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Ballmer and Gates: Let's Stay Together

We can imagine that there were days of wine and roses at past Microsoft shareholder meetings. Champagne flowed, caviar gleamed and the whole affair had the feel of a huge gala dinner. OK, so maybe things weren't that fancy...but they were surely better than they are now.

The marriage between Microsoft and its shareholders, once so vibrant, has gone a bit...stale. Hence the decidedly not-party atmosphere at this week's shareholder meetings, in which rumblings and grumblings about the company's long-stagnant stock price drowned out whatever noise popping champagne corks might have made.

There were questions, some more burning than others, about everything from Windows Phone 7 to Bill Gates's sales of Microsoft shares to fund his immense charitable foundation. When pressed about why he was selling shares for charity rather than simply taking them off of Microsoft's books, Gates gave an excellent response, as quoted in the story linked above:

"I think the thrust of the question is, 'Are the current grantees of the foundation more deserving than turning the money over to Microsoft shareholders?' I've made the decision that that wealth is going to go into the foundation rather than being the reduction in the shares of Microsoft."

Good for you, Bill. Seriously. Nobody could ever accuse Bill Gates, of all people, of not being responsible to Microsoft's shareholders, and he should be able to use his shares for whatever purpose he chooses. The fact that he's selling them to pump money into his wonderful foundation is even more laudable.

That little exchange was just a sidelight, though, in the shareholder affair. The real bomb dropped when somebody asked Steve Ballmer about possibly breaking up Microsoft. Both Ballmer and Gates spoke to the topic, offerings answers a bit short on details and pretty long on, "Uh, no." And that's OK with us. (Check out the TechFlash link earlier in this paragraph for their full answers.)

We've never been proponents of a Microsoft breakup. We at RCPU do feel as though Microsoft should focus less on the futile pursuit of consumer hegemony and more on maintaining and expanding the company's enterprise empire. That's not tantamount, though, to saying that there should be multiple Microsofts. We're more interested in a more focused, less consumer-hungry Microsoft.

What we find interesting here is simply that the "break-up" question came up. Not much about what Ballmer or Gates said was surprising, but clearly there is some frustration boiling up from within the Microsoft shareholder base. We're guessing that shareholders are a long, long way from forcing a breakup of the company and will probably never get to that point. But if key players don't like the returns they're getting, they'll continue to make their voices hears.

Maybe the days of whine and thorns, then, have replaced the days of wine and roses in Redmond. Still, while the party might not be what it once was, it goes on -- as will Microsoft, as a single, still pretty darn strong entity. For now, anyway.

Should Microsoft break up? Why or why not? Send your answer to lpender@gmail.com.

Posted by Lee Pender on 11/17/2010 at 1:23 PM


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Reader Comments:

Wed, Nov 17, 2010 Tom

I completely agree that mgmt (and marketing) appear to be out of touch with the rest of reality and could use some 'refreshing'. Not to make this a tech discussion but, WinPhone7: It seems many of the neg articles out there have the same questionable source for sales data, but if we set that aside and consider from a consumer/dev perspective, then it's quite an impressive platform - and market acceptance won't really be known for apx 6-8 mo. And what about the tech issues? 3rd party multitasking: Prob not YET enabled due to a desire to establish the platform as fast/responsive w/o having it bog down due to a cruddy designed app (user perception is everything); CopyPaste: I hear it's coming; 'Non-remov' mem: I really just don't understand all the fuss here; Tethering: prob in due time, and so on... It's new, it's growing, it's ver 1. What will make it succeed/fail will be the level of committment MS shows. I took a leap of faith a few mos ago when I decided to focus my firm's mob devt div on WinPhone7 (and iPhone/iPad), because I TRULY believe in the potential of those platforms. MS needs to compete well in this arena more than ever before, and I think that they certainly have the platforms/dev tools to do just that. Kin: Not bad, but Verizon's data plan was a deal breaker. I disagree with MS seemingly 'kicking it to the curb', as it shows a lack of committment. Vista: I know lots of people disliked Vista, but most of the complaints we encountered ended up being rooted in a lack of available (or properly fctl) device drivers, compatibility of apps that wouldn't run (usually due to the app trying to access resources it never should've but was permitted w/XP), or numerous UAC prompting (also often due to app design but which could be turned off). Vista as an OS is actually pretty good, but due to the logistics of how it was released, user PERCEPTION was neg and unfortunately PERCEPTION is really what counts in the market.

Wed, Nov 17, 2010 The Dude. NY

In my opinion it would be more effective to cut dead wheight like Steve Ballmer out of the picture rather than break Microsoft up. What's that you say, cut Steve Ballmer, why? Well look at his track record with the entertainment division, phones ( remember the kin...) windows Vista. The man is obviously oblivious to the consumers actual desires, and thinks it's ok to ram garbage down our throats, remember his insistance that Vista was agood O.S., that people wanted it if they didn't assocoate it with Microsoft? Hooeeyyy! He's out of touch, time to pull the lever that opens the trap door that sends him to his retirement. Get new fresh and smarter blood in the CEO's chair, then MS will really take off. Unburden the corporation with it's ties to former friends and allies for the sake of memories, this is business, swim strong, or sink like a stone. By by buster....

Wed, Nov 17, 2010 Kate SF, CA

Microsoft's competitor in the mobile biz, Motorola, will soon break up, selling its mobile division. However, Motorola has recently returned its mobile business to profitability, after embracing the Android mobile platform. Microsoft is doing badly in mobile. Windows Mobile, once holding 25% of the mobile market, has plummeted to 2.8% (Gartner figure). All indications are that the US launch of Windows Phone 7 has been a flop. There are plenty of recent reports stating that Microsoft has paid ISVs $100 million for each app they port from iPhone to Windows Phone 7. This is a money black hole. How many years will it continue? How many years will Microsoft have to keep throwing billions of dollars into the mobile black hole, hoping that one day Windows Phone may catch up to Android and iPhone? Would OEMs and carriers stay with Windows Phone anyway, or would they give up after some months of bad sales? All that investment wasted.

Wed, Nov 17, 2010 Tom

In my opinion Microsoft should NOT break up, although it does need to re-org and pull its svcs/prods together for a great user experience. I think we are beginning to see some of this with the integration of the Live platform, the upcoming release of Office 365 etc - but lots more need be done. Obvious grumbling points need to be removed such as the Hotmail interface and no SSL except for authentication. The msg needs to be clear in the commitment to their prods/svces. What do I mean? Well for example, why so little coverage of Silverlight at PDC 10? And what was Bob Muglia thinking when he replied to Mary Jo Foley saying "our strategy has shifted" referring to HTML5 and Silverlight? It really upset lots of people (incl me) who invest considerable of time/energy in Silverlight - which is an absolutely fantastic platform! So what are we to think? Yes he later tried to correct the perception but,,,... My take? HTML5 and Silverlight must BOTH co-exist. Another point: it's no secret that MS Office is threated by OpenOffice, so why do things to accelerate that? I'm referring to the end of the employee purchase program which allowed employees of certain orgs (such as UK's NHS, US's NIH, etc) to use Office at home for about $10? Now those people who took advantage of the deal are told to uninstall it and purchase a regular license - it just aggravates people. So much more I can say but I'll leave it at that for now.

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