FEATURES/Biggest Questions of 2013 | Jan 3, 2013 | 9629 views

Will Microsoft turn around?

It's too big, it’s into too many things and even a little blind to its own weaknesses, says Kurt Eichenwald

Too Many Distractions
Microsoft has one huge advantage. It is truly the leader in business-to-business, in business consulting, in getting corporations set up large-scale systems that incorporate servers and Microsoft products. That’s kind of its last strong area of holding. But, we are getting into the point where office technology is in fact connected to the employee and not so much to the office. In other words, so many devices are now portable, and you bring your own devices. As portablity emerges as the essence of business, the edge that Microsoft has today won’t matter as much.

The bottom line is Microsoft needs to stand up and say what it is. Is it an operating systems company? Is it a software company? Is it a phone company? Is it a gaming and entertainment company? Is it a search engine company? Is it a hardware products company? It wants to be everything. If you are going to be a phones and other communication devices company, you need to be competing with people who are doing that sitting down, standing up and thinking about it every single day of the week. But, here, someone who is dealing with this is reporting to you and you are simultaneously looking at the latest plans of how your gaming station is competing against Sony. That level of distraction is not a prescription for long-term health.

Even though Xbox makes money, in the context of a massive bloated organisation, the money it’s making is inconsequential. If the entertainment division is a standalone business, that you can buy stock in, people would run that stock up because you will get a direct access to that product’s profits. The profits wouldn’t be buried within this giant lumbering enterprise.

Devices Challenge
Ballmer says Microsoft will be predominantly known as a devices company in the future. I don’t think Microsoft has shown itself to have strengths in the hardware business. Go back and look at iPod versus Zune. Zune is gone, for a good reason. It wasn’t a good product. Then again, it came in too late. If Microsoft had come in with it first, it would have been okay. At least you were the ‘first to cool’, and lock in a market at that point. The tablet is okay; it’s nothing great, it has got some issues, and the phone again is building off of other companies’ technologies. Again, what Microsoft has to do is nail down what it’s really good at. The thing that it is good at without question are the Office, the operating system—regardless of whether it’s good or bad, it has a major lock on a large part of the market—servers and business-to-business. But, when you get spanked for virtually every single hardware product because you are late or inferior, it doesn’t speak for as the central element for your future.

At the end, if Microsoft wants to focus on hardware technology, it can. But, only if it is a company that is focussed only on hardware. That would be a lot better than that effort being a part of a massive enterprise that is looking at introduction of a product across the board, all at the same time.
The most interesting thing about the article I wrote for Vanity Fair was the reaction afterwards. I received far more emails and phone calls from Microsoft employees than I ever thought would be likely. And their comments were almost uniformly, “Thank you for pointing about the problems of working here; thank you for talking about the disastrous things like stack ranking.” But, the response I got from people who were in the corporate side of things was: “You don’t understand stack ranking, it’s great.” There was a complete disconnect between what the employees were saying and what the guys running the company were saying. If they don’t look on that as a fire alarm ringing, there is a problem. Then, they are going to continue down this path and people who have the option of working in Google or Apple or Facebook are going to drift away from Microsoft.

(As told to NS Ramnath)


Kurt Eichenwald is a journalist and author of four books, including The Informant, which was made into a motion picture starring Matt Damon. He is a contributing editor at Vanity Fair

This article appeared in the Forbes India magazine issue of 11 January, 2013
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Comments (3)
Deovrat Jaiswal Jan 15, 2013
I think the author of this article is too much obsessed with glitz and glam...and doesn't like change (And seems to be one among the Microsoft Haters' Club).
the author plus the readers need to have an open mindset towards the changes that take place, an optimist would definitely see the changes in Microsoft as the reforms that would truly change the world of computing, and a pessimist the other way round (like the author's views).
I am now switched to Microsoft products to a larger extent, using windows 8, sky-drive, internet explorer, skype, X-box games and ofcourse the Microsoft OFFICE. It is all a great experience with the new user interface, completely hassle free. Plus, I don't feel the need for Start Button, one can easily search things from the search box that is avialable at any damn app/screen......Microsoft is good to go for now....Wishing Luck for Ballmer....
Sea Jan 13, 2013
With their fear-based internal culture called "stack ranking" and the worst CEO in industry, I don't believe Microsoft can turn around.
Manoj Jan 8, 2013
Kurt, I think the recent success of Apple has a huge hangover on your views. Unlike Apple, an innovator company, MS has always been a fast follower - which means it's strengths are in quick adoption, understanding customer needs and strong distribution. MS should strengthen these across each of the product lines they are in.

Also, it's a quirk that all software companies want to enter hardware, and the hardware companies want to get into software. I dont blame MS for wanting to enter devices market, which is where the growth is now, not in static servers, desktops etc.

I believe MS's recent financial troubles originate from a lag between understanding customer needs and actually addressing them. As an example, there is nothing much wrong with Windows 8, except that it's USP - a consistent interface between handheld and desktop is not delivered. With Android -entrenched on smartphones, few customers swapping their laptops/desktops with new ones post the GFC, limited Windows 8 phones and no Windows 8 for smartphones running android currently, customers are not getting the benefit.

So rather than saying MS needs to overhaul it's strategy, I'd say MS needs to focus more on the synergy rather than just product launches which may be good, but do not enable customers to realize the benefits.

For example, how about a stripped-down Windows 8 which can run on older hardware? Or a Zune which does not require me to install a 100 MB program on my computer to load songs I own (I love my ipod, but hate itunes with all my heart), just a cloud connectivity? If MS plays it's card right and in time, there is no reason it cant hit the ground running in Asia - the growth markets now.
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