I’ve been thinking about Microsoft lately, maybe because I’ve been in an email dialog with Gary Flake, or because I just interviewed Ray Ozzie for my column, or because, perhaps, of silly speeches given by Gates like this one, which was summarized thusly by a news service I subscribe to:
“The cell phone will become a “digital wallet,” able to receive e-mail and even scan business cards, while computers and TVs will merge, predicts Microsoft chief Bill Gates.”
Now, I know it’s Gates’ job to make the world of tech seem approachable and understandable to the typical MS Office user – the same person who apparently has a dinosaur for a head and stopped paying attention to technology somewhere back in 1997. But g’damn, we’ve been hearing this speech for more than ten years now, and if Microsoft ever wants to get back out in front of the pack in technology, if it really wants to lead again, as it did in the mid 1990s, it needs to do one simple thing: Split the company up.
Everyone knows that Microsoft has one center of gravity that matters: The Office and Windows revenue line. Everything else pales in comparison. But where does Microsoft get judged, day in and day out? Not on Office, or even Windows. It’s search, and innovation across the web generally. And there, it’s clear, Microsoft’s gravitational mass is getting in the way.
Gates needs to do to Microsoft what Jobs did to Apple when he launched the Mac team – give the new guys carte blanche, and get out of their way. There so so many smart, amazing minds at MSFT, but also so many stories of brilliant mediocrity. How can a company innovate against the likes of Google and a thousand Web 2.0 startups when it has to worry about Windows and Office integration? Short answer: It can’t.
Microsoft is a middle aged company struggling to figure out how to dance with the teenagers, and its body simply can’t keep up with its intentions, no matter how correct they may be. I’m not claiming “Microsoft doesn’t get it” – in fact, I very much think it does. I’m saying that structurally, the company is not capable of executing on what it knows it must do. Major projects like Live, Search, and MSN need to compete in the same market ecosystem as Google, Yahoo, and the startups. As it stands now, they can’t.
But that could be addressed. MSFT has already taken the first step, which is to reorganize into three distinct businesses – Platform and Products (Windows and MSN), Business (Software), and Entertainment/Devices (Xbox etc.). But really, what it needs to do is spin out a Google/Yahoo killer. Take Search, Live, and a good chunk of MSR (research) and make it a separately traded division of MSFT. Take the damn thing public. Imagine that IPO!
Let’s call this new company LiveSoft. It spins out with exclusive licenses from MSFT for integration with Windows and Office. For infrastructure support and access to patents/IP/research/human capital. All the stuff it needs from Mommy Microsoft, it can have. But, it’s kicked out of the nest, and run by a real madman/woman, someone who lives to run this shit. It finds its Terry Semel, Meg Whitman, Barry Diller, or Sergey Brin. (Paging Dan or Jeff from Yahoo…) And it runs from day one out of the gate.
If I were at Google, this development would scare the sh*t out of me. And if I were on Wall St, I’d have a reason to really love a MSFT related stock again.
Anyway. There you have it. I read one headline, and this rant comes out. So, what do you think?