hoped for the kind of role that Raikes now has but Burgum's failure to deliver results in MBS has been painfully apparent. While Burgum's e-mail was concillatory, the net effect is that he's been symbolically rated 3.0 and been put on a perf memo. Color me unsurprised if he departs within the next twelve months.

This reorg does nothing to reduce the depth between people like Raikes and the ordinary individual contributor. There are way too many managers in MBS including several at the level of product or group management with just a handful of direct reports. This does nothing to address the fundamental vacuum of leadership in MBS. MBS still does not have a vision and it has a product range universally derided in the business community.

Morale amongst the rank and file in MBS, here in Fargo, in Redmond and in Denmark, remains universally low. Denmark in particular is smarting over the Redmond hit and grab attack on the Axapta product. Now I don't know much about Axapta in general but the folks in Denmark are the best architects of that product. Heck, there's even an MS Press book coming out called "Inside Axapta" and the authors are all in Denmark.

In short, this reorg solves nothing for MBS. It's a paper reorg.

msnblue said...

Regarding Ballmer & Gates' take on the reorg: why does it all have to be forward looking, positive reasons for doing the reorganization? What's wrong with a little bit of backward looking honesty as to why it was best to do a reorganization?
Come on Mini, you know you can not get the laundry out in front of the whole company knowing that the content of the webcast is going to literally get out there. I am happy with two things:
1/ A more candid and humble response from Steve to the bad press question. At least he made a subtle attempt to say I am listening.
2/ Jim’s departure. I don’t understand why he’s allowed to keep in charge of Vista release either but at least he’s out afterwards.
I also want to believe.

Anonymous said...

Wow. I'm sorry, Mini. You had me going for quite a while there, actually. But now you've lost me, just as I feared you would.

This blog really needs to be studied carefully. But not by Microsoft employees or even employees from other companies. Not by management either. It needs to be studied by psychology students so they can see what a serious case of DENIAL looks like.

It's pretty clear that you're fully aware that SteveB, BillG, and the other upper execs are way less than competent. And that this reorg is totally pointless. Yet you continue to hope that somehow these morons, these proven failures, will magically fix things and MSFT will be great again.

That doesn't make any sense and you know it.

The only way this company gets better is if employees like you get seriously vocal and demand real accountability and real leadership. Steve and Bill can brush off shareholders and the press indefinitely. Only you guys can fix your company because only you have real pull. Too bad it probably won't happen.

It's so interesting that highly intelligent people like you all still have to blindly BELIEVE in management, no matter how badly they screw up your company. It's simply an article of faith and you throw all your smarts and reason out the window.

You obviously know what's wrong with Microsoft. Until employees demand better, this blog is just so much pissing in the wind.

Anonymous said...

I worked at Microsoft for well over 15 years; I left because the company was fundamentally not set up to grow people to taking on new levels of responsibility. One of the earlier comments stated that many of MS’s managers are not good business people. The fault, if true, is not with those people, but that Microsoft has not given those people the opportunity to take responsibility for their businesses.

Microsoft is very top-down heavy; even as an exec VP, your every decision is second-guessed and interfered with by Bill and Steve. If Microsoft would be more like GE and let their division leaders run their businesses as their own businesses, I think you would see a dramatic renaissance in the company.

If you look at the history of the MS’s biggest successes, they happened IN SPITE of what executives at the company were trying to accomplish. Windows was being abandoned to focus on OS/2 - but it was resurrected by a single engineer who figured out how to salvage the code base and work more effectively with virtual memory - that opened the door for Windows to clean OS/2's clock.

Most of the innovations in the Office suite were made when the individual application teams really cared about the problems of their own users; the Excel group really cared about spreadsheets, and the Word group really cared about word processing. Office lost it's way when the unified Office Suite sucked away all the talent and clout from the individual product teams.

Microsoft just needs to push down decision making and authority as low as possible. The company already has the smart hard-working people in place to kick-ass in the software industry. But Bill has to learn to trust their judgment and quit meddling in the name of having a "grand-unified-strategy".

Let small teams start new products. Let them compete in an “off-strategy” way with existing product teams; give them the protection and cover to succeed or fail on the merits of their efforts – not their ability to politically out-maneuver another competing team. Give managers enough rope to either hang themselves or hit one out of the park (sorry for the mixed metaphor). Then hold them accountable for results.

Microsoft is way too focused on building the next billion-dollar business; there is no way for a team to start something that will be a great 50 million dollar business even with great profit margins. Why not create 100 teams like that? Some of them (with no way to predict which) WILL turn into billion dollar businesses. But if you don’t let them start they never will.

I was having a conversation with some other ex-MSFTees at their new start up company last week. They are building an amazing product with a very far sighted vision. All of them would have been THRILLED to build that start-up at Microsoft – but they just couldn’t make it happen there. Microsoft could not allow or support them in doing that. It makes me sad.

Anonymous said...

I was pleased - the three orgs have a chance to create more accountability and stamp out some of the dreamboat projects; there'll be shorter communication lines. And our senior management finally discovered that there is a market in what google does and decided to go after them with a vengeance. Yeah for them! And as a bonus, it's possible - just possible - that we are willing to at least hint at possible senior management accountability. Then again, Jim Allchin might just be fed up with being made a scapegoat (not claiming that he is, just that this is a possibility).

Anonymous said...

I wish Steve would get off the damn services bandwagon. He's been pushing services for 3+ years and even back then he was behind the times. Yes, services are great. Web e-mail, web photos, IM, search, blogs, message boards, etc., are all great and MSFT should do that stuff. (And already does that stuff.) But it's asinine to think that everything the company does should be a service. How are we going to charge monthly for a word processor, or a web browser, or an e-mail client, or a flight simulator, etc.? It's like when everything was supposed to be about .NET and for a couple years all our products were named .NET, until that fad blew over. It would be nice to have some management that recognizes and avoids meaningless "strategic" fads, because right now it's an embarrassment.

Anonymous said...

No more Jimbo or Eric Rudder playing clueless games with major P&Ls? Kevin leading STB with authority to fire Burgum in the next 6 months? There is hope for MSFT after all! Now let's see if the appropriate game plan comes with new players.

Anonymous said...

they should've gotten rid of jimall for allowing the next version of Windows to be named "Vista"

Anonymous said...

I got the re-org email this morning, although I work at google, one of our insiders @ MS sent us a copy, we made some xerox copies of it and stamped them to several walls around our dept, really fun.

fCh said...

The 2nd comment raises some interesting (insider) points. For us, the outside observers, the big question nobody has been willing to ask is: "How much does BillG still deserve the position he appointed himself to?" Follow up question becomes: "When talking about accountability, how high up can it go to?"

Be it as it may, we've seen how Scott McNeally and Larry Ellison have stepped aside to make room for new blood...

The more interesting points, and I would like to invite a conversation on the subject either here or at http://chircu.com, are those related to MSOffice on Linux, getting together with Apple's music format at the expense of WMA, etc. That such points make for heresy, goes without saying. I'm not sure though they make a lot of business sense.

Oh well, drop us/me a line, especially if you are one of those PM's. In any case, state you function at the Company!

Thanks, fCh http://chircu.com

Who da'Punk said...

Oy! This little blog has been Slashdotted. Not one of my goals. I apologize to Google / Blogger / Blogspot users if the strain is too much for this part of the database. Sorry!

The Slashdot thread is a great place to discuss this blog versus here since Blogger is having problems getting the comments saved / published. You might want to come back in a couple of days and let things cool down here.

And if you do leave a message here: be kind. Add signal.

Anonymous said...

The only way Microsoft can improve is by streamlining, and that is done by becoming smaller in size. It can grow later, but to lose the bad bulk right now, they have to get smaller -- its going to happen naturally, and no reorg is going to prevent it, either. Microsoft is going down, Apple is going up; but... now we Mac users see some of the same shortcomings appearing in Apple products, such would not be missed by the "old" Apple. Here's hoping both companies improve... I do think Apple has far more chance here :)

Anonymous said...

You know it depressing to hear you all bitching about Microsoft. I have met and worked with Jim Alchin and Steve Balmer and they both impressed me - no bullshit they both were focused and got work done. Most executives would have a hard time matching up - really. The executive bench at Microsoft is strong.

I have considered leaving Microsoft a number of times and the thing that keeps me working is the fact I enjoy the mental stimulation. The only company that has so far come close to getting me is Google. They have that edge that makes work fun - that is what scares Microsoft executives. Google is like looking in the mirror - who is Jekly and who is Hyde?

Bill was spot on today when he said "Don't underestimate us" it is true. I am not happy with the disparity in wages and many other things but I love the mental challenge of Microsoft. It is a company that delivers - love it or hate it - give it its due.

Anonymous said...

How likely is it that decision-making will be pushed down to the lower levels? To quote an earlier poster: "Let small teams start new products. Let them compete in an “off-strategy” way with existing product teams...". What does this remind you of? Let's see... oh yes! It's the profile of most successful Open Source projects!

It's not going to happen. The people in charge just don't believe in that kind of model.

Anonymous said...

Does the reorg really matter?

Every few years they cut and paste the trees. They give it some reason which usually includes accountability. The press picks it up. The pundits talk about it. In the end, we keep working on the same stuff. If there is an effect, it will be many months from now, and will be so subtle that we might not even notice.

Maybe Steve B had to write too many reviews this year. He had to give out multiple 3.0's this year. With fewer reports, he'll only have to give one 3.0 next year.

Anonymous said...

"But I hope that as part of the good shaking that some of the cruft breaks off and gets swept out and some of the cream rises to the top"

It is not just cream that rises to the top. Since the pond is dirty you will see few other things rise, if you get my drift

Anonymous said...

"Maybe Steve B had to write too many reviews this year. He had to give out multiple 3.0's this year. With fewer reports, he'll only have to give one 3.0 next year"

Clearly he didnt give out any 2.5's this year, or did he?

Anonymous said...

Another re-org. Whoop-tee-doo. I wish I had your optimism Mini, but I don't. Years ago, some exec discovered that they could mitigate their own accountability through re-orgs and new "initiatives". Since then, the company has substituted "new direction" and "change of focii" and "Going forward" for real innovation, and as a result, they've played the re-org card to death. Maybe ten years ago, stockholders would have been impressed with a re-org. And maybe ten years ago, a re-org would have meant something more than the three card Monte we've all come to know and expect... But on campus, most of us know it's business as usual. Those who pretend it's otherwise are the cruft. Not the cream.

Call me jaded, but it's just a job.

Anonymous said...

Speaking of reorg, what is the Bench program? How does someone get on it?

Anonymous said...

Does anyone remember Cairo? It was the first pie in the sky project spearheaded by Jim. It was a multi-year disaster. Finally it was cancelled, and then to my amazement, Jim was promoted to a VP! Longhorn is a repeat, only an order of magnitude larger, and with a familiar refrain: no accountability!

I'm amazed at all the slack given to Jim. At this point, we'd need to point the finger above Jim, for not removing him sooner.

Anonymous said...

I'd put on my re-org boots if I were you and working at Microsoft.

It's good that Allchin's being showed the door ala Belluzzo (and I never understood why Belluzzo was brought in after the trainwreck at SGi he helped make), but this blog makes it clear that the problem isn't at the Steve Ballmer/Jeff Raikes level, where that level isn't sufficiently empowered. The problems are far deeper, and have been more than adequately identified in this blog. Without some of those changes percolating through and the streamlining going MUCH further into middle management, it's deck chair shuffling as the iceberg comes up.

Jeff Carr said...

Very interesting comments in your blog:

I dont know if Windows will be as prominent as a cash cow in the future (or Office for that matter) as it was in the past.

That's dead on; neither has a financial future.

Secondly, there are more fish with more resources nibbling at us than in the past. For example, we didn't have to fight heavily against the free software loons ten years ago (while I don't think they have a sustainable business model, we have to spend time and money to counter them).

Firstly, you confuse successful software with "a sustainable business model". oops. Second, you thought you didn't have to fight heavily against free software ten years ago. oops again. Third, according to wikipedia (bye bye encarta) penguins are technically of differing orders than loons (Sphenisciformes vs. Gaviiformes). Still, Loons are of the same Class (Aves) so I'm sure everyone will feel they are family and not take any offense to the error. oops three!

Exactly what new freedom do you think these guys will have? Do you think the Jeff will be free to pursue Office on Linux?

That wouldn't matter: OpenOffice. It's free, and runs on Linux, Windows, MacOS, etc. If you did port msoffice to Linux, only clueless idiots would buy it anyway. (Sadly, that might actually be a sustainable business model if MSFT didn't already have 12 billion shares)

Most of the innovations in the Office suite were made when the individual application teams really cared about the problems of their own users; the Excel group really cared about spreadsheets, and the Word group really cared about word processing. Office lost it's way when the unified Office Suite sucked away all the talent and clout from the individual product teams.

Thats exactly why FOSS development is succeeding so rapidly. The engineers are in charge here. (Eric Raymond covered that concept well.)

How are we going to charge monthly for a word processor, or a web browser, or an e-mail client, or a flight simulator, etc.?

You aren't. You haven't been reading the signs: The brass have dumped their holdings for the last 7 years.

It's like when everything was supposed to be about .NET and for a couple years all our products were named .NET, until that fad blew over.

FOSS hated .NET. We told you we would kill it. You didn't listen. Now it's dead. You still aren't listening.

There are some of you posting on this blog still hoping that there is some hope somewhere out there. But there isn't any hope for Microsoft. Microsoft will lose. They were always going to lose. Money can buy temporary labor but it can't buy love or freedom and freedom always wins. End of story.

Some of the tongue and cheek aside; as developers you can keep doing what you are doing with Windows, but the longer you do, the less interesting, more arcane, less productive, more useless and ultimately less competitive you become. You want to make more money then you are making now? Go join up with people migrating customers from MSFT to FOSS. There's lots of money in it and people that understand how windows works are needed. People are willing to pay handsomely to permanently remove any future software license fees. Get smart; make some money as the giant falls. You helped build it after all. There is a $100 million consulting business just waiting for someone with knowledge of exchange to make a completely FOSS migration solution. Stop being lemmings -- there is lots out there to do that actually has a future. You just have to get of the bullet train that's headed straight for the sun.

Anonymous said...

I just hope (as per your earlier post) that this re-org sifts out some middle management. I am SO SICK of our middle management that adds NO value other than to squeeze their people more. The does nothing other than piss off those who really want to be creative and help the company. Our group has lost over 30% in the last 4 months because of middle management bloat, and micro-management by those middle managers who have nothing better to do than ask for status reports. Steve was wrong today, we DO need a culture change and he knows it. But of course could never allow that to be said on camera. Let's start the groundswell....what's wrong with unionizing? :-)

Anonymous said...

Here is a suggestion. How about we fire every person with a title containing the word "manager" that has direct reports. I'd love to see the numbers on that. It would save me from the hostile pencil pusher that I work for...I love the company, but loathe going to my office because of the hostile non-value added work environment.

Anonymous said...

When I first started at Microsoft like 10 years ago, there was some level of accountability. Not at the executive level, but anyone under VP was held accountable for screwups.

That seemed to end when the stock fell. Not sure why.

Now whole groups fail to deliver - not just late, but completely. Yet they cash their checks, and they're at least getting 3.0's if not above since they're still working there.

Kind of makes me sick when I work my butt off on something, it ships, I get a 3.0, and know another group failed completely yet they must have 3.0's since they're still working there year after year.

I think there is one word to describe Microsoft right now: dysfunctional. And not in the good Jerry Springer kind of way.

But like Jerry Springer, we're inbred. The same management people that have screwed stuff up just get shifted around. That's all a reorg means. I agree it won't change anything unless Kevin grabs people by the shorthairs and starts demanding accountability.

To the RedHat guy: at least here, the reorg-like-clockwork was the first sign of work not being fun but a corporate nightmare. So, just keep an eye on where your company is going. Six months doesn't sound surprising to me.

Unfortunately, as people have said, they're mostly used to hide screwups than to fire idiots.

Anonymous said...

I think the old guard/new guard problem needs to be addressed.

Sure there are some fantastic old guard people like Larry Osterman. But then there are some really crass old guard blue badgers who talk about the latest yacht/hot air balloon/castle/Weapon of Mass Destruction that they just bought, over the weekend. And that they have time to play with since they work only 9-5 - 3.0's who cares? It's all about the health insurance and pro-club. And rest 'n vest.

In another thread, someone said it right - the most demoralizing thing at MS is seeing how others slack off and get away with it. Give me a 0% raise and a 2% bonus as long as I can pick the slacker to fire. Now that would boost morale!

Maybe we need Product Group Survivor: Main Campus.

Anonymous said...

To the RedHat guy: at least here, the reorg-like-clockwork was the first sign of work not being fun but a corporate nightmare. So, just keep an eye on where your company is going. Six months doesn't sound surprising to me.

I was kind of afraid that this was the case. Things at Red Hat have changed pretty drastically since I was hired - not for the better, sadly - and I wasn't hired that long ago.

