Hacker News Reader

Comment by hello_moto | Hacker News Reader

There probably is a big turmoil inside Microsoft. Maybe this shake-up is needed, especially in the entertainment division.

On one hand, expect to hear many people outside Microsoft to boo this move since J. Allard seemed to be one of those "young executives who Got It". On the other hand, Steve Ballmer is left with less choices seeing those red numbers in Excel Spreadsheet almost overflowing whatever the data type in cell G-14, H-15 and K-25.

I'll give Microsoft two thumbs up for its effort trying to stay relevant (cause y'know... it's hard). But it's the price they have to pay when they decided to relax when they managed to monopoly the consumer market back in 95-2002 time period and to pursue/grow their business offerings.

It's tough to be both Apple and IBM at the same time.

View on HN

With that reasoning Ballmer should also be gone. The bottom line for MS may look good but after a decade of him not being able to come up with a game plan for mobile devices, which is where the future is, I am surprised the board hasn't shown the door for him. Clearly at this point their usual approach to licensing their OS to mobile devices in large quantities for cheap isn't going work (Android is free) but they still seem to be pursuing the same strategy. Pretty soon it might be hard to keep MS relevant. With all the talent they have a strong leader is what they need to turn them around, I don't see that being Ballmer.

Ballmer is in an odd position. You may be able to justify firing based on the stock price. But if you look at earnings/profit the man has delivered good growth.

Now you can say, "MS has missed the big trends like mobile devices and search". This is true, but at the same time they've really nailed the enterprise. Not sexy, but they went from people saying, "MS is a desktop OS, not a server" to them being one of the dominant server software providers. From Windows Server to SQL Server to Sharepoint to BizTalk.

If I were Ballmer and my head was on the chopping block my argument would be, "I've made us essential in the enterprise. This is revenue that we will see for decades. Sure, the consumer market I didn't do as well, but given a choice I'll take the less glamorous enterprise market. Why? In the consumer market you can go from market leader to struggling to make a profit in one product cycle (see Nintendo and Sony in the past decade)."

I'm no Ballmer apologist, but I just think there's an argument. Although really the stock price is hard to argue against.

Do you have a breakdown of their net profits? My understanding is that the majority of their profits are still from Windows and Office.

Definitely they make most of their money from Windows and Office. But they have found an additional profit stream.

In 3Q FY10 their breakdown was: Windows 3.0B Office 2.6B Server 1.3B

And note, this is profit for the quarter, not revenue. So their server division (which also includes VS -- which makes good revenue, but not great income) is about half of Office income. And I believe Sharepoint is counted in the Office income, although I'd consider it a server product and it brings in more than $1B revenue (not sure about the margins on it though).

Sharepoint is part of Office division.

This is probably not the best breakdown but just for a record (or to give a picture on their profits)... I talked to one of the Visio SDE in 2007 and he said Visio alone can deliver almost $1B annually.

Their team is about 26 people (26 of probably bottom line, not including Product managers, PMU, and everything all the way up).

>Now you can say, "MS has missed the big trends like mobile devices and search".

And the Internet.

They should have fired Ballmer when they saw his Windows 1.0 ad:

http://www.youtube.com/watch?v=tGvHNNOLnCk

A used car salesman running Microsoft is out of his depth. Is it really any surprise the company has floundered for years?

> On one hand, expect to hear many people outside Microsoft to boo this move since J. Allard seemed to be one of those "young executives who Got It". On the other hand, Steve Ballmer is left with less choices seeing those red numbers in Excel Spreadsheet almost overflowing whatever the data type in cell G-14, H-15 and K-25.

I'm confused. Did you read the article?

"The Entertainment & Devices Division has posted operating profits in the company's most recent two fiscal years, and it's on track for another profitable year, rebounding from the billions of dollars in losses it posted as the Xbox business was getting up to speed."

Why on earth would "this shake-up" be needed?

>Why on earth would "this shake-up" be needed?

Because you can't be top dog in the pack when you're looking at Nintendo's cute wagging backside inching further away. Wii is the PS2 of this millennium. There's no way the PS3 or XBox 360 will touch it.

Microsoft isn't used to being second fiddle. Hell, look at how they're stagnating in the web browser arena. Firefox and Chrome et al. are eating away at IE and MS doesn't seem to care because they can't control the browser with all these open standards anyway. Bing is an also ran that can't even come close to Google's dominance, no matter how much money they throw at consumers with that cashback scheme.

The reason they became successful (then, with the introduction of Windows 95, dominant) is that they were cheap and kinda worked. That's great in the era of big iron and 20lb. "portables" and all that. But now, people are willing to pay for "just works" and "magic". Plug, main screen turn on, device do thing, you use and it no hard.

