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Is Microsoft Still Relevant?

“Well, technology companies either move forward, too, or they die. They become less relevant.”? — Steve Ballmer.

I am writing this post on Windows XP, an operating system first released in October of 2001. It is a good enough operating system which means, for the most part, I endure the experience of running Windows. Windows 7 will soon hit the shelves at roughly $300 for an Ultimate version. I can pre-order a copy. I can line up early for a copy. I can host a Windows 7 launch party.

But I won’t.

The New York Times had an interesting piece on Microsoft. The online version is here. The Fake Steve Jobs provides a less sanitized and more vulgar version here. Some interesting quotes from the New York Times:

Is Microsoft leading the digital era?

For many years, Microsoft and its leaders could make sweeping statements like this with little public pushback. Microsoft embodied the technology industry and was the grand arbiter of the tools people used to conduct business and navigate the digital era.

These days, however, Microsoft has legions of doubters. While it still commands a prominent and profitable position in computing, brand experts say consumers stumble when trying to define what the company stands for and whether it can create a grander technological future.

Is Microsoft relevant?

Critics of Microsoft say it has hugely underestimated market changes and plotted a long and winding course toward irrelevance. It remains too fixated on its old-line, desktop-based franchises, they say ”” too slow, too predictable and too, well, Microsoft.

Can Microsoft build great products?

Executives at Microsoft say it has gotten its house in order, putting an end to delayed, clunky products like the maligned and then ignored Windows Vista… According to a new CoreBrand study, Microsoft”™s reputation and the perception of its management and investment potential have been declining for over a decade, with the drop-off accelerating over the last five years.

Is Microsoft the Evil Empire?

Rivals now simply dismiss Microsoft as a laggard rather than hitting it with the Evil Empire criticisms so familiar in the 1990s. In its place stands Google, which now has Microsoft”™s mantle as a game-changing technology behemoth and is also increasingly perceived as a dominant competitor whose power warrants concern.

Microsoft will be around for a while yet. And hopefully a new leader will drive some much needed change in this company. When the New York Times decided to run this photo of Ballmer as the cover for the story, you know that it is getting time for a leadership change.

ballmer

No More PowerPoint

Death by PowerPoint is a common curse for people in corporations. It looks as though Steve Ballmer no longer cares for the “long and winding road” of death by PowerPoint presentations. From a recent New York Times interview:

I”™ve changed that, really in the last couple years. The mode of Microsoft meetings used to be: You come with something we haven”™t seen in a slide deck or presentation. You deliver the presentation. You probably take what I will call “the long and winding road.”? You take the listener through your path of discovery and exploration, and you arrive at a conclusion.

That”™s kind of the way I used to like to do it, and the way Bill [Gates] used to kind of like to do it. And it seemed like the best way to do it, because if you went to the conclusion first, you”™d get: “What about this? Have you thought about this?”? So people naturally tried to tell you all the things that supported the decision, and then tell you the decision.

I decided that”™s not what I want to do anymore. I don”™t think it”™s productive. I don”™t think it”™s efficient. I get impatient. So most meetings nowadays, you send me the materials and I read them in advance. And I can come in and say: “I”™ve got the following four questions. Please don”™t present the deck.”? That lets us go, whether they”™ve organized it that way or not, to the recommendation. And if I have questions about the long and winding road and the data and the supporting evidence, I can ask them. But it gives us greater focus.

Microsoft Layoffs and Ballmer’s Email

Rumors about layoffs at Microsoft have been going around for a while now. Looks like the rumors were true. Here is an email from Steve Ballmer sent out early this morning:

From: Steve Ballmer
Sent: Thursday, January 22, 2009 6:07 AM
To: Microsoft – All Employees (QBDG)
Subject: Realigning Resources and Reducing Costs

In response to the realities of a deteriorating economy, we’re taking important steps to realign Microsoft’s business. I want to tell you about what we’re doing and why.

Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 percent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations.

The fact that we are growing at all during the worst recession in two generations reflects our strong business fundamentals and is a testament to your hard work. Our products provide great value to our customers. Our financial position is solid. We have made long-term investments that continue to pay off.