I know that this blog is all about trying to get changes to happen within Microsoft, but I think that you might be surprised at how well the message resonates with people outside of your company.

And in case you guys were wondering if the grass was greener over here - the pay is laughable, in most cases, but it's enough to live comfortably on, and as far as I'm concerned, that's good enough for now. We haven't gotten anywhere near as corporate as it sounds like you guys have, but I suppose that in any organization growing at such rates, it's probably inevitable.

Tarry said...

And BTW this mini-idea is not new anyways. I've been screaming for long.

--Fire Managers without any talent(The one's who suck so bad in mid-management)

-- Fire anyonw who talks and does not perform/demonstrates

-- hire anyone who's technically capable and is breathing fire.

We need people who're hungry as hell. And sure Microsoft deserves good talented staff who can help reshape the company's future. In fact every company needs that.

Anonymous said...

As a Windows guy the message to me is that we are really now about web services. Suddenly those Indigo folks trying to poach me 6 months ago are starting to make more sense (hint: one of the places to go if you want in on the new cool).
So let's go kill Google for Brian. Or something. Right.

My take on Allchin is that he's planning to stick around long enough to give us his last guitar concert when Vista ships. (Deity love my earplugs!) And happy retirement, Jim.

Non-Windows:
- MBS is finally going to be responsible to Office. Great. Maybe they'll ship some product. Office 12 is a huge shift in the Office paradigm. I hope it sells. I don't think that Open Office can keep up and I don't think that any of the other closed source competitors are even close. And most of all I hope MBS can keep up with Office.
- Everything else is under Robbie. Maybe all of them will make some money soon if we're lucky. It *should* be the division for growing MSFT into new markets (as opposed to Windows and Office growing into "emerging markets"), but I'm still playing wait and see. That division seems a little too scattered to me, though. It's almost like whatever was swept up off the floor when the re-org was done. (Not that it wouldn't be incredibly fun to work on a PPC version of Windows (XBox) - once upon a time I saw an old version of that and as a systems guy I considered it to be pretty cool.)

- Drew

Anonymous said...

Most decision are top down. So do you really think Jim made most of the bad decisions on his own. If you believe that you're either dumb or stupid. Usually the top works together to build a strategy, that's why this reorg wont work.

Could you keep your top management and change your strategy. Hell Yes! There is still hope! Your top brass just needs to FIGURE OUT HOW TO SHIP SOFTWARE. It's really that simple.

Anonymous said...

*lol*, yes indeed. www.IWantToBelieve.com !!!

Anonymous said...

I generated this from a stream of thought, so likely there are lots of spelling grammer and continuity errors.

I have worked at MSFT for almost 5 years now and I see several fundamental problems:

First off, the product development model that Bill created and fostered no longer works in our environment. It was awesome up to the time we shipped Windows 95, but now it’s no longer feasible. I continually get stories from longtime MSFT employees who talk about the days when they slept on the floor of their office…stayed all weekend…and basically busted their asses to ship. That will never happen again because the world of work has changed.

We seem to think that the more people you throw at a project, the faster it will be developed. Well, 9 women can’t have a baby in 1 month, but we keep trying. If we could figure out a methodology that supports the concept of resources = faster / better, then that would be a great innovation. Cut the fat and make the teams smaller. Let’s be a little crazy and follow an open source methodology where people can contribute features and not have to do 100 presentations and get sign off from 30 people. Let them build it and check it in, don’t cut them off at the knee’s before they have the chance to even try. If its there and works, it’s less likely to get cut for that very reason – its there and works.

You know what else? Microsoft is a big company and has a support structure that mimics most medium to large companies in the world. Why not allow the folks that use our stuff internally to file feature requests. Insure it does not drop into a black hole but rather follow up and value and respond to the idea even if its sucks. Make sure they are not afraid to submit more features. We have access to real world users – right on our doorstep. I know for a fact they have frustrations…I fight with Sharepoint every day and have a lot of suggestions from that.

Innovation comes from people being challenged and nothing is more challenging then having to look at a product from end to end, figuring it out and owning it. One crazy Jolt drinking developer could code solitaire and minesweeper from scratch in a weekend. (I know…..who cares, but at least they could change the patterns on the back of the cards) Do a Google search on Media Center plug-ins…that community has created more cool stuff in the last 6 month then what we have in 2 years. Sad, but it gives me some hope as I have not seen such community involvement in a Microsoft product in years. I hope we foster it and not start throwing lawyers at them for some dumb-ass reason.

Honestly, to develop great stuff that reaches millions of users, we have to provide the incentive to succeed. At the least model it after what the executive team gets. It’s the guys in the trenches that make the difference yet are getting a 2.5% raise, a 5% bonus and 200 shares of stock. This sucks. Meanwhile Jim Alchin gets 6 million in salary and stock a year to play his guitar and not comb his hair. Maybe that’s what you need to enter the cult of Bill these days – never wash or comb your hair. In a company that has revenues of 38 Billion dollars a year we must be able to come with a model that rewards those that deliver and give the company products that move it forward. We should also make sure that the non-delivers (paging Jim…your product is over a year late….) get the message that its not ok. Pay the people who make you money. Cheerleaders don’t generate revenue.
The ROI on an investment like that is huge. Think of Google. Their best stuff has comes out of the 8 hours a week they give each employee to tinker with whatever the hell they want. When you give people free range and pay them they will start building stuff to make their lives easier…and guess what, they are the same people we are trying to provide solutions to. There is a site at work that I likely can’t name but it has thousands of tools people have created to help them do their jobs. They can post them to the site and share with others. I have found tools there that I could not find in a commercial / open source or freeware environment. It reflects what could happen if we cut the fat and let people just do their thing. Hell, if we shipped that stuff or better yet – gave it away for free like we do with the XP Power Toys, we would be rock stars.

That leads me to another point. The reason all the people I know that work on and develop solutions that support the Microsoft platform is almost universally common: When they were first getting into the technology and messing around with PC’s, it was easy to find copy of Windows, Visual Studio or whatever for free. I don’t think I ever paid for any Microsoft products in college I just didn’t have the money. I copied my buddies CD or the cheapo PC clone store I got my PC at was able to ‘include’ the OS and other required software in the purchase price. Hey, piracy is wrong and it’s not something we should encourage…but we should at the least make our software really really cheap for our future adopters so that the future developers and users can become users. Give it away we can’t be making huge revenue from that market. Think long term.
Its scares me that this is what Linux does today, it’s free. Open Office is free. I can do anything on the ‘free’ platform that I can do on Windows. Eventually it will be like an old sweater that I am comfy with. Wait 10 years and watch as these folks graduate and move into positions of influence. Its no longer a hard migration issue – that generation will be comfy with Linux and it will be the kind of decision (if not easier) that was made when corporations moved from OS/2 or Dos to Windows. No need to train….What the hell is Windows anyway?
I truly believe that was big factor that drove our platform we were able to get the stuff for almost free. Give it away to students….hell use them to get feedback on the product. They will be blunt and critical. They will tell you when something is sucks.

If you think we copied in the 90’s, its nothing to what we do now. No longer do we lead. Instead our benchmark based on trying to get partway to where our competitors are. Who the hell uses MSN search? I work there and dropped it for Google after about a day. I bet most users don’t even know it exists. If we are going to compete against a brand that is so well known that its name is used to describe an action that people perform everyday we better have an offering that spits gold coins from the USB port. No one says ‘lets search the internet’ anymore, they say ‘Google it” If I hear ‘”Google is doing this and so should we” I’ll will go postal. We have to realize that parity is not enough. We can’t ship MSN Search in the OS like we did IE. Yet, no one is motivated to any more then that.
We still call it a campus. We need to face the facts - it’s not a campus anymore. It’s an industrial park. It’s a bunch of buildings with 30000 people in them. We come in and try and find a parking spot close to our building but end up finding one so far away that we spend 15 minutes walking to the building. I am an employee with no emotional investment. I have a box I go to everyday and try to ‘innovate’.

Another thing is that our employee demographic has changed over the last 10-15 years.. The average employee is no longer in their early 20’s, can collaborate directly with Bill and join the “cult of Bill” In those days they would build software because it’s a puzzle that has never been solved. It was a game. That is long gone. In my 5 years at Microsoft I have never seen Bill in person. I have as much insight into him as the dudes on Slashdot have. I have seen more images of him as the Borg then as anything else.
The motivation is also different from then. We don’t love what we do ask most employees and they will tell you – Steve running around and jumping up and down is tired and dumb. . We are IBM and Steve would be better off telling us what we are doing, why we are doing it, how it affects us and how it will increase profits and thus drive nice fat salary increases (or at least ones that help us maintain parity with inflation).
We just want to get paid. We want to be able to at the least buy a new Kia to park beside the old timer’s Ferrari. The fact that we can’t is sad.
Do you know that when people find out where I work, they assume that I must be rich? Hell, I have friends who work in smaller, more nimble and supposedly frugal companies that promise the big payoff when they IPO yet they make a lot more then me.
I get by and that’s it. I am also in a unique situation that prevents me from leaving. It sucks. I would expect there are worse places to work (like Real Networks – my previous employer)

The last major problem I will mention is the company’s refusal to face up to the fact that it no longer matters where you are and when you work. You can be in bed…by the pool…on the roof…naked in the bath, whatever turns your crank. The technology now exists to allow people to have access to everything you need to do their jobs (don’t give me the collaboration crap we collaborate so much that we never have time to actually build anything …IM is so prevalent that it’s a part of out daily work day…we sell a corporate version that is targeted to scenarios like this its is the best collaboration tool out there…we friggen sell Live Meeting). Let people do their job wherever and whenever they want. If they make their deliverables and are on campus in the rare occasion that they need a face to face meeting…who gives a damn. And frankly, those face to face meetings should be rare – I don’t have face to face meetings with Dell Support when my computer is on the fritz. We somehow solve the problem 95% of the time over the phone. Enough already with the meetings.

I think we can all agree on this - the smaller the team, the less opportunity for people to abdicate their responsibility and hoist it onto other folks. I worked on Passport for about a year. There are about 200 people working on Passport. 200 people…think about that. IT’S A SIGN IN SCREEN! It’s not that hard. It’s so basic that any problems they encounter have already been solved long ago – its not a product that is turning the world on its head. I am convinced that my new team could build a better Passport with 2 PM’s, 2 Dev’s and 4 testers. We have a project in my group that is twice as complex and yet teams of 8 people can build and support them. They can ship every quarter while Passport takes 3 years to rev their crap.
I use Passport as an example to people in my current group – they have it pretty good because we actually ship stuff all the time stuff. Sadly, its all internal tools. We enable the business (our stuff is more ops based) and can turn on a dime. We still have to many people, but it 2x to many, not 200x. I agree with Mini – lean and mean is the key. Small teams given free reign and compensated with figures that blow the industry average away will be the innovators. These massive teams are just whirlpools of stagnation and mediocrity.

This is the first time I have recorded my thoughts about Microsoft. I am tempted to clean this up and send it to Steve or Bill and see what happens. Would that be the ultimate test of the 'open door policy'?

Anonymous said...

My experience has shown that once an organization begins this slide from "perks" to "no perks", they only recover under one condition: bring in new people at the top. Not just swap people around at the top, that only temporarily distracts the employees.

Anonymous said...

You can scramble the insides all you want. As far as Mini's goal of a leaner and meaner Microsoft goes, all you have are the people being hired and the people leaving.

6.5% are pushed out because of performance problems.

A few more leave on their own.

It comes down to making a credible argument for not working at Microsoft that persuades people either to not take a job at Microsoft or to leave.

For people who just want a job, any job will do if you're average.

For people already working there, the perceived risk of making a change is often too high in their minds.

For any argument you make about not working at Microsoft, someone comes in and talks about being mentally stimulated or talks about the influence your work has on the world.

What you end up with are average people adverse to risk who work at Microsoft 'cause its their drug of choice or they need the money.

Anonymous said...

FUTURE OF MBS

· Raikes owns SBA and Office – now will also own the migration path MBS CRM and Dynamics. For the time being Dynamics will be sold by the existing MBS VAR channel. Think of this as Business Standard and Professional.

· I think by 2009 business aps sold and supported will fall close inline with Raikes current model of selling the MS Office Products. Implementation of Dynamics will be as difficult as implementing MS Project and the APIs easy enough for enterprise IT staff to play with. You want to add a module just down load it. If that is the vision then visualize what that means to methods of distribution… could it be like the success Raikes has enjoyed with MS Project sales teams and PCubed combination. You can hire people for deep ERP custom stuff too.

· By 2009 a unified system Dynamics will be one functional code base not 5 accounting apps.

I still think that SAP is interesting and my long dark horse favorite is Autodesk for Manufacturing and Animation content tools.

Bend over all you sorry as VARs -- The few that are good will stay as partners but their buiness models will need to be adjusted.

Drew from Zhrodague said...

Perhaps if Microsoft -- and even others -- are interested in becoming more efficient and productive, there may even be a place for me there. Who'da thunk it?

Anonymous said...

How likely is it that decision-making will be pushed down to the lower levels? To quote an earlier poster: "Let small teams start new products. Let them compete in an “off-strategy” way with existing product teams...". What does this remind you of? Let's see... oh yes! It's the profile of most successful Open Source projects!

Heh - and most open source projects don't make a single dime...your point?

Anonymous said...

dear Mini-Microsoft, could you mention something about Windows Mobile changes in context of reorganizatin. I know of several incompetent people there, and this unit may not be so important due to small revenues (yet) but isn't it a shame that after 3 years on the market Windows Mobile phones still have below 3% of market share? What will change in Windows Mobile due to this reorganization?

---
http://blogs.msmobiles.com/mobilephonefan/

Anonymous said...

Microsoft are large, so it comes as no surprise that the departure of high-profile staff attracts a lot of attention, as has been the case recently.

As for all this blogging, it is pretty much the modern equivalent of everyone meeting up at the bar on a Friday and grumbling about work.

One thing that really puzzles me though, is why Microsoft havent kicked-^&%$ out of Google's search engine, it is so lame.

Give me a team and a decent chunk of time and I could blow Google search out of the water, really it is incredible that Microsoft with all their technology havent not done this.

What about free ads? surely this would hurt Google, really hurt them and what would it cost Microsoft?

What is wrong with a scheme that lets businesses advertise at zero cost for 6 months?

Sure would attract a LOT of Google's customers; once their business had been aquired Microsoft could just undercut Google on rates and they would remain with Microsoft.

And what about features? Surely advertizers would pay more if the search engine was able to offer more features for them?

I am frankly underwhelmed by Google, and annoyed since I have no control over ranking, I ma forced to accept search results whose ordering reflects Google's interests rather than mine.

It is all very puzzling!

hugh_gleaves AT hotmail DOT com

raulizahi said...

On the re-org, organize any way that you want, but please keep delivering easy-to-install, low-HW demand OSs.

I think the Linux threat to Windows is only half real. Linux can be a bloated and HW-demanding OS.

Recently I went through several Linux distributions and also FreeBSD to finally settle on Windows 2000 as the chosen OS for a 1998 laptop with a PII 266 MHz and 192MB of RAM that I revived and I am using for web surfing and wireless around-the-house development.

Microsoft does have some good priorities, such as running on as lean a HW implementation as possible.

Please keep that up and keep those developers happy.

Anonymous said...

Questions:

Google is doing a massive infrastructure build.

1. Can Google eventually securely host the applications of Office over the internet, and how will this affect Microsoft?

2. Is it possible that even Windows will be unnecessary in the future, as most work is done through hosts online and not stored on PCs?

3. Is there any anxiety about this at Microsoft?

On another matter:

Why is MSN and MSN Search so dreary and behind? MSN is graphically ugly and exceedingly business looking; the name has negative cache; there is nothing to compare with Froogle; in most areas it is outdone by other sites. What's going on?

I'm not a Microsoft person, just a curious observer. Please post some answers.

Anonymous said...

I disagree with your take on Jim Alchin's departure. From what I know personally, he really did set his upcoming retirement date almost 3 years ago. I heard about it then, and have kept mum about it. Vista is shipping late (as usual for an OS of ours) but after passing the tough internal stress testing that Windows OS always gets. Now with Alchin gone, it's true that a staunch proponent of stress testing is out of some people's way.

I wanted to read about how shitty the infrastructure has become for the average dweeb employee. Yes, the review model is by-design 'unfair.' More interesting to me is the way that political players use the dates built into the system as triggers for management events that optimize for their cabal. How can we make a system that is unfair and ungamable? MS used to be full of technically competent people, but they have gotten elbowed out by the politically competent people.

There used to be changing rooms with showers and towels, quality ball-point pens, dinners before ship dates, convenient shuttles everywhere, all sorts of incentive to make the workplace attractive for long hours. Now the attitude is that you better get your work done or you're fired, so screw you when you need a ball-point pen. "Buy your own damn pen. We're returning shareholder value up here."

St Wendeler said...

