Microsoft Losing Its Way Update

A few weeks ago in “This Weekend’s Unanswered Questions: Special ‘What’s Up with Microsoft?‘ Edition,” I explored some of the more obvious problems at “Mister Softee,” as Jim Cramer likes to call it. I cited four items indicating lack of direction: an idea to imitate Apple by opening retail stores, Steve Ballmer’s violent tirade against an employee leaving for a competitor, the technologically unsatisfying and three-years-late-already Vista operating system release (when it comes), and its longstanding poor response to security issues that continues to this day.

Two weeks later (first item at post), I was unimpressed with Microsoft’s highly-publicized reorganization: “It reminds me of General Motors’ endless attempts to reorganize itself through the 1970s, 1980s, 1990s, and what there has been of the 2000s, as its market share and, more importantly, its engineering edge slowly but surely eroded. I hope I’m wrong.”

It turns out that I’m not the only one seeing the signs of big trouble.

A week or so later, Biz Weak did a piece about the company (free for now) in late September that generated a lot of impressive responses in its Oct. 17 Letters to the Editor (free for the time being):

• Comparing Microsoft to Digital Equipment Corp., a computing giant that totally missed the PC revolution in the 1980s: ” Both companies viewed their stock as undervalued and spent billions buying back shares. Both companies had many reorganizations. I hope the parallels end here — Digital no longer exists.
• ” If 15% of Microsoft’s employees are dissatisfied with the way things are run, chances are that a large number of those are among the top new talent of the company. When (not if) they walk, the downward spiral will be impossible to stop. Let Steve Ballmer stop worrying about the short-term “needs” of his shareholders and concentrate on the long-term survival of the company they entrusted to him.”
• “Reading this was like reading about IBM (IBM ) 20 years ago.”
• “Steve Ballmer is not creative or sensitive enough to nurture a culture of America’s best and brightest techies. Your account of Ballmer’s vicious tirade against an employee who had jumped to a competitor was truly frightening to read. It should have been reason enough for Bill Gates and Microsoft’s board to fire him.”
• “Steve Ballmer’s failure to answer Kathy Rebello and Jay Greene’s questions with any honest and straightforward response is the sign of someone either completely clueless, in total denial, or both.”

The company’s subsequent public spat over DVD formats and its short-lived attempt to control the distribution of audio devices are not encouraging signs.

As I’ve said before, the US economy, and really the world economy, are very dependent on Windows/Vista computers for future productivity increases. It is thus more than a little important that Microsoft have its act together, at least in the short run, until, as appears inevitable, Net-centered applications begin to dominate the landscape. I hope they have it in them. Everyone should.