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Microsoft Getting Fat & Middle-Aged

Lawrence D'Oliveiro
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Interesting article at Forbes
<> about the
current state of Microsoft. Did you that Microsoft's Dimdows and Office
divisions account for 140% of its profits? That means that its XBOX, mobile
and other smaller divisions are losing nearly a _third_ of the money being
made by the big two. The XBOX division alone is losing a billion dollars a

Marc Benioff, CEO of, which is currently eating Microsoft's
lunch in the CRM market, gleefully proclaims that "Microsoft is a vestige
of the past".

Gabe Newell, who worked on Dimdows versions up to 3.something, says
"Microsoft has become what it used to mock ... [back in the 1980s] We
laughed at IBM. They had all this process for monitoring productivity, and
yet we knew they had spectacularly bad productivity. That's Microsoft now".

Ballmer tried to set up an organizational structure to improve
accountability, but the main result has been "competition for resources":

The seven divisions act as rival fiefs, pursuing overlapping
technologies and warring over whose code will prevail in the spaces
where different divisions' products interact. "Windows and Office would
never let MSN have more budget or more control," says Mark Jen,who quit
Microsoft eight months ago. "MSNe-mail should talk to Office Calendar
contacts and share appointments from Office with friends and family on
the Web. But then MSNcould cannibalize Office." (Microsoft insists its
Office and MSN features work well together.)

He has also put in place regular internal surveys and management/employee
meetings to arrange "commitment" targets to boost employee skills which are
measured in performance reviews, but it appears this just adds more
bureaucratic deadweight.

Longhorn/Vista was initially supposed to be out in 2003. Then 2005.
Currently it's scheduled for the end of next year, but some analysts say
2007 is more likely. One reason is that employees are continually bogged
down in "reviews" that involve generating reams of PowerPoint slides. Also,
practically nothing can be done without getting approval from a lawyer.

One reason why Microsoft was caught flat-footed over desktop search was that
3 different groups were working on a tool to do this, so naturally there
were political issues over whose ideas would prevail.

I think this quote nicely illustrates how out of touch Ballmer is:

"You could say 1995 to 2000 was about us winning on the desktop. Then
2000 to 2005 we won and drove the server market. And the next five years
is all about driving and winning the Web".
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