Re-Arranging the Deck Chairs in my opinion. There are some significant, institutional problems at Microsoft that have to be addressed. For the amount of cash that MSFT invests in R&D, you would think that they'd come up with more marketable offerings than they do... Fortunately, the cash keeps rolling in so there is still time to right the ship.

Unfortunately, for all of their assurances, I don't think the execs get it...

Regards,
St Wendeler
Another Rovian Conspiracy

Anonymous said...

In summary great software, long hours, crap canteen and we have to work arrogant multi-milionares. Try it sometime - invigorating.

fCh said...

I keep reading on these pages about how lean and mean MSFT used to be, and how annoyed are the developers by the extra layers of "bureaucracy" (PM and testers included).

These are probably the voices of those (younger) developers who got into MSFT at its top form. Yet, why aren't they being told that MSFT used to ship buggy software ("blues screen of death") and made for tons of jokes about bad software development. When you grow big and customers say you need to fix up or else, adding more testers and "bureaucrats" to make sure the customers don't switch is VITAL!

I shipped myself some big ass software and know full well about the culture clash at the intersection of developers, business, customers, partners, testing, consulting, etc. Guys, beyond a point in size, it's just life! For those advocating a smaller MSFT (hence mini-Microsoft?), I should add that a little fat hasn't killed anybody, and one gets to appreciate that when a new opportunity shows up or the market fluctuates. In a sense, one of the problems Microsoft has is its inability to hire what it needs! And this is not a function of Google as much as a function of how education fails US. Moreover, as of late, we've seen many of downs, yet people complain about having to co-pay $40 for branded medicine. If you spent time with the folks from Wall-Street, who are ready to chew you up at a moment notice, you'd have a better understanding of where Ballmer is coming from on that.

As I said elsewhere, I'd recommend MSFT reorganizes along big enterprise stuff and consumer stuff. Big enterprise software is meant to be boring and process-laden(sorry folks), consumer software being in the opposite category. Self selection of the employees could put its mark on the overall happiness then. As another recommendation, MSFT could do better if stayed away from just about everything that (can) exist in digital form. Initially, this approach might have been the result of lower projected revenues in mature areas. Now, when so much is becoming digital, may be hubris. A better way to tap into the future would be to just buy whatever company is doing well in a promising area--problem is, those guys don't always develop on .Net or Visual Studio...

Why wouldn't the top brass at MSFT put everything into two buckets? Maybe because they keep telling everybody Windows is a monolith that cannot be taken apart into modules--yet they are doing just that, at least when it comes about developing the beast. In other words they might have gotten themselves on a "dependency path" that does not allow Microsoft to be different and save management/legal face at the same time. To counter a possible argument like: "fCh, doesn't MSN cut it both ways under you two bucket plan?" I would say that beyond a certain size, MSN consumer cannot be(come) MSN enterprise, unless you want to make everybody unhappy--from developers to customers, your cousin included.

As for Google, let those guys go round the bloc for a few times, prove their worth, and then jump to conclusions. Google is not the answer, any number of start-ups in the Valley might be--at least for those who dream of themselves sleeping on/under tables and developing untested software. I use and respect Google's stuff, yet I am apprehensive like hell about what it may turn into--I'll write more about this at my blog soon.

Cheers, fCh http://chircu.com

Anonymous said...

6.5% are pushed out because of performance problems.

In my 10 years at MSFT, I've seen exactly four employees terminated for performance reasons:

Two got caught stealing.

One did literally no work for over a year.

One got managed into a no-win situation. A great contributor who I later hired into my group.

I personally know well over a dozen former employees -- good contributors with no performance problems to my knowledge -- who left for personal or professional reasons. That includes me.

And I know of hundreds who have been RIF'd out in the name of "streamlining the org" or "changing focus".

I can also think of at least six employees whose worthless contributions I know intimately, and yet have been rewarded -- and in some cases promoted -- regardless of their lack of results.

So don't go thinking that MSFT is taking that 6.5% off the bottom shelf. Some employees leave and are replaced by slightly more new employees. That is all.

Anonymous said...

sing it with me:

Ding dong Rudder is gone, Rudder is gone

Ding dong Eric Rudder is gone!

There is one good thing about the reorg - I don't need to work for Rudder anymore! I guess Allchin won and Ballmer grew some balls since Rudder didn't get to be heir apparent in Windows. Maybe now he'll stop feeding articles to press like the NYT or FT about how he is the next CEO of MS. He has a great public face, but the guy is just a prick with an ego that would make Larry Ellison jealous.

yay!

Anonymous said...

Mini, it would be cool if Microsoft employees tell which org they work for. Does most of the griping come from teams that are having trouble shipping (Windows) or teams that are shipping fairly regulary (Office)? How many in msn are griping?

We are doing some things right, although its hard to tell from the comments posted here. We are a big company and there is big company tax to pay. This is a reality of working here. We work on very large software projects so there is a tax to be paid for integration, doing builds, and cross team collaboration.

Anonymous said...

I can honestly say I haven’t heard a current MSN employee gripe except to say “my fear is that MSN will become like the rest of Microsoft” which, by the way, is Microsoft’s true dilemma.

Sure you should fix what’s already screwed up, but the biggest problem is that even the happy people think “my things going to get screwed with any second now”. After a couple years of that you want out just so you don’t have that hanging over your head anymore.

Dave said...

"we've been underestimated before and Microsoft perseveres and gets back on top. But what's coming to the rescue?"

When did Microsoft ever get back on top?

I can't think of a single place where they were on top, lost that top position, and returned to that top position.

Microsoft's MO is to climb to the top, and stay there. If they ever lost the top spot, I would be shocked if they could get it back without buying the competing product.

Anonymous said...

Reading through this blog today, and realizing the new audience that has been linked to it, I re-realize the following truth:

Slashdot == Trolls

Just as with the comments on /., the noise significantly exceeds the signal in their comments here. Mini, perhaps you should move your blog so we can get back to meaningful conversations? Oh well, I guess we just have to wait out the useless blather that /. brings.

Anonymous said...

A few points (from 12+ year vet Softie, Dev/DevLead/DevMgr, most of my time in Windows, some in MSN).

The 6.5% forced attrition number is total BS. It doesn't happen. I have the same experience as a previous poster - I can count the number of people I've seen fired for performance reasons on one hand.

Next topic: SteveB, BillG, JimAll are competent and smart in many ways, but have a awful weakness. I too came away from every meeting with Steve, Bill or Jim amazed at how smart and insightful the execs are. Absolutely, they are smart cookies. But.

The company hasn't done well lately. Why? For the last seven years there has been an major disconnect between what the top brass says and what the middle layer does. Anyone else familar with this?

Step 1 Go to meeting with Jim, find myself nodding in complete agreement with what he says, leave with renewed hope and energy.

Step 2 Attempt to implement the ideas discussed at the meeting and pursue the goals that Jim laid out.

Step 3 Argue with PM org and PUM/GM.

Step 4 Realize middle management doesn't support what Jim told me to do.

Step 5 Drink heavily.

For all their smarts, the problem with our execs is they can't herd the cats at the middle management level.

John C. Welch said...

The problem with Microsoft is that it doesn't have a mission that can be articulated in under a day.

What is the company's purpose in life? I think anymore, the only thing that makes sense is "To eventually be the only software/hardware company in computing"

The other problem is that they've saturated Windows. The only reason I upgrade versions of office is for critical needs that only exist in newer versions. Usually, this revolves around Outlook.

Other than that, I could keep everyone at Office 2000 (Win) for the next five years, and they'd never care or even notice.

On the Windows side, it's either catching up to everyone else in the OS space because the Windows leadership is still enamored of "The Big New Thing" every 5+ years, or desperately trying to figure out a way to get people to buy a new copy of Office.

They have a huge market potential in the MacBU, but face it, if you talk to MS outside of the MacBU, the attitude is "You're lucky to have that you friggin' loser"

If you aren't a 100% Microsoft Windows shop, Microsoft actively hates and punishes you. You don't count until the only Kool-Aid you drink comes from Redmond. Bill Hilf can talk all the party line he wants about "helping MS to understand Open Source" but his group has one purpose: to give Ballmer more ammo so that he can eventually shoot Linux dead.

If it wouldn't kill a few hundred million in sales at a VERY high profit margin, and make the feds look even closer at MS, Ballmer would terminate the MacBU, burn the buildings and the code to ashes, cover them with dirt, and sow salt on that dirt.

Microsoft has literally no clue how to work with other platforms beyond pushing you to bleed MS blue. The latest Services For Unix is STILL pushing NIS and flat files for user management, even though the Unix world has been leaving those behind for many years now. Services For Macintosh is such a joke that anyone recommending it just shows how incompetent they are.

Windows Media Player for Mac OS X is an utter shitpile...buggy, slow, and nigh-unsupported. In a year, it will be useless too. MSN Messenger for the Mac? version 5 is at least not completely useless but close.

The MacBU has customers BEGGING for more and better product, (I bet if you track the adoption rate of Service Pack 2 for Office 2004, it's the kind of thing that the Win Office team has wet dreams about), but the rest of the company is so insecure that they can't bring themselves to properly fund one of the few really oustanding units in Microsoft. (the OUTLOOK team is bigger than the entire MacBU, and that includes the janitors in San Jose).

Yet the leadership underfunds and undersupports them. The last really open market MS has, and they spit on it. Idiots

Anonymous said...

I'm not a MSFT employee, but I am an institutional investor with a fairly large position in the stock as I have been for the past several years. Hopefully this will provide a slightly different perspective.

One of the biggest problems I see right now is the company not using enough of its cash. I recently worked through some numbers which basically told me that in 2008, the company will have generated more cash than what they had prior to the special dividend. Why not do something with this? Yeah, yeah...a $30B stock buyback over 4 years. Big deal. How about using that $30B program in years 1 and 2? Then, double the dividend and continue to buyback stock at an accelerating pace?

I've read all the crap lately about the company in BW, forbes, etc. Here's a suggestion: Instead of Gates unloading 20M shares a quarter, how about a few insider buys? Steve seems to have such a high degree of confidence in the product cycle, how about buying some stock Steve? And, I'm tired of hearing about the diversification strategy as an excuse to sell more stock. Gates effectively paid himself $3B with the special dividend. If the times ahead are so promising, put your billions where your mouth is and show us what a great investment is.

Also, who is in charge of M&A activity at MSFT? Is there too much pride in going out and buying something worthwhile? Christ, look at Oracle lately. Not that I 100% agree with all of the purchases, but at least they're active and trying to put their stake in the ground in the apps business. One example that comes to mind immediately for MSFT is in what was the home and entertainment division. They could go out and buy a quality public company for $2-2.5, add $1-1.5B in annual revenue and tons of development talent that would drive even further top notch product. There is a lot of stuff that could be scooped up in the business solutions group, that maybe, just maybe, might help them turn a profit.

I agree with most of what has been written here today and last night about the recent changes. It's like putting lipstick on a pig. Maybe the one good thing to come out of this will be the actual delivery mechanism by way of MSN. Speaking of which, why does MSN suck so bad? Everyone talks about how sophisticated the search technology has become, that's great. MediaMetrix tells a slightly different story. I suppose if all this chatter about AOL finally comes together, 1+1 might actually equal 1.75, but that's 3 steps ahead of where they are today.

Finally on all the stuff related to Google. I'm a happy shareholder. I'm not 100% convinced that when Google hits 10K+ employees things will be able to work the way they have recently. They've undoubtedly has the wind at their back for the past few years, particularly after the IPO which just added fuel to the fire. This whole notion of Google taking over the world, I don't buy into that. They'll stumble sooner or later most likely from their own doing. Either way, MSFT does have the tools to combat Google in my opinion. The question is whether or not they can actually execute now.

One last thing. I saw Ballmer gave himself a "pretty good grade". To put this into perspective, if my performance was similar to MSFT's stock price over the past 3-5 years, not only would I not have a job, I'd never be able to find work in the industry again.

Anonymous said...

Check out Sinofsky dodging questions about the reorg with Ballmeresque "skill" ("Why ask me, ask PR!") at his blog:

http://blogs.msdn.com/techtalk/archive/2005/09/19/471651.aspx

Anonymous said...

"I can also think of at least six employees whose worthless contributions I know intimately, and yet have been rewarded -- and in some cases promoted -- regardless of their lack of results."

I worked there for five years. In my experience (especially in test) most of the employees stay because they know they couldn't cut it technically on the outside. I left because I wanted risk, not the comfort of mama microsoft. I found a great job that most of the testers (not SDETs) I know at Microsoft never could have gotten (including the test managers) in testing at another software company. I've met very few testers at Microsoft in the past five years who enjoy their job or are even remotely passionate about the technology, they stay because they couldn't make it outside. Sad.

Anonymous said...

With respect to cash-on-hand: we'll burn through about 4 billion in infrastructure cost once we begin to set up a serious storage/services architecture. As for the other 26 - buybacks is where it's at.

Anonymous said...

Did anyone notice that Wall Street didn't cotton to the re-org that well? Man our stock sucks... I repeat my mantra "Short stock, jump out window".

Anonymous said...

For outsider working at a competitor, i is quite astonshing to see this blog. We thought that we are working for company which is like dead mice. I have seen these orgs in current organization. This is reality of big coorporation with lots of money and strong cash flow. If you read Good to Great by Jim Collins then you find that re-orgs are pretty mush useless... As long as corporate leaders to connect to brutal realities which is very hard in an organization like MS. So MS will go on and still remain most power software company. MS may endup buying SAP if it is allowed to by FTC and put their business apps to rest...

Anonymous said...

"The 6.5% forced attrition number is total BS. It doesn't happen. I have the same experience as a previous poster - I can count the number of people I've seen fired for performance reasons on one hand."

There is a difference between "fired" and "encouraged to resign/retire" or even "Resigning in disgust"

Sure the "fired" claim may be accurate, but may well amount to pointing out how well a minor laceration of the scalp has been stitched while the patient is in danger of bleeding to death from a severed leg.

P.U.R.E.? Some may well be. But among the numbers of people I know who left (resigned) most had tenure that doesnt seem to support that label. The reasons I was given for the departures ranged from disgust over the current state of affairs as detailed on this blog; through not being able to find within the company the challenges and risks they craved.

My own experience is but one datapoint. And whether or not I currently work there is immaterial since most every other industry job in the Puget Sound is in some way entwined with how healthy MS is. Still, it is quite clear that the company is in dire need of the oft spoken "Self examination" and the voices in the trenches need to be heard a bit more clearly.

If that weren't the case then this blog would have a lot less to discuss.

Anonymous said...

do suicides count as part of the 6.5%. Can anyone guess how many people commit suicide each year at MS as a result of work (review score, etc)

Anonymous said...

I can also think of at least six employees whose worthless contributions I know intimately, and yet have been rewarded -- and in some cases promoted -- regardless of their lack of results.

This is one of the intriguing aspects of corporate culture. If you contribute nothing of worth to your team, BUT you are perceived up the chain as being worthy of a 4.0, you get a 4.0. That worth could come from something as simple as rubbing up to managers and making them believe that they are the most amazing geniuses in the world. Sometimes it's better to be obsequious than it is to work hard in the name of the customer. That's one of the sad truths of corporate culture.

Building9 said...

Last year some time, a guy drafted a white-paper for BillG's thinkweek about the cultural/behavior problems at MS and how they interfered with (a) people enjoying their work and (b) innovation and growth of the company. In summary, the ideas were:

1)we eat our young (i.e. new hires)
2)we grow bullies, not managers
3)we're so desparate for new ideas, yet because of 1 & 2 above, we crush them as soon as they form.

I forget the guy's name, but some other folks took his observations and started a DL ('pogo', look it up) to try and build more interest internally for making things better I went to some of the meetings, and had some interesting conversations with a whole range of like minded folks (from long-timers like Mark McDonald to new-comers like Ward Cunningham). Clearly, there are plenty of dissatisfied folks here, unified in our sense of what's wrong with the place, but not in how to fix it. Here's a few suggestions we've discussed:

#1 suggestion: don't be a sheep. When someone acts/decides in a manner inconsistent with customer/employee value, call them on it.

#2 suggestion: don't be a dick. Just because you can pick an argument or shoot down a co-worker or marvel at the sound of your own voice, doesn't mean you should.

#3 suggestion: get a life outside MS. Just because you can send email at 3am in the middle of your holiday with your family, doesn't mean you should (especially if you have direct reports).

Pogo has sort of lost it's way these days (roughly since Scoble joined - not blaming him, but it correlates). If you want to find people interested in making it a better place, start there and make something of it.

James B. Brinton said...

MS is reminding me more and more of dear, departed Digital Equipment Corp., one-time king of the minicomputer sector. Seen as invulnerable.

Both underline the differences between building a company through technical creativity and – once the company is built – maintaining it, growing it, and satisfying the short-term thinkers on Wall Street.

