Macworld published an article about Microsoft CEO Steve Ballmer’s talk during Microsoft’s annual financial analyst meeting on Thursday.
The last time I looked in on Steve B. he was getting some PR treatment. In an article, he mentioned taking the long-term approach and how long it took Microsoft to do anything right (OK, he didn’t say it exactly like that, his words were that it took them 10 years to get Windows popular and many years to get database popular).
Anyway, he’s doing it again. Only this time instead of a PR article he’s talking directly to investors. Let’s face it, things are not going so well at Microsoft these days:
- Google killing them in search.
- Vista is a non-event both from a sales (over XP) and a technological standpoint.
- The Xbox is a money-pit, and only getting worse.
- Hardware “partners” HP dumped Media Center PC earlier this year, and Dell offers pre-built Linux systems. Both offer XP as an alternative to Vista.
- The Zune is a freakin’ disaster.
- The iPhone has shown in only one try just how feeble Microsoft’s mobile OS is despite its sixth try.
Aside from the usual PC licenses they get (which they’d be getting with XP anyway, and didn’t have to spend $6B on Vista for), the only bright spot is Office 2007.
Any shareholder with more than half a dozen brain cells would be asking lots of questions, so I guess Steve needs to assure them things are just peachy keen. This is not exactly Steve’s strong suit.
First and foremost, he pleads with them to be patient:
““Vista doesn’t get done by three people in a garage in three days,” said Steve Ballmer. … “A great misconception in the tech industry is that most successes happen overnight,” he said.”
Maybe it’s a misconception because after all that work Vista seems like it was done in a garage in three days. Besides, the Xbox has been out how long now? How many iterations? And what about that PlaysForSure thing, wasn’t it around a couple years? But you dumped it blaming your hardware “partners” for not competing with the iPod, and then went on to produce your very own brown piece of crap. Oops.
Here’s another beauty:
“While Microsoft once was largely defined as a desktop company, it has proved that it can expand into new sectors, Ballmer said. Around 18 years ago, Microsoft decided to get into the enterprise market and now is a major enterprise software company, he said.”
Um, back then the enterprise was the desktop market (primarily). You moved into it on the coat tails of IBM’s PC when IBM didn’t see the future. You maintained it with practices that, well, let’s just say were “questionable.” Still, I don’t begrudge Microsoft’s success in the enterprise, but the fact is you slipped and fell into it a long time ago. Shareholders like to see something new on the horizon that’s successful. You’re not delivering.
““We are hell bent and determined to allocate the talent, resources, money and innovation to become a powerhouse in the advertising business,” he said. Microsoft is currently in third place in online advertising, behind Google and Yahoo, but he pointed to some Microsoft successes like deals to provide ads for Facebook and Digg as evidence of potential to improve that position”
Heh. I love it when people put “Microsoft” and “innovation” in the same sentence. Vista was Microsoft’s ticket to innovation buzz, and they never got it (nor did they deserve it). No one thinks of Microsoft as an innovator. As usual, Balmer believes you can just throw money at it. I’ll say this, they do an excellent job of burning through cash. The business deals with Digg and Facebook are a case of throwing more money than necessary at it. You need to be smart where you spend the money, Steve, that’s what the shareholders are concerned about. Lots of money going out and no return. Heaven knows how long it’ll take to get the Vista and Xbox expenditures back.
“On the devices side, products like Windows Mobile, set-top boxes, Zune and Xbox will be key to Microsoft’s growth in the devices market, he said. “We need to have this business outlet for our software creativity to continue to grow and innovate and be relevant,” he said.”
Steve, you’re making me giggle. Zune is a non-entity, so it would have been better to just not talk about it. The Xbox is on very hard times and, frankly, Microsoft’s actions aren’t enough. But I love the fact that you worked “creativity,” “innovate,” and “relevant” into the same sentence.
And what would any Microsoft talk be without throwing out some big numbers? This time it’s about the people:
“In its fiscal year 2007, Microsoft hired almost 13,000 people, including 4,000 in product development areas, he said. … As an example of the type of people working at just the Redmond, Wash., headquarters, 1,000 employees there speak Russian, he said.”
Yes, the number of people are all that matter; I think your shareholders can breathe a sigh of relief now. As for the ones speaking another language, I assume they’re the ones working on your product specs?
“Those workers will help bring about new innovations during the next ten years,”
OK, score another point for “innovations.”
“Computers aren’t self-contained devices like they once were. Instead, storage and applications can be handled remotely and users can access them from a variety of different types of devices, he said. That opens up the potential for new devices and applications, he said.”
But you’re not a device company, Steve! You’ve shown so far that you can’t get the job done. Mice and keyboards? Great! Everything else? Not so much.
“Microsoft executives are spending Thursday talking to a group of financial analysts. … It also comes at a time when the company faces the challenges of adapting to a marketplace that is shifting toward hosted services and away from PC-based software.”
Yes, and you arrived late to the party, as you have every party over the last dozen years. Only this time, a more savvy customer base is not as easily fooled by shoddy hardware and weak software. There is no “wow.” Meanwhile, the enterprise is getting a taste of Linux and liking it. Apple may have trouble brewing for you there as well, in the form of Leopard server. Your licensing costs are going to look pretty silly as more and more IT people (in the small and mid-range business first) start to show how much money can be saved going to alternatives.
Meanwhile, as your bread and butter business is taking heat on all sides, where are the other sources of revenue? You’ve been trying it for years now with all the items listed above, and it isn’t working. They’ve been patient long enough, the shareholders should be pointing you to the door.