The Three-Tiered Take
Ever since Microsoft was found to have abused its Windows monopoly to unfairly compete against Netscape, the idea that the company should have taken the option to split up has been thrown about at least once every year. There is little doubt that Microsoft has been pushing itself too thin by attempting to enter every market it possibly can. And that’s not for a lack of enough employees. It is widely known that the company has suffered from too many layers of inefficient management and poor internal communication. That’s partly why companies like Apple and Google have recently outpaced it in the very markets it helped develop over the years.
The solution suggested by many is to break the company in twain. What many financial analysts and industry pundits have said is that the enterprise business be led by the old guard, where Ballmer would be comfortable, and will do very well. The consumer division could become a new, lean spin-off that should be run by younger, less risk-averse people and have to fend for itself, thereby creating a more efficient company.
Microsoft, of course, has provided decent counter-arguments lately. They’ve pointed to Windows Phone as the perfect example of integration of their varied offerings. Kinect has been heralded as to have been nigh impossible to pull off without the existence of their independent Research group’s collaboration. Windows and Office too are products that are built for both consumers and enterprise. What then might be the solution?
I’m suggesting a three-tiered take:
- Microsoft Business Corp.: enterprise-oriented company that sells Windows Server, SQL Server, Exchange, Sharepoint and Lync, both separately and as a hosted Azure + 365 package. Other businesses would include Dynamics, Windows Auto, Mediaroom, Windows Embedded, Amalga etc.
- Microsoft Developer Org.: A non-profit funded by the business and consumer companies. Would include the Windows core team, online services platform team, the developer division and the Research group.
- Microsoft, Inc.: This consumers-first entity would handle Windows, Windows phone, Windows slate, the Office client, Windows Live, Xbox, MGS, Bing and Zune.
This way, the enterprise company would be a highly profitable venture, the money-sink/investment bits would be clearly identified as such, and would not appear to be “losses”, and the consumer Windows, Office, Xbox and MGS guys would fund Bing and Windows phone. The two for-profit entities would be more likely to support third-party products really well and push each other, properly, to compete through innovation instead of corporate infighting. The non-profit technology development groups would be more likely to work on stuff that could be commercialized faster, by either company or a third-party.
Clear identification of each group’s role might mean more purposeful hiring and easier cutting of the useless fat. The stock price might actually improve too. Of course, no solution is perfect, and these divisions I have dreamed up won’t cut clean lines for some products that span multiple markets. It could also potentially put Microsoft at a competitive disadvantage or to inefficient redundancy.
That’s why I’m curious to hear your thoughts on this subject.