Both companies are following the same arch through time: 1) initial dependence upon (and respect for) technical talent, 2) movement of technical talent into management positions (for which many were unequipped), 3) addition of layers of middle managers added as the company began to feel “too big to manage,” 4) distancing of top management from the working level and from market realities, 5) decline in status (and success) of work at the technical level, 6) followed by a corporate death-rattle.

Note that DEC imploded almost overnight; so could MS. From being a cash-rich dominant player, holding user conferences on the QE 2, it went down the drain in only a few years. All it took were a VERY small number of poor key decisions by top management and a series of reorganizations. Today, there are still ex-DEC people wandering in shock around Boston. One ex-hot shot I used to know installs garage doors for a living.

DEC erred in keeping so much power at the top, in taking on a fat layer of useless middle management, and forgetting that the heart of the company’s success lay with the creative techies.

MS appears to be following the same path, only with more management by the numbers—a weakness. MS may very well be killed by Excel-based, metrics management – the problem with metrics is that you cannot quantify creativity all that well, and creativity and the consequent new revenue streams is what MS needs.

You don’t need to trim costs, you need to boost creativity. Google could take you to school on that score.

A couple of suggestions: Everybody out there read or re-read “The Mythical Man-Month: Essays on Software Engineering, “ by Frederick P. Brooks. Jeff Bezos will sell it to you for $24.10, and it will remind you of a lot of what’s good and bad about software development.

Second, while MS should be lean, it should not be mean. It needs liposuction around the mid-section to flatten the organization and remove the drones. You can save a lot of money by canning useless middle managers and get the real creative people closer to the guys at the top. Assuming the guys at the top have a valid vision, that’s a good thing. If not, extending the metaphor, MS needs a brain transplant.

If MS were my company, in addition to the middle management reduction, I would be setting up many small independent development groups. I would point them in several general directions, run up the Jolly Roger and move out. Some would fail; some would succeed greatly.

Finally, with the money saved by a wholesale cleansing of middle management, I would increase salaries (and improve working conditions) for the most creative low-level Softies, because that’s where the future revenue streams will come from.

For God’s sake, don’t build shareholder value by locking up the pencils and starving the troops—there is no better long-term strategy for corporate failure in the IT sector. The people who make you rich should be well treated and feel like stakeholders.

By the way, this was written using Word 97 and Windows 2000. Both perfectly adequate now and for years to come. That’s a hint, folks.

Someday I will tell you all about Wang Labs, Data General, Prime Computer, Compaq, and other examples of “It could happen to you.” It isn’t just half-assed dot-coms that crash and burn.

Jim Brinton

fCh said...

From the above comments, I welcome the following, based on the perspective it provides: the investor banker's. I'll try to embed some comments here and there as the text flows on


I'm not a MSFT employee, but I am an institutional investor with a fairly large position in the stock as I have been for the past several years. Hopefully this will provide a slightly different perspective.

One of the biggest problems I see right now is the company not using enough of its cash. I recently worked through some numbers which basically told me that in 2008, the company will have generated more cash than what they had prior to the special dividend. Why not do something with this? Yeah, yeah...a $30B stock buyback over 4 years. Big deal. How about using that $30B program in years 1 and 2? Then, double the dividend and continue to buyback stock at an accelerating pace?

How is a buyback going to solve MSFT morale issue? How much did MSFT stock price increase when it started issuing dividends? If a MAJOR buy back is going to spike the stock to $30 or $35 for a quarter or two, is that going to make employees' life that much better? As a short-term investor, yeah, it's a no brainer, but whom else would stand to benefit? Wouldn't a whole bunch of people (employees, investors, etc.) rush for the exits upon such occurrence? I would knowing that nothing has changed fundamentally...

I've read all the crap lately about the company in BW, forbes, etc. Here's a suggestion: Instead of Gates unloading 20M shares a quarter, how about a few insider buys? Steve seems to have such a high degree of confidence in the product cycle, how about buying some stock Steve? And, I'm tired of hearing about the diversification strategy as an excuse to sell more stock. Gates effectively paid himself $3B with the special dividend. If the times ahead are so promising, put your billions where your mouth is and show us what a great investment is.

That other people in Management don't buy their Company's own stock may be a true sign of disease--either they don't believe on the future or they got too much stock (options). I would leave BillG out of this.

Also, who is in charge of M&A activity at MSFT? Is there too much pride in going out and buying something worthwhile? Christ, look at Oracle lately. Not that I 100% agree with all of the purchases, but at least they're active and trying to put their stake in the ground in the apps business. One example that comes to mind immediately for MSFT is in what was the home and entertainment division. They could go out and buy a quality public company for $2-2.5, add $1-1.5B in annual revenue and tons of development talent that would drive even further top notch product. There is a lot of stuff that could be scooped up in the business solutions group, that maybe, just maybe, might help them turn a profit.


As I suggested, the reason may have something to do with the fact that the coolest things don't get written on .NET or Visual Studio. Otherwise, it's a valid option up to the point of considering integration costs. MSFT seems to have a hard time to manage even its own organic growth--just look for all the complaints about hiring.

I agree with most of what has been written here today and last night about the recent changes. It's like putting lipstick on a pig. Maybe the one good thing to come out of this will be the actual delivery mechanism by way of MSN. Speaking of which, why does MSN suck so bad? Everyone talks about how sophisticated the search technology has become, that's great. MediaMetrix tells a slightly different story. I suppose if all this chatter about AOL finally comes together, 1+1 might actually equal 1.75, but that's 3 steps ahead of where they are today.

Finally on all the stuff related to Google. I'm a happy shareholder. I'm not 100% convinced that when Google hits 10K+ employees things will be able to work the way they have recently. They've undoubtedly has the wind at their back for the past few years, particularly after the IPO which just added fuel to the fire. This whole notion of Google taking over the world, I don't buy into that. They'll stumble sooner or later most likely from their own doing. Either way, MSFT does have the tools to combat Google in my opinion. The question is whether or not they can actually execute now.

This guy cannot come too harsh on MSFT. For one, he's just a button pusher and not decision maker at some bank. It is the decision maker's decision to buy or sell a huge quantity of MSFT stock. Nonetheless, I think his final points are well taken.

One last thing. I saw Ballmer gave himself a "pretty good grade". To put this into perspective, if my performance was similar to MSFT's stock price over the past 3-5 years, not only would I not have a job, I'd never be able to find work in the industry again.

For an additional perspective on the guys on Wall Street, let me remind some of you that:
Morgan Stanley has just had to ditch its CEO, amid an 83% drop in its profitability.
Merrill Lynch has gotten itself into some trouble on the private banking side.
Bear Sterns, this once lean and mean name on the Street, is facing major problems too.
Citibank is trying hard to undo Weill's legacy.
Should I go on?



Cheers, fCh http://chircu.com

Anonymous said...

"I can also think of at least six employees whose worthless contributions I know intimately, and yet have been rewarded -- and in some cases promoted -- regardless of their lack of results."

[Old Guard employee here] This is another area where there is huge disparity between the worker bees and those who have made it to some level of seniority (either I.C. or management). Many managers are quite happy to 3.0 a junior developer for a checkin screwup months ago but are complete wimps when it comes to holding more senior people accountable.

I've been here since the good ol' days. I've had several review periods where I basically accomplished nothing, and two major project f***ups which were my fault. Each time I felt a 3.0 would have been generous. One time I even put 3.0 on the overall employee rating for myself. Each time I ended up with a 3.5. In my experience directors and PUMs are wimps when it comes to being honest with their directs. It's so much easier to have someone down the chain give out the 3.0s.

Anonymous said...

"This is another area where there is huge disparity between the worker bees and those who have made it to some level of seniority (either I.C. or management)."

This disparity is actually institutionalized. A couple of years back I saw a complete review model. There is a separate curve for people above some level (66 I think), with far less 3.0s required.

todd said...

"When I first started at Microsoft like 10 years ago, there was some level of accountability. Not at the executive level, but anyone under VP was held accountable for screwups. That seemed to end when the stock fell. Not sure why."

The reason that accountability ended is because the engineers in the trenches stopped holding their bosses accountable. I can't tell you how many times I heard my friends tell me that the bloat in the company was inevitable due to its size. When I started with the company in 1995, we had somewhere around 15,000 people, yet each group had a great deal of autonomy. People didn't put up with crap from their boss, in part because I think that Bill recognized the value of the SDE. As soon as we went from an environment where "dev is king" to one that valued the bureaucrats (thank steveb for that shift), the devs could no longer put pressure on their bosses by saying stuff like "if you don't cut this crap out then I'm finding another group". In "the good old days", I helped push at least two unproductive managers out of our group. When I left the company three years ago, my GM was the biggest NOP there ever was, yet his job was much more secure than mine because he was a big suckup.

Anonymous said...

How is a buyback going to solve MSFT morale issue? How much did MSFT stock price increase when it started issuing dividends? If a MAJOR buy back is going to spike the stock to $30 or $35 for a quarter or two, is that going to make employees' life that much better? As a short-term investor, yeah, it's a no brainer, but whom else would stand to benefit? Wouldn't a whole bunch of people (employees, investors, etc.) rush for the exits upon such occurrence? I would knowing that nothing has changed fundamentally...


I would argue those who stand to benefit the most are all of the people internally who have been complaining about lackluster raises, minimal performance bonuses, and stock grants and or options that are either down 20% or underwater. It's not to say the stock can trade like Google or anything we experienced during the bubble, but watching a stock go in the right direction I'd say would help morale to an extent. Obviously that doesn't cover the other issues you internal people are talking about pertaining to stagnant innovation, bureaucracy and other things of that nature. No matter which way you slice it, if you look at MSFT's FCF on an annual basis, it's fair to assume they could reduce the enormous amount of shares outstanding which would create a better supply/demand situation simply by accelerating their buyback program. And this isn't a 1-2 quarter event. As stated it's a 4 year plan, I'm suggesting to fold the 4 years into 2 years. After that is completed, put into place another buyback similar to the first one. All of this could be done and funded on an annual basis without draining the cash balance.

The special dividend and the quarterly dividend are a completely different story. Throw out the special dividend since that has come and gone. With the quarterly dividend, it should be raised to at least double where it is now. That would put it slightly ahead of the S&P and would give more people a reason to own the stock. With a company this large, cash management is part of the fundamental picture.

That other people in Management don't buy their Company's own stock may be a true sign of disease--either they don't believe on the future or they got too much stock (options). I would leave BillG out of this.

Again, this was my point...why isn't SteveB buying stock? I was at the financial analyst day where he talked about his bogus story regarding his conversations with internal employees asking them if they were buying MSFT stock. No one raised their hands...and for me on the outside based on some things people are writing here and talking about, I can understand why. If the stock is such a great value (which I happen to agree with from my perspective) SteveB and other members should be buying stock, end of story. And, if that did turn out to be the case, the stock would react favorably and give internal employees as well as outside shareholders an idea of just how serious he is.

This guy cannot come too harsh on MSFT. For one, he's just a button pusher and not decision maker at some bank. It is the decision maker's decision to buy or sell a huge quantity of MSFT stock. Nonetheless, I think his final points are well taken.

You can call me a button pusher because believe it or not, I do push buttons to send my trades to our traders who then execute the trades. Also, I think I was fairly clear in saying I was an institutional shareholder, not an investment bank or banker or sell-side analyst. So, you're actually dead wrong in saying it's not my decision to buy or sell the stock. I evaluate many different stocks and buy and sell them as I see fit for the money under management at my organization. Perhaps you're referring to the analysts who do work on Wall Street and publicly cover the stock. There, you may have a valid point that should be addressed. If you were to look at the coverage list and the analysts' respective ratings, come back and tell me how many people don't have Strong Buys, Buys, or Overweight ratings on MSFT. To cut to the chase, I have not seen one major analyst come out and talk critically about MSFT. That's a rather large problem in my opinion. Everyone has assumed MSFT is always on cruise control, however, blogs like this along with other sources are clearly pointing out that's not the case.

Finally, pointing out issues at Citibank, JPMorgan, and others is really irrelevant. It has absolutely no relevance to what I do or who I am associated with.

Anonymous said...

Amusing blog.

Bunch'a monday morning quarterbacks IMHO.

Google... lol. Please. They're just the next RedHat, Novell, Sun, Apple, etc, that won't beat Microsoft. Google can have my PC when they pry it from my cold, dead fingers.

BillG is a business genious. You can't compete with him, so stop trying. If you could, you'd own your own company instead of working for his. And even if you did own your own company, you can't compete with him. The poor bastards who think they're beating BillG at anything simply don't realize he's already 10 moves ahead of them. Ask Jobs. Ask McNeely. Ask Ellison. Hell... ask the U.S. government.

SteveB... he's our quarterback. Steve can throw the ball 80 yards. You can sit in the stands and critique his play, but you can't compete. Don't bother. If you could, you probably wouldn't be reading this blog, and you certainly wouldn't be posting on it.

JimAll... he made NT happen here. You don't take someone like DaveC and ship NT. That takes someone like JimAll. You can't compete with JimAll. If you could, you'd have to identify your replacement over a year in advance. You'd be the one sitting in the corner office with a sexy secretary next door. But no... you could walk out the door today and nobody would care.

So... when you guys offer criticism to MSFT, just remember that you're not a player. You're that dude on Monday morning who tells everyone how he would have called the play on 3rd and 7 with 8 minutes left.

fCh said...

It looks like I've just implicitely called somebody an investment banker, yet (s)he's an INSTITUTIONAL INVESTOR--MEA CULPA!

While there ought to be some differences in my assumptions, I stand by most conclusions/recommendations.

Whether or not MSFT buys it stock back, unless it addresses the fundamental issues, how's a stock buy-back going to put the Company on the right tracks? Having the stock lower than most people would like it to be should be the greatest incentive for most people to do their jobs right! In other words, as I and others have sugegsted here, call incompetence and politicking by their names where you see them. Each one owner of MSFT stock (options) ought to feel empowered by the their ownership! Is is too much to ask?

Now, doubling the dividend cannot hurt anybody and would firmly place MSFT where it belongs: a long term growth stock.

Thank you so much for your reply! Cheers, fCh
http://chircu.com

This guy cannot come too harsh on MSFT. For one, he's just a button pusher and not decision maker at some bank. It is the decision maker's decision to buy or sell a huge quantity of MSFT stock. Nonetheless, I think his final points are well taken.

You can call me a button pusher because believe it or not, I do push buttons to send my trades to our traders who then execute the trades. Also, I think I was fairly clear in saying I was an institutional shareholder, not an investment bank or banker or sell-side analyst. So, you're actually dead wrong in saying it's not my decision to buy or sell the stock. I evaluate many different stocks and buy and sell them as I see fit for the money under management at my organization. Perhaps you're referring to the analysts who do work on Wall Street and publicly cover the stock. There, you may have a valid point that should be addressed. If you were to look at the coverage list and the analysts' respective ratings, come back and tell me how many people don't have Strong Buys, Buys, or Overweight ratings on MSFT. To cut to the chase, I have not seen one major analyst come out and talk critically about MSFT. That's a rather large problem in my opinion. Everyone has assumed MSFT is always on cruise control, however, blogs like this along with other sources are clearly pointing out that's not the case.

fCh said...

The person who wrote

Amusing blog.

Bunch'a monday morning quarterbacks IMHO.
8<------

exemplifies what is rotten in the state of MSFT!

Johnny-Bravo said...

Steve Ballmer’s Idea:

Microsoft's seven divisions will be merged into three groups -- Platform Products & Services, which includes Windows, MSN, and the Server & Tools division; the Business group, which includes Office and Microsoft Business Solutions; and the Entertainment & Devices division, which includes Xbox and the mobile devices group. Microsoft CEO Steve Ballmer explained the move in an interview with The Wall Street Journal

My idea:

It would be to merge Windows and the Server Tools WITH the Business group which includes Office and Microsoft Business Solutions; then form the Entertainment & Devices Group with that wrapped around the core of a full blown wireless ISP solution (Bill Gates’ 3000 satellites forming the wireless backbone) using MSN and the newly acquired AOL (all those users ;-) as the front end human interface for Xbox, Media Center, Cell Phones, Laptops and everything else too.

Microsoft had better do it before Google does, they have just announced an acquisition of a wireless company that they plan to use to form their own wireless backbone and become a World Wide Wireless ISP!

Anonymous said...