But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.

Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs.

During the second quarter we started down the right path. As the economy deteriorated, we acted quickly. As a result, we reduced operating expenses during the quarter by $600 million. I appreciate the agility you have shown in enabling us to achieve this result.

Now we need to do more. We must make adjustments to ensure that our investments are tightly aligned with current and future revenue opportunities. The current environment requires that we continue to increase our efficiency.

As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We’ll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.

Our leaders all have specific goals to manage costs prudently and thoughtfully. They have the flexibility to adjust the size of their teams so they are appropriately matched to revenue potential, to add headcount where they need to increase investments in order to ensure future success, and to drive efficiency.

To increase efficiency, we’re taking a series of aggressive steps. We’ll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We’ve scaled back Puget Sound campus expansion and reduced marketing budgets. We’ll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.

Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we’ll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don’t, we will also offer severance pay and other benefits.

The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company’s cost structure so that we have the resources to drive future profitable growth. I encourage you to attend tomorrow’s Town Hall at 9am PST in Café 34 or watch the webcast.

While this is the most challenging economic climate we have ever faced, I want to reiterate my confidence in the strength of our competitive position and soundness of our approach.

With these changes in place, I feel confident that we will have the resources we need to continue to invest in long-term computing trends that offer the greatest opportunity to deliver value to our customers and shareholders, benefit to society, and growth for Microsoft.

With our approach to investing for the long term and managing our expenses, I know Microsoft will emerge an even stronger industry leader than it is today.

Thank you for your continued commitment and hard work.

Steve

How to Fix Windows Mobile

From BusinessWeek:

In September, Microsoft Chief Executive Steve Ballmer spent a week traipsing across Europe and parts of the U.S. schmoozing 17 of the world’s largest handset makers and wireless carriers. It was Ballmer’s longest trip ever aimed at drumming up support for Windows Mobile, the company’s software for cell phones. The trip may not have been long enough.

In recent months, Microsoft’s (MSFT) mobile strategy has hit a rough patch. In the third quarter, iPhone maker Apple (AAPL) shipped more smartphones than all 56 device makers that make Windows Mobile phones combined, according to research firm Canalys. As a result, Windows Mobile slid from its position as the world’s second-most popular mobile operating system a year ago to the No. 4 spot, behind Nokia’s (NOK) Symbian, Apple’s OS X, and Research In Motion’s (RIMM) BlackBerry.

From Paul Thurrot’s SuperSite for Windows:

As I noted previously, I did meet with Windows Mobile this week. They”™re good people, smart people, and they seem to understand the issues. They also seem to value the business market more than the consumer market, but that might only be because that”™s what they pretty much offer at this point. I will be writing more formally about Windows Mobile by the end of the year, but I wanted to at least mention one thing I found vaguely alarming. When asked about the success of the iPhone and how that impacts Windows Mobile, I was told that the iPhone “validated”? Microsoft”™s approach. That”™s some weird combination of revisionism, wishful thinking and, perhaps, delusion.

From John Gruber’s Daring Fireball:

It could well be that this “the iPhone validates our approach”? thing is just bullshit doublespeak ”” that the Windows Mobile team knows full well just how bad a position they”™re in at this point but they can”™t bring themselves, or are not permitted to, admit it publicly.

But if that”™s truly the mindset of those leading Microsoft”™s Windows Mobile team, that”™s delusion, and they”™re pretty much dead. Microsoft”™s response to the original Macintosh, Windows 1.0, appeared by the end of 1985. Their response to the iPhone is nowhere to be seen.

And, of course, the always insightful Steve Ballmer from last year. 


Random Quotes

Apple shipped 6.89 million iPhones this past quarter and RIM shipped 6.1 million units.

“There’s no chance that the iPhone is going to get any significant market share. No chance.” — Steve Ballmer, CEO Microsoft, April 30, 2007.

“We sold more phones than RIM.” — Steve Jobs, CEO Apple, October 22, 2008.

This article says it all.

I’m a PC

Better ads for Microsoft?