Posted by Tom Foremski - August 26, 2013
There has been rush from people (journalists and bloggers) who have never run a lemonade stand or any business, to give copious free advice to Microsoft [$MSFT] in the wake of CEO Steve Ballmer's resignation.
I read some of them, the best one so far is from John Gapper at the Financial Times. His advice is simple:
Exit the consumer business because it is businesses that buy Microsoft products and not consumers. [To Microsoft’s new chief executive: stop chasing consumers.]
He reminds those with long memories of the struggle IBM had in responding to the challenge of cheap computing in the mid-1990s. It appointed Louis Gerstner CEO, the former head of American Express Travel Services group. Mr. Gerstner famously said: "The last thing IBM needs right now is vision."
Mr. Gapper writes:
The absolute last thing Microsoft needs is the last chief executive's vision for it to create "a family of devices band services for individuals and businesses.
It's not hard to make the point about exiting the consumer market because Microsoft's efforts have failed time after time, more recently with the Surface Tablet $900m fiasco.
There's also the Zune, the iPod challenger; the short-lived KIN social media phone OS (which was ahead of its time). And the venerable Xbox gaming console, which barely makes any money for Microsoft. And some will remember "Clippy." Oh, and the consumer satellite communications business, TV news; magazines…
Foremski's Take: I've never run a lemonade stand but I did used to cover Microsoft, IBM, and other large enterprise IT businesses at The Financial Times, which means I won't resist giving some of my free advice to the embattled software giant.
- Mr. Gapper doesn't mention Microsoft's Bing search service but it is another good example of failing in the consumer market. If it shut down Bing Microsoft would save about $2 billion a year and create a big monopoly problem for Google since it couldn't claim that competition is always just a click away.
- It could spin-out its consumer businesses instead of shutting them down, and retain just its enterprise software business, which has been bankrolling the rest of the company's mis-ventures for decades. Wall Street would love that scenario and so would the bankers.
- A more focused Microsoft would be able to produce new ventures in the enterprise market where there's far more money than in consumer markets.
- Microsoft should follow IBM's example of appointing an outsider who has also been a large enterprise customer. As a former major customer of IBM Mr. Gerstner knew exactly where IBM's value lay and he spent ten years rebuilding IBM as a computer services company. [His "Who Says Elephant Can't Dance?" book is very good and explains the tough job he had in remaking IBM's culture.]
An outsider is most definitely needed because Microsoft's culture is stagnant; and a large customer knows where Microsoft's value lays and what could be done to build on it.
- Time to revive an old partnership: with Intel. It too, is unable to make its consumer market ventures succeed. The old CEO's consumer TV project should definitely be ditched. And like Microsoft, Intel's tablet and smartphone efforts continue to fizzle as it strikes out in chasing the diminutive British chip company ARM.
- The rise of tablets and smartphones drives enormous demand for servers — that's where both companies make their fattest margins. It's a market rife with opportunities. Such as: producing a range of embedded software and highly-tuned, secure hardware from these two companies would do very well in enterprise markets. Low maintenance and high throughput systems would hurt competitors Oracle and IBM while winning grateful data center customers.
- It's time to bring back Bill Gates. I saw the recent 60 Minutes report by Charlie Rose on Bill Gates 2.0. He has more than 1,100 people working at his Foundation, including his wife. He showed-off bis huge bag of books, which demonstrates he has plenty of spare time on his hands.
His top projects are a solar-powered toilet without running water, a new condom, and the war on Malaria. There's absolutely no special expertise that Bill Gates brings to those projects.
Taking over at Microsoft again, he could turnaround the company, and turn heads in ways that no one else could.
It's time to ditch the 2.0 and work on Bill Gates 3.0. It would make a killer chapter in his biography; and it would keep billionaire upstarts such as his neighbor Jeff Bezos from overtaking him in the "stuff that really matters beyond money" competition.
Let's face it: giving away billions of dollars is easy. Saving Microsoft is a challenge even Bill Gates would have to think thrice about. Which is why he should do it.
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