"One of the biggest problems I see right now is the company not using enough of its cash. I recently worked through some numbers which basically told me that in 2008, the company will have generated more cash than what they had prior to the special dividend. Why not do something with this? Yeah, yeah...a $30B stock buyback over 4 years. Big deal. How about using that $30B program in years 1 and 2? Then, double the dividend and continue to buyback stock at an accelerating pace? "

Agree. Mgt touting the $30B/4 years as confidence in the stock is total bs. If they had confidence in the stock, they would have made the buyback immediate. Instead, they choose to make the one-time immediate even though it offered nothing to long term holders and actually adversely impacted earnings immediately (via significant charges to protect employees) and for all future periods (via reduced interest). The only people who benefited from that stupidity were traders (who proceded to then dump the stock and bury it in the ground) and Baller/Gates themselves (though the latter gave his to his charity). Mgt is doing the buyback primarily because they were under pressure to do something and knew that while this looked good on the surface, the reality is that most of that buyback will get used up in mitigating further dilution over that period. In other words, most of that $30B is going to executives and employees and not to shareholders. Shareholders should demand that this be addressed via the upfront loading you suggest. They should also demand that the $15B in "strategic" investments also be liquidated and used to immediately buy back stock. MSFT isn't a mutual fund and has no business carrying that much shareholder money in 3rd pty equities. Finally, the dividend should absolutely be increased. At half the market rate for a brutally performing stock, it's a freakin joke. And for those confused by the math, reducing your share count doesn't provide a 1 or 2 Q benefit - it means less shares over which to divide future earnings for all time. Plus, it sends a real message of confidence.

"Here's a suggestion: Instead of Gates unloading 20M shares a quarter, how about a few insider buys? Steve seems to have such a high degree of confidence in the product cycle, how about buying some stock Steve? And, I'm tired of hearing about the diversification strategy as an excuse to sell more stock. Gates effectively paid himself $3B with the special dividend. If the times ahead are so promising, put your billions where your mouth is and show us what a great investment is."

Gates has his charitable commitments so I'll excuse his selling. However, completely agree that the total lack of confidence expressed by MSFT's insiders (they lead the entire market in selling and almost never buy except in neglible amounts) is a major factor. Either these folks are getting way too many shares such that as confident as they are, they feel unloading them at every opp is still the right move. Or else these folks just don't share Steve's optimism - in which case why are these people in the positions they're in getting paid what they're paid? To date, it strikes me as a non-performance performance bonus. I'll take a cadre of possibly less capable but more confident and more committed people any day - and they'll be cheaper. Finally, if Gates and Ballmer want to sell, they should sell to the company. It'll help them monetize more that they can in the open market, it'll reduce their clout and embolden external holder (both good) and will help MSFT's representation in the S&P given the new rules that effectively penalize large insider ownership. Plus, Steve at least thinks he's done a good job with the stock - so he should be happy getting today's price.

"Also, who is in charge of M&A activity at MSFT? Is there too much pride in going out and buying something worthwhile? Christ, look at Oracle lately. Not that I 100% agree with all of the purchases, but at least they're active and trying to put their stake in the ground in the apps business."

Agree again. MSFT has had one of the largest war chests in technology over the past 5 years as IT valuations imploded and what did they do? Virtually nothing. Admittedly, they haven't shown much ability to digest even the smallish acqs they have done (i.e. Bus Sol), but that argues for getting in some outside talent in this area - not ignoring it. The reality is that as poorly managed as Oracle is, their PSFT acq was integrated faster and will be accretive years before MSFT will make a dime off Bus Sol (and the total price tag is approx equaivalent when you factor in the out of pocket costs, R&D and time).

"Speaking of which, why does MSN suck so bad? Everyone talks about how sophisticated the search technology has become, that's great. MediaMetrix tells a slightly different story. I suppose if all this chatter about AOL finally comes together, 1+1 might actually equal 1.75, but that's 3 steps ahead of where they are today."

Yes, MSN isn't blowing my hair back either. I read on this blog how tons of folks think it's the place to be. Are you kidding me? MSN search is still a joke compared to GOOG and ad sales last Q of 22% is good? Except for the fact that the market itself is growing at 50%+. I will say that at least the recent trend is encouraging.

"This whole notion of Google taking over the world, I don't buy into that. They'll stumble sooner or later most likely from their own doing. Either way, MSFT does have the tools to combat Google in my opinion. The question is whether or not they can actually execute now."

Agree and they will stumble eventually. Unfortunately, I'm not a GOOG shareholder and am a MSFT one. At least as a GOOG shareholder, I have good confidence that my stock, having already tripled in a year, will go to $350 (at least) before tanking. When is MSFT just going to stop tanking?

"One last thing. I saw Ballmer gave himself a "pretty good grade". To put this into perspective, if my performance was similar to MSFT's stock price over the past 3-5 years, not only would I not have a job, I'd never be able to find work in the industry again."

Ballmer has a way of interpreting data to fit his conclusion. For example, he likes to relate things to over his tenure, because the 5 year chart on MSFT is approx equal with the 5 yr NAS. Of course, any moron knows that this isn't because it's performance has tracked the exchange but rather because it tanked less initially. For the past 3+ years, it's performance has been an unmitigated disaster on any dimension - vs the indexes, vs the software group, vs its competitors, vs its historical PE -range, etc. Same thing goes for his idiotic reference to profitability increases of 70% over that time. WTF does that matter when everyone knows that earnings (which is all that ultimately matter) have been flat due to legal settlements, charges, etc. Does anyone think those are magically going to end? This is like saying the Titanic voyage would have been a success if you just leave out the iceberg.

everyh because MSFT tanked less during the dotcom meltdown and that for the past 3+ years, it's been a total disaster. I guess the equivalent would be taking the

Anonymous said...

Google... lol. Please. They're just the next RedHat, Novell, Sun, Apple, etc, that won't beat Microsoft. Google can have my PC when they pry it from my cold, dead fingers.

Google's beating Microsoft on the Internet, Apple is beating Microsoft in the digital media market, and Linux is beating Microsoft in the server market. The only thing keeping Windows around is application reliance on Win32 API, because as a desktop interface, Windows is far, far behind and way overcomplicated (requiring several "wizards" as a layer between the user and the difficult interface).

BillG is a business genious. You can't compete with him, so stop trying. If you could, you'd own your own company instead of working for his. And even if you did own your own company, you can't compete with him. The poor bastards who think they're beating BillG at anything simply don't realize he's already 10 moves ahead of them. Ask Jobs. Ask McNeely. Ask Ellison. Hell... ask the U.S. government.

This is ridiculous. Bill and Microsoft aren't 10 steps ahead of anything. Remember the mid-90s panic over the realization of the Internet? What about the panic over Java? How about the lack of innovative features in IE for years that competitors offered for free and gained share? How has Apple one-upped Windows (feature-wise) four times in the past five years while Longhorn has features removed to meet some late 2006 deadline?

MSFT can afford to be behind because of its monopoly power, and this extends to everything it does. IM chatting was around before Messenger...it just got packaged and forced on Windows XP startup via a registry key. Netscape was doing their thing before IE, which suddenly got shipped free with every installation to crush Netscape. Users are still running administrator accounts in 2005...being told to add layers of antispyware, firewall, and antivirus software to feel safe using the Internet. For once, it would be nice for MSFT to be genuinely ahead again (like it was with, say, IE4 or Windows 95).

MSFT isn't 10 steps ahead. It just has really big, expensive boots to run up from behind people and stomp on them! But now its people are joining the other team that actually knows how to run, not stomp.

SteveB... he's our quarterback. Steve can throw the ball 80 yards. You can sit in the stands and critique his play, but you can't compete. Don't bother. If you could, you probably wouldn't be reading this blog, and you certainly wouldn't be posting on it.

This is just getting weird. I don't think Steve is a particularly good "quarterback" at all, unless you count chair-throwing. Explain why the stock's been flat for five years, Longhorn isn't out the door, and employee morale is dropping as top people leave for Google. Sorry, I forgot the Ballmer kool-aid: "Innovation, innovation, innovation, self-criticism, innovation!"

JimAll... he made NT happen here. You don't take someone like DaveC and ship NT. That takes someone like JimAll. You can't compete with JimAll.

Yeah, he's sure doing such a good job getting Longhorn out the door in less than five years. People get degrees in college in less time it's taken to ship this thing. The project has become the illustrative epitome of everything wrong with MSFT.

Office 12's UI is the only spark of creativity I've seen in a quite a long time, but everything else is tail-chasing of OS X, Google, etc...

So... when you guys offer criticism to MSFT, just remember that you're not a player. You're that dude on Monday morning who tells everyone how he would have called the play on 3rd and 7 with 8 minutes left.

The plays are obvious to everyone but the players, it seems. That's why Google is kicking butt and taking names. The Win32 API/Office combo isn't going to carry Microsoft forever...it needs to be hungry again. Creative people want to create new things, not repackage old cashcows to maintain monopoly power, and that's why people are bummed and some are leaving.

Seriously, MSFT had better wake up. Google is making the inevitable reality and using the Internet as its OS, starting its own wi-fi network...wake up, MSFT! Drop shadows and sidebars aren't going to get rid of the Internet...

Anonymous said...

The poor bastards who think they're beating BillG at anything simply don't realize he's already 10 moves ahead of them. Ask Jobs.
Funny. Talk about denial. There was a great quote from someone about BillG, perhaps Robert X. Cringely, that said he figures out where the parade is heading, and then runs out in front. And this was published *before* the internet gaff, which they've never completely recovered from (think Solaris and Oracle and now Linux and BSD), and Java.

As for the poor bastards, Jobs? Give me a break - he's not not even on the same chessboard buddy, he's playing go ever hear of Pixar? iPod? Get the pic?

And many of BillGs enemies now work for Google. It's a competitive world out there, long as the lobbyists and lawyers don't get in the way...

Anonymous said...

So don't go thinking that MSFT is taking that 6.5% off the bottom shelf. Some employees leave and are replaced by slightly more new employees. That is all.

The 6.5% forced attrition number is total BS. It doesn't happen. I have the same experience as a previous poster - I can count the number of people I've seen fired for performance reasons on one hand.

Perhaps you didn't see the Forbes article or you believe it to be a factual error in the article.

What one or two people "see" doesn't really mean much unless it is a statistically significant sample of the 60000 employees working at Microsoft.

http://www.forbes.com/home/technology/2005/09/12/microsoft-management-software_cz_vm_0913microsoft.html

In its days of complacency, IBM had a no-layoff policy. Ballmer, determined not to let deadwood accumulate in Redmond, Wash., lets go of 6.5% of the workforce every year for inadequate performance.

http://businessweek.com/magazine/content/05_39/b3952001.htm?chan=tc

It's not a mass exodus. Microsoft has 60,000 employees, and many of them are undoubtedly happy with their jobs and the company's culture. While Microsoft's annual attrition rate rose one percentage point from fiscal 2003 to 2004, it's still just 9%, a bit lower than the industry average. Microsoft says it receives 45,000 to 60,000 job applications a month, and over 90% of the people offered jobs accept.

Anonymous said...

The poor bastards who think they're beating BillG at anything simply don't realize he's already 10 moves ahead of them. Ask Jobs.

Incidentally, this reminded me of something from a Jobs interview I saw last year, sent to me by a friend at Apple, quoted here because I think it does provide a little insightful commentary regarding the current situation with MSFT, management, and the whole process getting in the way of innovation:

Q: What can we learn from Apple's struggle to innovate during the decade before you returned in 1997?
A: You need a very product-oriented culture, even in a technology company. Lots of companies have tons of great engineers and smart people. But ultimately, there needs to be some gravitational force that pulls it all together. Otherwise, you can get great pieces of technology all floating around the universe. But it doesn't add up to much. That's what was missing at Apple for a while. There were bits and pieces of interesting things floating around, but not that gravitational pull.

People always ask me why did Apple really fail for those years, and it's easy to blame it on certain people or personalities. Certainly, there was some of that. But there's a far more insightful way to think about it. Apple had a monopoly on the graphical user interface for almost 10 years. That's a long time. And how are monopolies lost? Think about it. Some very good product people invent some very good products, and the company achieves a monopoly.

But after that, the product people aren't the ones that drive the company forward anymore. It's the marketing guys or the ones who expand the business into Latin America or whatever. Because what's the point of focusing on making the product even better when the only company you can take business from is yourself?

So a different group of people start to move up. And who usually ends up running the show? The sales guy. John Akers at IBM is the consummate example. Then one day, the monopoly expires for whatever reason. But by then the best product people have left, or they're no longer listened to. And so the company goes through this tumultuous time, and it either survives or it doesn't.

Q: Is this common in the industry?
A: Look at Microsoft -- who's running Microsoft?

Q: Steve Ballmer.
A: Right, the sales guy. Case closed. And that's what happened at Apple, as well.

------

Q: How do you systematize innovation?
A: The system is that there is no system. That doesn't mean we don't have process. Apple is a very disciplined company, and we have great processes. But that's not what it's about. Process makes you more efficient.

But innovation comes from people meeting up in the hallways or calling each other at 10:30 at night with a new idea, or because they realized something that shoots holes in how we've been thinking about a problem. It's ad hoc meetings of six people called by someone who thinks he has figured out the coolest new thing ever and who wants to know what other people think of his idea.

And it comes from saying no to 1,000 things to make sure we don't get on the wrong track or try to do too much. We're always thinking about new markets we could enter, but it's only by saying no that you can concentrate on the things that are really important.

Anonymous said...

Seriously, MSFT had better wake up. Google is making the inevitable reality and using the Internet as its OS, starting its own wi-fi network...wake up, MSFT! Drop shadows and sidebars aren't going to get rid of the Internet...


Yep, once Google gets people to start using their network on the Internet, there won't be a reason to use Windows. People will again start complaining about having Windows pre-installed on machines because that means that are paying extra for it. If they don't need Windows, why pay for it?

Anonymous said...

When a "business genius" is CEO and/or in a major leadership roll in a company and the stock of that company flatlines for five years, they cease to be a business genius and move into the "we were at the right place at the right time back when software was young and we're resting on their laurels (and our monopoly" category. It's not that people at MS don't try to innovate, often they do. And there are some smart folks there. But those people haven't changed much about the company, it's the monopoly that keeps MS in busineess.

Anonymous said...

What are your opinions of Robbie Bach?He seems to be one of microsoft's more competent executives.

Anonymous said...

Wow, Steve Jobs nailed the situation at Microsoft perfectly. Thanks to whomever posted that interview.

Anonymous said...

(disclaimer: I work at MSFT in Redmond)

Yes, Microsoft is top-down heavy, but the company has strong-willed and respected leaders in KJ, Jeff and Robbie: it makes sense as it gives SteveB fewer direct reports, puts more responsibility in the president's hands. Bill and Steve clearly want the company to evolve, really put the next set of leaders in key roles, ones that have and will do a good job of stewarding the company in the future. I think that Microsoft is becoming more like GE every day, with internal adoption of Six Sigma, continuous improvement and a focus on excellence across the board in sales and marketing, products, engineering, systems and operations. To quote an earlier post, this move is akin to Bill's '95 internet revelation: this has the chance to be a real management renaissance in the company.

We still have silos, and we will still have difficulty in communicating across groups and lots of other issues. But by Steve's own definition (in his Businessweek article), 94% of our employees are some of the best in the business, and the bulk of them are happy at the company. Usually the most dissatisfied are the most vocal: when was the last time as a cable customer you called your provider to tell them that you were thrilled by their service? I'll venture to guess never. But if the picture on your TV starts to get fuzzy? I'm on the phone with Comcast. The same is true with employees: lots of really happy and productive employees don't come out with really positive stories, that doesn't sell magazines.

Anonymous said...

(disclaimer: I work at MSFT in Redmond)

Thanks for checking in, SteveB. You can go have some milk and cookies now.

Anonymous said...

The "10 steps ahead" thing got me thinking, what exactly is the deal with Microsoft R&D? You always hear how much MS is spending on R&D and how important it is but when all is said and done, I've never seen anything useful come out of there.

The only innovation I've ever seen is from the actual product teams.

Anonymous said...

I think Robbie Bach should stop posting questions like "What are your opinions of Robbie Bach?He seems to be one of microsoft's more competent executives." to blogs and get back to effin' work!

Anonymous said...

Microsoft feels like Digital Equipment Corporation circa 1994.

Anonymous said...

"Thanks for checking in, SteveB. You can go have some milk and cookies now."

im not steve anyone who knows me knows i dont use punctuation or capitals and typ wth two finggers

Anonymous said...

I agree, Steve Jobs nailed it, and his analysis reminds me of the business advice in The Dilbert Principle. You have to avoid "one-off" work, where it isn't totally obvious how the work improves a product. Just by following this rule of thumb, we could eliminate half of our "platforms" and "technologies" and "strategies" and simply produce better software. Personally, the only way to justify my team's work is with half an hour of vague handwaving from PM.

Anonymous said...

"Last week, or last weekend, was not - it wasn't my most fun time of my twenty-five years at Microsoft."

Gee, I'm sorry to hear that Steve had a bad week. Perhaps he has some idea now how his shareholders have felt for over 5 years. Maybe the unpleasant light of reality will cause him to finally question current directions and make substantive changes where appropriate.

"But at the same time, what did it say to me? Okay, for the first time in twenty-five years, all of the discussions we've had internally, about how we go be better, now the press wants to kibitz on. That's okay. As long as we do what we do best. We go out, as we keep improving. Just keep improving. Driving harder. And when we look back, a year from now, after this incredible pipeline has come to market [...] we'll be in a very different spot. [...] Do we have a corporate culture problem? No."

Of course, there's always the learn nothing from it and simply increase the speed despite your downward trajectory approach...

