Yet Another Microsoft Musical Chairs Shell Game

December 14th, 2011

Certainly the skies must seem cloudy to the executives at Microsoft these days. PC sales are flat, so Windows 7 sales are still growing, but not as fast as before. Microsoft’s efforts to turn Bing into a true Google competitor appear to have faltered; most of the share gains come at the expense of Yahoo!, which also uses Bing technology. And let’s not get started about Windows Phone, which has gone just about nowhere compared to the iOS and Android.

I suppose you can make all sorts of assumptions why Microsoft’s luster appears to be irrevocably tarnished. But a lot of it seems to result from the lack of vision, and perhaps the unfortunate obsession with a “Windows everywhere” strategy.

Now it’s not that Microsoft isn’t trying, though the success of their strategy is debatable. Both Windows Phone 7, and version 7.5 have gotten decent reviews from the critics, but customers continue to look elsewhere. So Microsoft entered into a multi-billion dollar partnership with Nokia to produce a new line of smartphones, beginning with the Lumia series, which debuted in Europe. It’s not obvious that this move will turn things around.

And don’t forget that Nokia’s CEO, Stephen Elop, is a former Microsoft employee. Was he a stalking horse too? I wouldn’t presume to guess.

These days, Microsoft’s newest scheme is to graft a descendant of the failed Zune interface, dubbed Metro, onto Windows 8. The interface has already failed to make Windows Phone 7 shine, so why does Microsoft believe that success will somehow follow when Windows 8 arrives? Did the public clamor for Metro, and for dumping it onto the next version of Windows? Why does Microsoft believe that an interface that has already failed to catch fire will somehow succeed if they try it again elsewhere? And you don’t have to remind me that one definition of insanity is to keep doing the same things, hoping for a different result.

Another common tactic employed by Microsoft to deal with a failed strategy is to move executives around in a foolish attempt to make magic. So bombastic CEO Steve Ballmer this week announced to his employees that Windows Phone President Andy Lee has been shuffled off to a new position, referred to as a “time-critical opportunity focused on driving maximum impact in 2012 with Windows Phone and Windows 8.”

Does that mean that Lee has been removed from the line of fire and placed in some meaningless position where he can collect a paycheck without doing any damage? It’s hard to know, and the tech media hasn’t decided if this is a parallel move or some sort of demotion. It appears to be the latter, and it may well be that Ballmer made this decision because Microsoft would have to pay a load of severance cash to Lee if they decided to show him the door. But if they set him up in some invisible position, he won’t make trouble. Later on, he can be fired in a way that won’t call attention to his predicament.

Or maybe Ballmer was just being kind to Lee for some unaccountable reason.

Ballmer’s letter continued to express a real disengagement from reality, where he went on to say that Lee had been responsible for a “ton of progress.” What sort of progress is he talking about? Windows Phone is a failure. It hasn’t caught on, and implying otherwise doesn’t change a thing. And if he truly made a “ton of progress” why was he removed from his position?

In Lee’s place, Ballmer selected Terry Myerson, the Windows Phone engineering lead. Ballmer’s logic in choosing from within the company is that Myerson “has been so integrally involved in our Windows Phone work already. I’m confident that he can make a seamless transition to this new and broader leadership responsibility.”

In other words, a lieutenant for the poor performing executive replaces that executive. So how does that change anything? Is Myerson the magic bullet, someone with the vision and the ability to turn around a platform that has, so far anyway, gotten a thumbs down in the marketplace?

As you readers might recall, in the past five years alone, Microsoft has dumped $42 billion into R&D. Other than the continuing success of the Xbox and related products, what have they delivered to stockholders for that investment? In contrast, Apple has spent $10 billion in the last decade. Apple will also jettison a failed product, and not toss money into the trash bin. So when the Power Mac G4 cube didn’t catch fire, even though it was clearly a favorite of Steve Jobs, Apple made the cold and hard decision to discontinue the product.

Indeed, if the iPhone and the iPad weren’t huge successes from the get-go, I doubt that Apple would have kept them on the market for very long. With Apple TV, although sales haven’t been that high, it appears to be profitable, and is, in fact, one of the most popular entrants in the connected TV space. If it didn’t hold it’s own, Apple would have given up on their hobby real fast. Would that Microsoft could begin to understand the concept. Maybe stockholders should be demanding a change from the top. Imagine if half that $42 billion were returned to stockholders as dividends, rather than being squandered on useless products. But that’s not Microsoft’s way.

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2 Responses to “Yet Another Microsoft Musical Chairs Shell Game”

  1. Drew Costen says:

    Can somebody explain to me how Steve Ballmer is still in charge over there? I personally can’t stand Microsoft (the only product of theirs I still use with any regularity is Skype), but somehow I still feel bad for everybody in that company with him running things.

  2. DaveD says:

    Over a year ago when Windows Phone 7 OS went Golden Master, Microsoft held a mock funeral heralding the upcoming demise of the iPhone and the Blackberry. It appears to be a bit ironic that Microsoft may soon be digging its own grave. It will be interesting to see how “Metro” plays out in Windows 8. Is it a “must-have” feature for those who would stand in line for hours desired? With Steve Ballmer at the helm during the last decade, Microsoft’s stock value is basically flat-lined.

    RIM may need to dig a big hole to bury all the unwanted PlayBooks (Hint: See where Apple buried the Lisas.). It is amusing that RIM is located in the city with the name of “Waterloo.”

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