When the vast majority of users are obsessed with social networking, writing small little text/tweets, bite-size 2D addictive casual games with one-button control, and playing music and youtube videos, how are you going to cash in on that if you're a Microsoft? Try to replicate Zynga and Twitter? Then what? Watch as you're yet again late to the party and throwing massive gobs of money down the pit to fill it up and catch the competition?

Maybe -- and this could be the key -- MS needs to start _aquiring_ technologies instead of trying to reinvent them like they're some garage startup. Go buy some big sexy new technology, actually ship it (or hell, ship surface/origami/courier/etc.). Because you're not going to outsexy Apple or outcasual Nintendo playing by their rules. You just won't.

I can't tell if you're talking about Microsoft as a whole or E&D specifically. Because you bring up laptops and Bing, I'll assume the former.

> Microsoft isn't used to being second fiddle. Hell, look at how they're stagnating in the web browser arena.

Microsoft plays second fiddle all the time. Aside from Windows, Office, and (_maybe_) VS, nearly all their products are ranked second (or lower) in popularity. MSN Messenger. Bing. Windows Mobile / CE. Xbox. Windows Server. IIS. SQL Server.

> Bing is an also ran that can't even come close to Google's dominance, no matter how much money they throw at consumers with that cashback scheme.

I've heard good things about Bing. Claiming they bought all their users is disingenuous.

> When the vast majority of users are obsessed with social networking, writing small little text/tweets, bite-size 2D addictive casual games with one-button control, and playing music and youtube videos, how are you going to cash in on that if you're a Microsoft? Try to replicate Zynga and Twitter? Then what?

You don't, and you then compare the current financials of Microsoft, Zynga, and Twitter.

> Maybe -- and this could be the key -- MS needs to start _aquiring_ technologies instead of trying to reinvent them like they're some garage startup.

Microsoft acquires companies _all the time_. It's a common criticism: "Microsoft has never created anything. They've just bought out companies that create things." "Like some garage startup"? Hardly.

> Go buy some big sexy new technology, actually ship it (or hell, ship surface/origami/courier/etc.).

Whatever criticism Microsoft deserves, failing to ship is hardly among it.

Yes, Microsoft is used to play second fiddle. But then again, didn't they clean up (or there were some stuff going on) their Online divisions couple months ago (or even last 1 or 2 years ago)?

Once in a while, there will be divisions that would require some changes. Couple years ago, Vista (or the OS div) was the main target. They moved Steven Sinofsky from Office to OS.

Once the situation over the OS div is better a bit, then the Online division. They brought up various outsiders if I remember correctly. Some from Yahoo!, not sure if they get anyone from Google (most likely not). Then Bing showed up.

Now it's the E&D that got their piece of Ballmer Pie.

PS: I'm probably speculating.

> But then again, didn't they clean up (or there were some stuff going on) their Online divisions couple months ago (or even last 1 or 2 years ago)?

I believe so, but I don't recall specifics.

> Once in a while, there will be divisions that would require some changes. Couple years ago, Vista (or the OS div) was the main target. They moved Steven Sinofsky from Office to OS.

Sure. My original point (in response to you) was that E&D is in the black - not the red - so your vision of Balmer "seeing those red numbers in Excel Spreadsheet almost overflowing whatever the data type in cell G-14, H-15 and K-25" simply doesn't exist.

> PS: I'm probably speculating.

And I'm trying to bring everyone back to earth. :)

With this new tablet product, Courier, it might gone red again for a while.

A millennium is a very very long time :-)

If you look at what they've produced (that particular division) so far are pretty much copies of successful stories out there. And they knew they will be in the deep red for a while once these copied-products are out.

This story will be like this for a while and I'm not sure that's a good way to run a business financially or mentally (for the employee).

Yes, they are finally profitable (after almost 9 years?). But sometime you'd have to check the casualty as well. In this case, it looks like the Microsoft brand is the foremost casualty.

Why on earth would "this shake-up" be needed?

Perhaps once it crossed that line from being a money pit to a profitable division Microsoft decided it was time to put the "grown ups" in charge to juice up profits using all the marvelous techniques cut-throat business minded people excel at. That's a total guess on my part but it seems like something Microsoft would do.

I wonder if this wouldn't be a good time for Microsoft to split itself up - I still think it is pretty crazy for the same company to be producing everything from the Xbox 360 through to Dynamics AX.

Probably they should. But what sets Microsoft apart from their competitors is the integration of their various products. Sure, the integration might be weak on some products and cohesive in others, but so far they've done well compare to other companies.

I'm not a Microsoft hater by any means, but from what I can see they are definitely losing their touch - too many acquisitions, too many overlapping products and, worst of all, licensing schemes that are frequently like something from Kafka.

Honestly, trying to get a straight answer on Microsoft licensing is, as far as I am concerned, the worst thing about their products (which are often technically rather good).

Reply on news.ycombinator.com