Appropriately, the word verification string for this post begins with KY - which is what shareholders need to make what mgt continues to do to them less unpleasant.

Anonymous said...

Sooner or later all successful start-ups turn into 'banks'. After 30 years and with US$38bn in cash Microsoft is no exception.

I am going to make some controversial statements as I think the 'discussion' above is rather one-sided.

Did you really - honestly - think working for a company with 57,000 employees would somehow be entrepreneurial and entitle you to entrepreneurial pay-offs?

Why not just quit if you don't like your job. If enough people do, Microsoft will become Mini again. Problem solved. If you are waiting for Ballmer to fire the guys around you and enable you to profit from it, you are simply greedy.

As for Mr 'institutional investor': I rather doubt your investment acumen if you berate Steve Ballmer on the basis of MSFT's share price since 2000.

Maybe you were too busy making all those 'huge' trades at the time but the MSFT stock was trading at bubble levels of over 50 times earnings five years ago. If you would have been in the investment business (or even out of college) in the early 1990s, you would have remembered that MSFT typically traded around a p/e of 20, as is does now, in fact.

MSFT's earnings have actually increased by close to 40% since 2000 , while the S&P 500 is down by more than 15% since Sep-00. I somehow doubt you have a better track record than Ballmer. Don't be shifting blame for sub-par stockpicking on the company CEO. Credit where credit is due.

Anonymous said...

I have a couple of questions:

1.Why do people idolize Steve Jobs yet criticize Bill Gates?Whose company makes more money?

2.For all you nerds who care about making 'cool technology' why in the hell do you work at microsoft in the first place?Microsoft is in the business of making money not 'cool products'.Why dont you geeks go work for Apple or Google if you love them so much?

Anonymous said...

I am going to make some controversial statements as I think the 'discussion' above is rather one-sided.

You know, if the internal "discussions" at this company weren't always so one sided and people were allowed to express themselves openly, these "one-sided" discussions on blogs wouldn't be so one sided. The fact is that people who express doubt internally are cast with a very suspicious and calculating eye, even if those people are attempting to do what is right for the customer.

Anonymous said...

MBS is finally going to be responsible to Office. Great. Maybe they'll ship some product.

MBS has been shipping products, just not any products that are being developed in Redmond.

Office 12 is a huge shift in the Office paradigm. I hope it sells.

O12 is really not that great. Replace several toolbars with a big giant toolbar. Oh yea, don't forget the MacBU actually came up with the idea.

Another poster alluded to the MBS VAR channel being killed off by Raikes and that implementing Dynamics in 2007 would be as easy as Project. Must be some good weed if you think this will happen.

Enterprises like to have their hands held by someone. Nobody in at MSFT is going to help them out. IBM, SAP and Oracle have this figured out, MSFT doesn't. VARs hold the customer's hand, they coach, they coddle, they do all the shit work that MSFT doesn't want to do. Think MSFT can do without them, think again.

MBS has shit for growth because managment doesn't understand the model. They also think that technology will solve any problem. Technology doesn't solve a business problems, people do and products that cater to people.

scoobydothree@yahoo.com said...

I am a little surprised that this Blog is focused so much on personnel matters, and so little on strategic matters.

I don't think it can be said that Mr. Ballmer has done a good job as CEO. The CEO's first job is allocation of capital; it's not process. And in that task he's failed.

While MSFT earned very low single digit returns on cash since 2000, Ebay (plus PayPal), Yahoo, and Google emerged as major players, with novel business plans; frankly Microsoft could have bought or copied all three much earlier, without monopoly issues.

Moreover, it's long been said that applications would move on-line, a la salesforce.com; yet it appears--correctly?--that Google is going to beat Microsoft to the punch in this regard. This is Microsoft's core business--how can this happen?

So, yes, those who point to MSFT's stock stagnation as evidence of Mr. Ballmer's failure are dead right: by focusing excessively on process and investing in pointless ventures like XBox, but failing to address the online threat to MSFT's core business, it seems that he's failed spectacularly to allocate capital. The market price reflects that failure--and the fear of worse to come.

What I don't understand--and perhaps for the reason that I'm flat out wrong--is why the posters on this board are not more concerned with the strategic threats. Namely:

With Google building out an enormous network, isn't it likely that they will offer applications, perhaps supported by ads, securely over the internet, thus making Office and even Windows redundant? This was long Sun's dream, but they couldn't figure out how to market it or profit from it. But it SEEMS now eminently possible. Yet I detect no urgency from those on this board, who are focused on pay levels and ship-dates.

Is there nothing to fear?

Second, I would like to ask why there isn't anyone who sees MSN as a marketing dud. After all it does many of the same functions as Yahoo and it now has an adequate search engine, though no Froogle; but many prefer othe sites. I think the trouble lies in the layout, the name, and the style of the site. MSN seems to have missed the design revolution; comparing it with other sites is like the comparison of Walmart and Target, or J.C. Penney and Urban Outfitters. But isn't anyone paying attention?

Maybe you guys are in too many businesses. Or maybe the qualities that made MSFT a great success in the 80s and 90s, just aren't working now, and the company is destined to do a long, slow burn.

As important as navel-gazing is, it would be nice if a few posters might address these major issues.

Anonymous said...

I don't think they are in too many businesses, the management just doesn't know what to do with them.

The state of the stock price is the result of decisions made 5 years ago. The stock price 5 years from now will be the result of the decisions they are making today.

Anonymous said...

I can't speak for other groups, but life is great in Xbox. I'm happy to work with such an extremely sharp team and there are few employees I'd consider us better off without.

MarkL's parting comments about Microsoft's inability to ship software were unfortunate. Perhaps an internal change to a faster-paced group would have changed things.

In addition to the game console and Xbox Live service updates, the Xbox group ships software releases with lots of new features and tools to game developers every month. This schedule forces projects to get completed fast. Individual contributions have high visibility and it's a great feeling to get thank-yous back from game developers you respect.

Management has encouraged and supported employee side projects, many of which have shipped through official channels. Often, one person will get a feature/tool up and running quickly. Getting high-quality code to customers as soon as possible is the priority, not building a fat hierarchy to check off boxes and reword status reports to other managers.

Anonymous said...

"The state of the stock price is the result of decisions made 5 years ago. The stock price 5 years from now will be the result of the decisions they are making today."

Let's assume you're right. The people making the key decisions today are, for the most part, the exact same people who made the decisions 5 years ago. So, unless they've suddenly gotten smarter, there's good reason to think that their decisions now will be no wiser than those then. Given that the stock is down 50% over the past 5 years, I guess the logical conclusion is short the stock?

Anonymous said...

"Maybe you were too busy making all those 'huge' trades at the time but the MSFT stock was trading at bubble levels of over 50 times earnings five years ago. If you would have been in the investment business (or even out of college) in the early 1990s, you would have remembered that MSFT typically traded around a p/e of 20, as is does now, in fact."

Can't speak for that poster. But would point out that:

1) Everyone was trading at bubble levels in 00
2) MSFT actually traded lower than most then because concerns about the anti-trust trial were already taking a toll
3) None of this explains MSFT relative underperformance since vs the software sector, serveral of its key competitors or the indexes - esp in the past 3 years.
4) The "e" in MSFT's current P/E has been massively hampered by both emerging "investments" and various "one-time" charges. So comparing the P/E now to then and saying they are equivalent isn't really accurate.
5) MSFT's cash and cash generation currently is much larger.

Bottom line, MSFT now commands one of the lowest P/E's in its history. Its P/E is far below the software index average and if you substract its large cash pile, even below that of the S&P average. It has badly lagged all major indexes and virtually all competitors for going on 3 years.

"MSFT's earnings have actually increased by close to 40% since 2000 , while the S&P 500 is down by more than 15% since Sep-00. I somehow doubt you have a better track record than Ballmer. Don't be shifting blame for sub-par stockpicking on the company CEO. Credit where credit is due."

More like 30% and only because of the acceleration over last year - which was actually lower than in 00. Meanwhile, Sales have risen 70%. In other words, in addition to being flat to negative for much of 00-04, even with last year's acceleration, earnings haven't even come close to tracking revenue. Re how that compares to the S&P, effectively meaningless since most other S&P companies aren't blessed with one monopoly far less two, amazing margins afforded by those monopolies and a huge cash stockpile with which to buy anyone or anything they need to succeed. Plus, most people compare company's on their YOY comps not them vs the broad industry. But while we're on the subject, note that even those less effective S&P entities on avg (as measured by the SPY's) have actually matched MSFT over 5 years and beaten it by 40% over the past 3. What does that say about the story (if like me you think the story is poor) or (if like you, you think it's great) Ballmer's ability to tell it to the street? Bottom line, MSFT's stock is a multi-year disaster with a basis in both real operating concerns (poor earnings growth, poor overall growth, continued massive losses from emerging bets, continued massive fines and legal settlements, etc) and declining street confidence in the future. Ballmer's job is to enhance both. He's failed. May be a great guy. May be a very capable guy. May be an idiot. Doesn't matter. The results speak for themselves and the street has made their opinion clear for years now. Perhaps you noticed their latest vote of non-confidence over the past 10 days as MSFT has shed 10%+ despite already lagging the index ytd(again) and is now (again) threatening its lows? By the way, what's with your and Ballmer's apparent inability to accurately read a stock chart anyway? Are you getting the X and Y axis confused by chance? Looking at them upside down? Let me save you the learning curve: this stock has been a grossly underperforming DOG vs even the indexes for more than 3 YEARS. If the index is the average and you underperform it badly for years, in most walks of like that's considered failure. At MSFT itself, even being rated average (3.0) repeatedly is cause for termination. But hey, when your the SLT or Ballmer himself, multi-year below average performance is simply an inabillity to take a long enough timeframe. Hey MSFT employees, try this on your next review "Hey, I know I've been a 2.5 for the past 3 years in a row (of course you wouldn't be there but work with me here - I'm even being generous with the 2.5), but if you average my performance out over 5 years, you'll see that I'm really a 3.0 on average"

Anonymous said...

MBS’s problem is not around shipping. They ship too much stuff!! They need to consolidate.

Office BCM/SBA – smart move and great team. V1 is winning reviews even against an entrenched competitor like Inuit/QB!! Now let’s hope it sells.

CRM V1.2 was a crap product (that btw CRM new license revenue is more than all those crap ERP products we bought for billions of $). V3 is a huge/huge improvement. And their developer story that I saw at PDC was actually quite cool.

ERP is the real abortion – multiple code bases, multiple sites, dysfunctional leadership!! They have a bunch of non technical GMs and directors who are even more clueless. Marketing team is simply missing or doing stupid stuff like re-branding. The bet is on Axapta. If they can figure out how to ship 4.0 next year and get the guys in all their sites to stop fighting and work on one product line – they have some hope. If not all those acquisitions should be spun off!!

I have heard that MBF is being bought back to MBS. This will be a real disaster. For all the screwed up things in MBS……MBF beats them all in terms of being a cluster fuck!! These guys have not shipped anything in 5 years!! Talk about adding “shipping veterans” to MBS. DarrenL is the last guy MBS needs!!

Anonymous said...

Re MSN: As an MSN refugee, I can attest that it's not a great place to be. VPs who have a bit of vision, but horrible management skills, all governed by back-room politics. A real shake-up of the execs there would be a great sign that the company is serious about change.

IMO, the biggest general issue is the lack of turnover in the upper-middle management -- people with PUM, GM or VP (not SVP, etc.) titles. It's had two affects: stagnation and complacency. When I joined the company in the mid-90s, there was more natural turnover.
This created a healthy degree of opportunity for the next tier of leaders and a regular change of ideas. Sure, that had its downsides at times, but it created a more dynamic environment and a real sense of opportunity.

I also agree with some of the comments about the overall quality of management and the shift from engineer-managers to just managers. Bright engineers, but shitty managers, at least had something else to do in the company. Bring in average managers and they get trapped in their current roles, as the person who hired them is long gone and they can't/won't find another job because they are just not that good.

I've had the luxury of working for some great managers at Microsoft; people who I'd work for in a heartbeat again. However, that was years ago and sadly, while I've looked for that same caliber of talent, it's increasingly hard to find. As a junior person, you really only had to worry about your lead & their boss. As you move up in the ranks, you're worrying about PUMs, GMs and VPs. Finding a good line of those is increasingly tough.

I'm still at Microsoft and I get good ratings and OK pay. But, my exit clock has started. I'm tired of the bickering and the in-fighting. If we put half the energy we use to posture internally into delivering great customer value, we would deliver amazing products. It's the noise of the bureucracy that's starting to wear on me and many of my peers.

Anonymous said...

I worked for Microsoft for 15 years, and left a month ago, because of all the stuff that has been written in this blog - bureaucracy, useless level of management, product integration deadlock and so on.

Seeing JimAll leaving and being replaced by a salesman, just reensure me that I did the right thing.

Despite the criticism I see in the comments about JimAll, I have a lot of respect for the guy. He was actually the last manager who understands what software is. All the others are managers (bad for the most part) who could sell shoes or car insurance equally.

Meetings with Jim were always uplifting and very energyzing. Mails from Jim were always to the point, precise and actionable. Unlike mails from other execs - like Brian, Soma, BobMu and the rest writing 3-4 pages of insipid stuff, with no action items, and full of 'I am super excited....' BS.

I for my part am missing JimAll and wish him best of luck.

Anonymous said...

"It is a company that delivers - love it or hate it - give it its due."

That's a good one. Kind of like MCArthur's "I shall return"? Give em an event or give em a date but never both. MSFT delivers? As in what - Vista? 5 years for SQL? 2 years for CRM? Stock performance? Customer satisfaction? Bus Sol "will be $10B by the end of the decade"? Trustworthy computing? MSN search will beat GOOG? The emerging business units will be profitable? Xbox will win in Japan? Innovation? Stop it...my stiches...

Anonymous said...

Why do people idolize Steve Jobs yet criticize Bill Gates?Whose company makes more money?

If money is your criterion, then sure, Gates and the Sultan of Brunei are f*ing brilliant. By any other measure, Jobs makes Gates look like a one dimensional moron. And the money race isn't over yet.

Read some of Jobs' interviews. The man actually has interesting and substantive things to say. Then read an interview with Bill - nothing but platitudes and BS.

I work at MSFT, and I'd swap Gates and Ballmer for Steve Jobs in a second.

Imagine that - Steve Jobs as our new CEO. That would get me excited about the company again.

Anonymous said...

Maybe it's a little bit out of the context but I had an interview with MS today. And after it I'm glad it's over and I'm actually going to cancel another two waiting for me in a queue.
At least - one thing is pretty clear to me - I don't want to work for MS anymore.

Anonymous said...

Despite the criticism I see in the comments about JimAll, I have a lot of respect for the guy. He was actually the last manager who understands what software is. All the others are managers (bad for the most part) who could sell shoes or car insurance equally.

Wowza, your so wrong it almost hurts to read your post.

First, I'm sorry, but a good manager's job is to allocate resources in a way that gets good products out the door on time. Allchin's done none of that, every project he's presided over has been late and lacking most of the promised features. For gods sakes, he promised WinFS in Cairo at the beginning of his MS career and now he's set to retire having not delivered it.

As for technical skills, this will be Allchin's lasting legacy and Microsoft and it isn't a good one. He's the one who advocated isolationism, pulling IE for other platforms, fighting every internet objective tooth and nail. The Silverberg contingent had something akin to the .net framework on the drawing board in 1998 and Allchin killed it.

At the same time he continued to pimp Win32 as the be-all-end-all way beyond the point where everyone knew that wasn't true.

Why you'd have any respect for the man is beyond me.

Anonymous said...

Imagine that - Steve Jobs as our new CEO. That would get me excited about the company again.

That is, until you run into him in an elevator, don't answer his questions correctly, and he asks you "What did you use to do here?"

I have MANY stories from friends and acquaintances about Apple being a dysfunctional and political workplace- they d,o some good work IN SPITE of that, because they have enough talented people and Steve is prefectly willing to go tell people to go pee up a rope and say "No" to things like backwards comatibility and enterprise penetration because they aren't core competencies, not because the employees are all singing Kumbaya. Apple is no paradise to work with- they regularly take dumps on their developers ("Surprise! We're switching processors in 12 months! You longtime ISV's in the middle of a development cycle just got handed extra work!"), resellers ("Oh, yeah, you noticed we shipped those iPod nanos to the Apple Stores first? Too bad.") and orphan technologies after you drink the KoolAid (Spotlight represents the THIRD search API they've had in the last few years).

Steve's a genius artist, but he's as tempremental and bitchy as BillG or SteveB. He's on a hot streak with the iPod, the industrial design is legendary, (there's a reason why Apple is referred to as "R&D South") and their OS group has had their stuff together for a while, but he's not THAT far removed from the G4 Cube or NeXT- and thinking that he'd be the solution to MSFT's malaise is silly.

msnblue said...

The poor bastards who think they're beating BillG at anything simply don't realize he's already 10 moves ahead of them. Ask Jobs. Ask McNeely. Ask Ellison. Hell... ask the U.S. government.

This is, no doubt, a proven fact. That's why Microsoft was always leading the way because BillG is always 10 moves ahead. That's why he saw the internet potential first, not Netscape.
That's why he led the digital music revolution, not Apple.
That's why he figured out search and the ads business model not Google.
He is definitely always 10 moves ahead.

Anonymous said...

WTF – MBF moving back to MBS??? No wonder we are screwed up. This is a team that should have been disbanded 4 years ago!! I can’t believe Rudder did nothing with them. Please tell me this is not true. I actually like working in MBS. Yes there is confusion in ERP space with multiple product lines – but at least I get to work on some new stuff and learn vs doing the same old stuff in Windows or Office!! But if MBF comes back just as we may be painfully turning the corner…. I may have to really think about what I do next.

Anonymous said...

Here's the full Steve Jobs interview:
http://www.businessweek.com/bwdaily/dnflash/oct2004/nf20041012_4018_db083.htm

fCh said...

Jim Brinton, the former DEC employee, could you tell us what you were doing there? Hardware, software, SE...

Probably, you should inform some that one of the biggest problems DEC got itself into was coming out with a processor so wonderful that it was much faster than any memory on the market! If memory helps me well, this mishap was fatal to DEC, or put it into the (saviour) hands of Compaq.

SGI was another example of fine company up to a point... Sun almost got itself into a similarly tight corner. Now, it seems to see the light of day again, or at least is trying...

SGI and Sun are very similar to DEC, yet some make it others don't.

Anonymous said...

Some of you software nerds need to take some marketing classes.Success in the marketplace is not always about pioneering new markets and products.Letting other other companies to spend all their money on R&D and afterwards taking over the market with superior marketing,pricing and distribution is smart business.

Gates IS 10 steps ahead of everyone in that regard.Think about it.

Anonymous said...

First, I'm sorry, but a good manager's job is to allocate resources in a way that gets good products out the door on time.
For gods sakes, he promised WinFS in Cairo at the beginning of his MS career and now he's set to retire having not delivered it.

I give you that Jim is not perfect and made several mistakes -- more in the management side of things than on the technical side.
However, WinFS is Bill's fiasco, and not Jim's. Bill has been the one pushing hard for this since 95, and still is.
Unfortunately, we know where it stands...


The Silverberg contingent had something akin to the .net framework on the drawing board in 1998 and Allchin killed it.

First I love .net and I am sure it will become a great success and be widely used. However if .net is not where people think it should have been by now (replacing native code), this is definitely not Jim's fault, but the .net guys. There are still so many issues that have to be addressed before we can replace the old win32 api, that the conservative approach of Jim was the exact right thing to do.

Anonymous said...

The poor bastards who think they're beating BillG at anything simply don't realize he's already 10 moves ahead of them. Ask Jobs. Ask McNeely. Ask Ellison. Hell... ask the U.S. government.

So true.

Gates was selling GUI operating systems long before Jobs introduced the Mac.

And let's not forget all the Windows CE handhelds that Gates sold before Apple started copying him with the Newton.

Java? Nothing but a cheap imitation of Gates' ground-breaking C# language.

Unix shell? Gates did it first with DOS.

After Gates invented Media Player, he sure must have felt betrayed when one of his own employees started Real Networks based on his concept.

It's just shameful the way everyone keeps trying to cash in on Gates' best ideas.

Anonymous said...

I have not read all the comments, but thought I'd throw in my 2 cents. I am very pleased to learn that Microsoft is becoming more of a vertical org, NOT! I am also pleased to learn that MSN and Windows will be run as a single division, NOT! (MSN delivers the most useless software in the whole company -- no value add whatsoever -- so now that MSN and Windows will be the same org, maybe we can make Windows.Next filled with even more junk than before -- not that I think much of the Vista which IMO is just XPSP3). And last but definately not least, I am super glad to learn that this org will be run by a guy from Walmart, NOT! Sheesh!

Anonymous said...

Apple beat Microsoft to the iPod! OMG we're all doomed!

They beat us to the iPod like Palm beat us to palmtops, like Novell beat us to file servers, like Netscape beat us to the web, like Sony beat us to the gaming console, like Google beat us to "Search", like Sun beat us to the workstation, and like IBM beat us to the mainframe.

Enjoy it while it lasts.

10 steps ahead means we were jamming a full PC into your pocket in 1999, knowing that it's going to take a decade before it's small enough.

10 steps ahead means we're focused on taking the entire living room while Google is still fucking around with "the web *is* the computer". Scott McNeely called. He wants his idea back.

10 steps ahead means BillG kept his shares, while Jobs sold his.

But whatever guys. I'm going back to work tomorrow to kick ass. What you do with your time is up to you.

Anonymous said...

However if .net is not where people think it should have been by now (replacing native code), this is definitely not Jim's fault, but the .net guys. There are still so many issues that have to be addressed before we can replace the old win32 api, that the conservative approach of Jim was the exact right thing to do.

The blame lies with whomever thought it was a good idea to replace all the Win32 APIs with .NET in the first place. I don't know who that was, but all the emails I saw trumpeting this plan were from Jim.

It was pretty obvious to everyone in devdiv that this was insane for many reasons, least of which was the readiness of .NET.

mini.dmd.org said...

Wow.

WOW.

My months of leaking emails to the Guardian (around anal-retentive policies concerning petty hate crimes on campus) pail in comparison to this.

That was passive/aggressive - this is possible progress.

MiniMS - I dedicate my adventure to you... More to come...
http://wsp2006.blogspot.com/

Anonymous said...

like Google beat us to "Search"

Actually, MSN has been in the "search" business since before Google existed. Google beat us to "find".

You might say Google beat us by taken the MSN search concept, doing a much better job of execution, and figuring out a superior business strategy.

Story sound familiar?

Anonymous said...

10 steps ahead means BillG kept his shares, while Jobs sold his.


10 steps ahead means BillG dumps his shares as fast as he can before everyone realizes that MSFT isn't going to see 30 ever again.

Anonymous said...

The Silverberg contingent had something akin to the .net framework on the drawing board in 1998 and Allchin killed it.

First I love .net and I am sure it will become a great success and be widely used. However if .net is not where people think it should have been by now (replacing native code), this is definitely not Jim's fault, but the .net guys. There are still so many issues that have to be addressed before we can replace the old win32 api, that the conservative approach of Jim was the exact right thing to do.


Well, but see that's the problem, the "conservative approach" is corporate speak for "kill innovation".

Microsoft could have been Java before Sun created it or Google before it existed but instead jimall resisted it all until he was forced to play catch up because the world had clearly passed him by. Now, the company is trying to create the same products advocated in 1998 but playing catchup because they wouldn't let their employees innovate and lead

This isn't just him but the whole upper management team, they started the software industry in a big way and deserve credit for that but they just don't understand how things work anymore. They think shrink-wrapped software is still the future and its not.

Put it this way, I quit 4 years ago and at the time I couldn't imagine thing getting any worse. But every benchmark I have (this blog, friends still in the company, etc...) indicates that it has. Be happy jimall is gone and, if I were you, I'd hope that BillG and SteveB aren't too far behind.

Anonymous said...

"I can't speak for other groups, but life is great in Xbox. I'm happy to work with such an extremely sharp team and there are few employees I'd consider us better off without."

I guess if you're allowed to lose over $4B that will likely never be recouped and go four years w/o even beginning to turn a profit, life is grand indeed. As a fellow human being, I'm happy that you're happy. As a shareholder, I just have to ask myself why I'm underwriting it?

Anonymous said...

Why do people idolize Steve Jobs yet criticize Bill Gates?Whose company makes more money?

Who has the higher stock price?

Microsoft may make more money annually, but that's because of a monopoly on the commodity PC platform and the Office doc format. Regardless of what you think about Jobs, Apple's the one the press talks about, who puts out the cool features that end up in competitors' products. "R&D South," anyone? Nobody's putting Microsoft stickers on their cars. Jobs gets idolized because he cares solely about making "the best of the best" (up to his and Jonathan Ive's anal retentive standards). That spark of energy is clearly not as prevalent at MSFT right now.

Apple beat Microsoft to the iPod! OMG we're all doomed!

Well, it's killing off WMA. It's a question of control over the platform of digital media. All Jobs has to do is sell H.264 videos through iTunes for playing on a video iPod, and VC-1 will be dead in the water overnight.

They beat us to the iPod like Palm beat us to palmtops, like Novell beat us to file servers, like Netscape beat us to the web, like Sony beat us to the gaming console, like Google beat us to "Search", like Sun beat us to the workstation, and like IBM beat us to the mainframe.

Where is MSFT's iPod killer (BillG promises one every six months)? Playstation is still over 70% of the market, and X-box has yet to turn a profit. And Google IS beating MSFT in search. Actually, now that I re-read your paragraph, I'm not sure what point you were trying to convey. In the last five years, MSFT hasn't been able to beat Google, Sony, or iPod like they did those older companies you mention.

You can't reference the glory of the 90s whenever the company fails at something, or you will continue to fail. The company can't just sit on memories of the past and its PC monopoly and expect to survive as the top player.

10 steps ahead means we're focused on taking the entire living room while Google is still fucking around with "the web *is* the computer". Scott McNeely called. He wants his idea back.

But people are flocking to the Google stuff! Google has actual released products, while what you have is mocking and references to the go-go 90s. That's not a good place to be in. Go ahead and try to take the living room and ignore the Internet (again). Once Google has the PC, they'll have everything else. They're a freaking verb already.

The Windows/Office combo won't last forever. Wake up, MSFT! You should have been writing your online Office suite three years ago.

Anonymous said...

I have MANY stories from friends and acquaintances about Apple being a dysfunctional and political workplace

I don't know, I've heard that Jobs has calmed down since he came back to Apple, and especially after his cancer surgery, and that Apple is a "dream job." There are plenty of Apple employee blogs out there (they're just not as vocal about their employers, to avoid the hounding of the rabid Mac rumor community). Surely, it's no less dysfunctional and political than MSFT.

Apple is no paradise to work with- they regularly take dumps on their developers ("Surprise! We're switching processors in 12 months! You longtime ISV's in the middle of a development cycle just got handed extra work!")

To be fair, OS X on x86 wasn't exactly a well-kept secret the past five years, at least among higher-ups of the important companies like Adobe.

("Oh, yeah, you noticed we shipped those iPod nanos to the Apple Stores first? Too bad.")

I think that's an obvious given.

and orphan technologies after you drink the KoolAid (Spotlight represents the THIRD search API they've had in the last few years).

What makes you think Spotlight will be orphaned next year? Just curious. Spotlight is part of their current "make everything on the desktop seem like iTunes" philosophy.

Steve's a genius artist, but he's as tempremental and bitchy as BillG or SteveB.

True, but those personalities are what shape their respective companies. I think BillG has gotten less interesting lately (most of his yearly industry predictions never come true), and SteveB, well, I think he was better serving the company when he wasn't CEO. At least Jobs is interesting to listen to and makes you excited about things. I remember when BillG was like that.

He's on a hot streak with the iPod, the industrial design is legendary, (there's a reason why Apple is referred to as "R&D South") and their OS group has had their stuff together for a while, but he's not THAT far removed from the G4 Cube or NeXT- and thinking that he'd be the solution to MSFT's malaise is silly.

Just different clashing cultures between companies, due to the demeanors of their famous CEOs. But Jobs is certainly an interesting fantasy shake-up. However, I think most of Apple's successes come from being smaller and more hungry. Jobs at Microsoft would stomp all over the place and slash a TON of fat there and piss everybody off. Which is, of course, what the company needs, but hey. :)

Anonymous said...

Apple is no paradise to work with- they regularly take dumps on their developers ("Surprise! We're switching processors in 12 months! You longtime ISV's in the middle of a development cycle just got handed extra work!")

surely you haven't forgotten the Visual Fred debacle :) MS can be just as crummy when it comes to playing switcheroo on developers, all in the pursuit of the .NET marketing buzzword (which thankfully faded away...)

Anonymous said...

"Read some of Jobs' interviews. The man actually has interesting and substantive things to say. Then read an interview with Bill - nothing but platitudes and BS.

I work at MSFT, and I'd swap Gates and Ballmer for Steve Jobs in a second. "

Agree. Talk about lack of innovation/inspriration, Gates still kicks off almost every presentation with the same "hardware innovation" slide he's been using for the past two decades. Jobs may also be a prima dona and an asshole to work with but he understands one thing that Gates still doesn't - the days of using customers as beta testers and getting paid for it are over. From now on, especially with a maturing market, the person who wins is the one who thrills customers by providing innovative technology and/or things that appeal to people emotionally - not marginal upgrades consisting mostly of bug fixes that have the emotional resonance of dental floss.

Anonymous said...

I've been with MS for 11 years now. I've worked on some of highest profile projects throughout my career. Yes, I've seen a dramatic increase in in-fighting and cross-divisional conflict. Many people seem to think that stirring the political pot and jostling up the management chain is a substitute for shipping quality products. I don't see things that way. My primary aim is to ship great technology that the world actually uses. Even after the cynicism bred by 11 years of market changes, government intrusion, management screw-ups, and nimble competition, I still believe that MS is the best place in the world for a technically-minded person to work.

Here's a free piece of unsolicited advice. It's not enough to despise incompetence and political posturing which stand in the way of shipping great products. You have to do something about it. I can't count the number of times that management has tried to sell some new brand of BS that everyone with half a brain knows is complete nonsense. Sometimes, you have to make a deal with the devil. Understand the politics. Understand where the power lies. Move the chess pieces around the board to check idiots. I've used the influence of stronger groups to reorient my management to coherent reality. They had no idea that I was involved. But, nonetheless, I've dragged them kicking and screaming to adopt solutions which actually address customer requirements. Sometimes, all of this maneuvering makes me feel dirty. Like I need a shower all the time. I feel like Othello's Iago. But it works.

Of course, some of you will no doubt ask, "How can you be sure that you're doing the right thing? That you're not merely becoming part of the political BS that's slowing this place down?" Simple. I've shipped a lot of great products, and I put my faith in meeting customer needs and building market share, not just making management feel good. At the end of the day, this is the only metric for success.

Don't let idiots control your destiiny. Work around them.

Anonymous said...

"I've shipped a lot of great products, and I put my faith in meeting customer needs and building market share, not just making management feel good. At the end of the day, this is the only metric for success."

What should be concerning to you (and every other reader) is that you percieve these goals as somehow being divergent from mgt's when in fact they are logical ones that any good corporation would seek to reward/pursue. That suggests to me that either there's a major mgt problem, a major comp problem that's rewarding the wrong mgt behaviour, or a major communications/trust problem whereby you incorrectly percieve that mgt doesn't share your same beliefs/goals. All three are unsettling possibilities...

Anonymous said...

What should be concerning to you (and every other reader) is that you percieve these goals as somehow being divergent from mgt's when in fact they are logical ones that any good corporation would seek to reward/pursue. That suggests to me that either there's a major mgt problem, a major comp problem that's rewarding the wrong mgt behaviour, or a major communications/trust problem whereby you incorrectly percieve that mgt doesn't share your same beliefs/goals. All three are unsettling possibilities...

It's a combination of the first two. Management is not effectively demanding accountability from people. When people fail to deliver, nothing happens. The company needs to start defunding and/or firing VPs whose projects fail continually. Incompetent staff need to be pruned from the organization.

Management is being rewarded primarily on the basis of owning technology -- the more, the better. Bill and Steve's "Darwinian Microcosm" used to work pretty well when the company was much smaller but, now, it causes a lot of problems when teams' missions overlap, VPs are jockeying for position, and nobody is cooperating because their priorities are all different.

Anonymous said...

My "interpretive blather" on the 3-way split announcement, as posted to groklaw in an off-topic thread was:

>blockquote<Desparately trying to become a nimble dwarf again, the giant cut himself into three pieces, each one several times bigger than an ordinary man. And then, in order to retain central control, he insisted that all three parts should share the same cerebrum (Ray Ozzie, CTO to hold that position in all three units).

But the part that made me laugh was the thought of Jim Allchin never retiring (waiting until after the release of Vista). I know it won't come to that, but the thought made me chuckle.</blockquote>

Anonymous said...

"I guess if you're allowed to lose over $4B that will likely never be recouped and go four years w/o even beginning to turn a profit, life is grand indeed. As a fellow human being, I'm happy that you're happy. As a shareholder, I just have to ask myself why I'm underwriting it?"

It's definitely a fair concern. Xbox and first-party game studios had an ASAP deadline to get to market and a blank check from Bill and Steve.

You can imagine how the few hardcore gaming enthusiasts around at the time used that blank check.

Even worse, the hardware design didn't cost-reduce well. You know poor decisions have been made when the competition is dropping to sub-$150 price points and your price match results in an instant $120+ loss per console. It's hard to make up that delta in game sales and memory units, the most profitable component, which customers aren't buying (less than 1% attach rate), cannibalized by the free hard disk included in every console.

The first Xbox never had a business plan to make a profit, rather simply to fight marketshare away from Sony, establish a customer base and build relationships with console game software developers.

Considering history, it's going to surprise many when Xbox 360 is profitable in a big way for Microsoft over the next few years. Profitability is a top priority across all aspects of the business. Responsible decisions have been made from the first day of planning to make sure that everything stays on track.

Rest assured, there is a clear understanding that the blank check days are over and responsible decisions are mandatory. We're shareholders too and are working hard towards a day when people will say "The big cash-cows at Microsoft are Windows, Office and Xbox."

Anonymous said...

Enterprises like to have their hands held by someone. Nobody in at MSFT is going to help them out. IBM, SAP and Oracle have this figured out, MSFT doesn't. VARs hold the customer's hand, they coach, they coddle, they do all the shit work that MSFT doesn't want to do. Think MSFT can do without them, think again.

MBS has shit for growth because managment doesn't understand the model. They also think that technology will solve any problem. Technology doesn't solve a business problems, people do and products that cater to people


You are so right - which is part of the reason that I chose to leave after more than 10 years in MBS.

MS is alienating the people who built the business that they paid billions for. People who understand the business, and saw MS as the opportunity for MBS to go to the next level. Instead they're being taken several levels backwards.

Before the acquisition MBS was close to being a truly global company, it was acquired by MS, who is not even close to being global. At it's best, it's multinational, but most of the time it's just an American company with a lot of subsidiaries.

As one of my ex-colleagues said the other day: "they are putting a lot of roadblocks in our way, but in the end we will win" - but the win will be together with SAP, Oracle or one of the other ERP vendors.

Anonymous said...

MBS has been under constant reorg since the summer of 2002, one more year of that won't stop people from leaving ;-)

Anonymous said...

The first Xbox never had a business plan to make a profit, rather simply to fight marketshare away from Sony, establish a customer base and build relationships with console game software developers.

Yes, that's been sufficiently obvious.

Considering history, it's going to surprise many when Xbox 360 is profitable in a big way for Microsoft over the next few years. Profitability is a top priority across all aspects of the business. Responsible decisions have been made from the first day of planning to make sure that everything stays on track.

I'm heartened to hear that although since the original investment is unlikely to ever be recouped, the entire exercise will never produce an overall positive return.

Rest assured, there is a clear understanding that the blank check days are over and responsible decisions are mandatory. We're shareholders too and are working hard towards a day when people will say "The big cash-cows at Microsoft are Windows, Office and Xbox."

Great. I'm more focused on the asinine mgt judgement that allowed so much money to be lost on round one such that the overall exercise can never be profitable no matter how well you folks execute in the future. I'm especially focused on that because each of the emerging bets suffers from similarly faulty logic. If new ventures are unable to provide sufficient ongoing profits to even repay the investment far less generate a healthy ongoing profit and do so in a reasonable timeframe (e.g. 3-5 years - not 5, 10 40, never), then they aren't a good use of [shareholder's] money and shouldn't be undertaken. Business 101 - or actually 001.

Anonymous said...

MS is alienating the people who built the business that they paid billions for. People who understand the business, and saw MS as the opportunity for MBS to go to the next level. Instead they're being taken several levels backwards.

That's because MS didn't really get into CRM and ERP to be the CRM/ERP leader - despite assurances to the contrary. They got into it because they thought it would be a great trojan horse to leverage more Office and other legacy products into the SMORG space. As such, instead of focusing on selling what they paid big dollars for and improving it over time, they've repeatedly introduced confusion and delay (most associated with integrating all the legacy shit they want to drag along), with the result that MBS has been a dismal failure and folks like salesforce.com has eaten MSFT's lunch. Another classic example of how MSFT snr mgt's refusal to see new opps for what they are vs through the glasses of how it impacts Office/Windows/Servers, not only doesn't result in success but actually leads to failure. As the old adage goes, "when all you have is a hammer, everything looks like a nail". Hence the reason MSFT needs new mgt at the very top.

Anonymous said...

Re: Google figuring out how to monetize Internet search.

Dead wrong. Overture did it. Google stole their idea outright, got sued over it, and settled that suit. Overture's now part of Yahoo, which has been a dysfunctional-go-nowhere company for a long time.

Re: Google's rumored global Wi-Fi network.

Neat-o. And they will make money from this how? Charging subscriptions? No thanks, I'll stick with wardriving. Selling devices that access their proprietary network from anywhere? Sounds like AOL-meets-Palm to me.

Targeting advertisements to my precise location? Ah, that's it. But a billboard's just a billboard, whether it appears on the road or on your cellphone. How much extra will advertisers pay? Not one fucking penny. The Web displaces ad revenue from traditional media, it doesn't increase the size of the pie.

I seriously love some of the free stuff Google gives me, and MSN's been an abortion for years, but I can't wait to see all the investors lose their shirts in 2007 or so.

Re: Xbox losses.

This and the Interactive TV debacle were defense against the risk that some other device would become the gateway from the home to the global network (not "Internet"...bear with me here for a sec). They lost $4B but maintained (so far) the two monopolies with their 70%+ profit margins. $4B? What's that, about four months free cash flow from Windows and Office. La de da.

So this time around they get a nice profitable little software business (like Sony). Swell. But better yet, they get a business selling things like music downloads over a dedicated network (Xbox Live) they've been quietly building out for four years.

No, I don't believe that Gates "didn't get" the Internet. Networked computing based on open standards? Old stuff. He fucking hated it becuase he couldn't control it and therefore couldn't see the money in it.

Nothing's changed. Xbox Live is Microsoft's Internet replacement. Notice that the Xbox Live APIs were opened to the PC last year? No, you probably missed that.

Xbox Music Store=iTunes Killer.
Xbox detachable hard drive plus DSP=iPod killer.
Xbox Marketplace=eBay killer?

The last Apple announcement sucked for all but the hardcorest Cult of Macsters. An even smaller iPod? ("But it's really pretty, daddy!") A phone that stores 100 songs? Snore.

Re: sarcasm regarding Gates's innovations.

Actually, there were portable media players that could play Windows Media Audio files on the market BEFORE the first iPod. (And MP3 players back in 1997.) Jobs is just as much of a thief as Gates is, he's just better at design and marketing. (The GUI was invented at Xerox PARC, kids.) Microsoft's monopoly power and brutal understanding of merchandising and willingness to screw its partners are awful hard to keep down.

Re: stock performance. Last three years have sucked rocks. I give them a pass on some of the one-times and legal expenses. Moving from options to grants was necessary for a slower-growth copmany, but expensive. Legal expenses are 90% behind them.

Re: Monday morning quarterbacking

Lotsa fun, though.

Anonymous said...

pffft, reorgs are products of bored bosses, give them a new set of golf clubs and tell them go play instead

Anonymous said...

Re: Google figuring out how to monetize Internet search.

I tend to agree with your thoughts and timing on when the GOOG investor tea party ends. However, imo it goes substantially higher between now and then. More importantly, MSFT still has a long way to go to match their search capability despite years of trying and $B's spent. The various counter-arguments wrt MSFT are also interesting. Agree that the $4B Xbox loss isn't large vs cash flow but still not sure it's been a wise bet, and the .10-.15/share that it and the other emerging businesses have cost EPS, approximates to about $2-$3 of share price foregone every year for the past 3+ assuming a 20X multiple. And while I agree that Xbox may eventually have some strategic merit, other areas like MBS just seem to be a complete fiasco with no let up in sight. To me, that's just plain mismanagement. I also think the struggles and delays across all these units have only added to the concerns about MSFT's ability to manage efficiently and enter new markets. One thing you didn't mention was Vista's delay which is odd given its massive impact. And while you were frank about the stock performance for the past 3 years, imo you were a little quick to give them a pass. For example, the one-time imo was one of the stupidest and least effective uses of cash in corporate history. Indeed, I would challenge anyone to defend it. And the fact that Gates & Ballmer were among the biggest beneficaries (yes they joined us is the resulting massive stock hit and Gates donated the money to his charity but they were able to monetize a ton of cash w/o being seen to sell their stock) has horrible optics. Similarly, touting the 4yr/$30B buyback is really rather disingenuous since a) they spent almost that much buying back stock in the previous 4 years with no reduction in shares outstanding and b) ~75% of this buyback will again be diluted over the 4 years. If they really thought the stock was undervalued, they'd have front-end loaded the $30B. Finally, you have the dividend. Why announce a puny dividend, increase it quite rapidly over the first year, and then (as we learned Friday) stop increasing it despite it being far below market? Either announce a dividend and set a precedent of consistently increasing it at regular intervals or don't bother at all. Finally, what about using that massive cash pile to make larger, smarter, accretive aquisitions? Sure, some are precluded given the monopoly status but not all. What's the point of having that industry-leading leverage if you're not prepared to use it? Even tiny acqs like flickr
would have been home runs from a consumer persective and could have been rolled into MSN and Media Center. Instead, they let Yahoo get it. Or how about inexpensive but out-of-the-box acqs like Transmeta which was going for a song, has a vast inventory of patents wrt low-heat X86 complaint processors and would have given MSFT in-house control over a chipset that in turn could have been used directly for devices (e.g. Xbox) or given away/licensed cheaply to the vast array of PDA/Set top/Mobile/Media Center/etc OEMs that MSFT is interested in courting to the platform? I could go on, but the net net is that I think there have been a number of bad mgt decisions that have contributed to the current mess and I give Ballmer in particular a D-.

Anonymous said...

Web-based platform is the future. And being able to collaborate across your own enterprise will allow for a great dynamic solution for customers. The real target audience of web-based solutions are businesses between $500,000 to $15,000,000.00 gross sales that salesforce.com to oracle do not appeal to.

Nicole Tedesco said...

I am not suprised that most posters to this particular discussion kept their names "anonymous."

I worked at MSFT, at MSN, for one whole year. I hated it. It was the by far the worst job I have ever had in my long (and satisyingly successful) 22 year-long career as an independent business owner, architect, engineer, consultant, documentist, and teacher. Perhaps I am too independant of an individual to ever work directly as an employee for a monster corporation (it was the only time I ever attempted it), and perhaps my comments below are just rantings of a "tainted" individual, but I too feel like this re-org will do nothing to help that company. MSFT reorgs on a regular basis, just as we all do when we simply breathe. The problem is the stifling culture of the company as it is more...

---rant---
...like "Lord Of The Flies" meets "Revenge Of The Nerds," littered with too much over-testosteroned posturing, producing more sycophantism than genuine customer value.
---end of rant---

(Phwew!) Sure, just about any large company will produce such nonsense, as it is almost a rule of human behavior in the large. However, after a few years of reflection, I do feel that Microsoft (especially MSN) was different, and in many respects worse than some of the worst companies I have ever serviced (at least from my perspective). I'm sorry but I just didn't cotten well to:

* Others taking credit for my innovations, or

* Working in an environment where "playing The Game" was far more important than identifying and fixing root problems, or

* Working with people who used layers of arcane acronyms to disguise the fact that they really didn't have anything interesting to say, or use "Microspeak" as an excuse to berate anyone who didn't know what the acronyms meant, or

* Working in an environment where beratement seemed to be a favorite past time (I can't tell you how many times my manager yakked on about how so-and-so didn't "know what [he/she] was talking about" -- once or maybe twice, and he may of had a point, but a regular diet of that just proved to me what a jerk he was as a human being), or

* Debates being "won" more often through behind-the-back debasement or through utter denial of the mere existance of an opposing view than through honest give-and-take and reflection, or

* Being forced to regularly "produce" (for the sake of being "productive") long before the real problems could have been identified in order to be fixed correctly, or

* Being forced to find ways of adding value in places where the value is obviously not needed or wanted, or

* Working in an almost cult-like environment where a significant fraction of sixty-to-seventy thousand people seemed to have utterly convinced themselves that the Real World does indeed work like it does in Microsoft (which is reinforced by an actively-encouraged behavior which instantly belittles one's experiences outside of the company--experience outside of Microsoft "doesn't matter").

...I could go on. Mental stimulation, my ass! I would rather pull out my own finger nails from their roots than to get within a mile of any Redmond campus location again (which limits my forays into Redmond these days and was one of my factors behind my decision to pack up and move across the lake completely and closer to Seattle).

I have had a few people come up to me during my brief tenure there and say, about some MSFT quirk or another, "Maybe that's why we've been so successful, because [insert quirk here] has allowed us to..." Hrumph. All rationalizations. My response was always that MSFT has succeeded in spite of its [in]ability to cost-effectively engineer anything useful. I mean, how much software development has been simply thrown out? How much software has been thrown into the marketplace without ever being used by anyone else in the world other than internal users? (If 9,800 of your 10,000 users are MSFT employees, it does not constitute a success.) MSFT has made it because of the business, legal and marketing accumen at the top of the food chain and not (these days, at least) because of its "great engineering practices."

Don't get me wrong, I did meet a lot of smart and decent human beings there, but when a bird's wings have been clipped there is no way you will ever see that bird fly short of placing it on top of a catapult...

Anonymous said...

Unless things have changed radically since I was last working at MS, they aren't in need of a re-org, what they need is a cultural "adjustment".

When I worked in the UK sub a couple of years ago I was amazed by the way the business units would jealously guard "their" resources and knowledge from other business units. You'd think they were actually competitors in the real world the way things went on. Need to know how something worked? If no-one else in your business unit knew the answer, you'd better hope you could work out how to do it yourself - because it was a certainty that you weren't going to get help from any other unit.

In general I must say I was very impressed by the quality of the majority of the other technical staff, but I found the constant infighting between units at best counterproductive...

I also agree with a previous reply about the way some people tended to try and steal your ideas and make them their own - that seemed to be a US trait mainly though. I learned early on not to discuss anything with my US counterparts until I'd thoroughly discussed it with my managers ;)

Actually maybe the managers thing is something that could be usefully addressed by a re-org - I was a "v-" and I had no less than four MS managers, in addition to my three native company managers. Fewer managers and more actual workers would probably be a good move!

Anonymous said...

"I also agree with a previous reply about the way some people tended to try and steal your ideas and make them their own - that seemed to be a US trait mainly though. I learned early on not to discuss anything with my US counterparts until I'd thoroughly discussed it with my managers ;)"

The US may have perfected it, but it happens everywhere - welcome to life in a bureaucracy.

Anonymous said...

Microsoft needs to flatten the management layers. We have WAY more managers than engineers.

Microsoft has 64131 employees.

26088 (40%) are managers (Program Managers not included here).
15895 (25%) are engineers (Leads not included here, they're included in the manager's bucket)
6029 (9%) PMs
3077 (5%) Executives, Directors, Presidents, VPs

The rest, some 13k, are other categories, such as support, sales, marketing, assistants or other.

Anonymous said...
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durak said...

They may have invented a "new" way to sell software, but there are limits to what you can sell that way. General products like Word & Excel are fine that way. But now they are trying to sell enterprise software (ERP) and the model falls flat on it's face. When we had one of their partners in pitching one of their three ERP systems it was the most pathetic thing I've seen. The partners proposal was a cut and paste job from Microsoft propoganda. Even though Exchange is very popular if you try to go and find info on how to justify it, you just can't find it.

donorsha said...

I got the re-org email this morning, although I work at google, one of our insiders @ MS sent us a copy, we made some xerox copies of it and stamped them to several walls around our dept, really fun.

Anonymous said...

I watched from quite a young age as Microsoft rose to power at the expense of IBM, whose tragic fawning relationship with Microsoft was largely responsible for the early wide distribution of Microsoft software that translates to the monopoly they have today, but eventually contributed to IBM losing control of the enormous PC market completely to Microsoft.

It was opportunism and ruthlessness on the part of Microsoft's management that caused the rapid ascention to the giddy heights they are at today, rather than great software.

One of the problems (I suspect) is that Bill Gates and Steve Ballmer created an executive culture which is centred around using questionable business practices to squash your competition, leaving yourself as the only (viable) vendor in a particular market.

I would use this analogy; A car racer can reach first place even though their only talent is nudging their competitors off the track and into a wall, but could never set a lap record or lead a race without dirty tactics.

In a motor race, you're usually not allowed to make a pit stop, rip off the extra weights and bull-bars and swap in a driver who is talented at leading a race from the front.

However in the business world, Microsoft is allowed to do almost anything they want, and the time has come for them to make a transformation to a company that can 'lead from the front' to follow my analogy.

More specifically, I believe that Microsoft and it's current management have created a corporate culture that doesn't believe in it's ability to create great software.

Great software that Microsoft have created seems to disappear into an amorphous blob of 'integration' which translated to english means dependencies on tenuously related products for tenuously related features that worked independently in the previous version.

Rather than have faith that they can compete in a fair market on the merits of their products, Microsoft managment seem to believe they have to road-block their competition at every turn, and it slows the company down like a ball-and-chain.

Franzmann said...

>>Great software that Microsoft have created

Uhh...i`m surprised about this and its scares me..