Microsoft’s Reorg

I finally got around to reading my ever piling up list of unread RSS feeds and one of the items that caught my attention was the announced reorganization of Microsoft’s Entertainment and Devices division. Within the sprawling extend of Microsoft’s business units, these are the people responsible for endeavors like the Xbox, Xbox 360, Zune and of course the soon to be released Windows Phone 7. As some of the analysis that I have read points out, the reorganization comes before the launch of Windows Phone 7 and right after the cancellation of the Courier Project (Microsoft’s answer to Apple’s iPad). Speculations aside, the Entertainment & Devices has not had any undeniably successful product though as noted the Xbox, depending on your criteria for success, accounts for some notable success.

However, a reorganization at such a crucial moment also highlight a lack of consistent vision and/or committed course of action to deal with the increasingly powerful and market and mindshare steals by Apple and Google. It can’t be a question of resources because as it goes, Microsoft has the necessary resource base to put together a compelling challenge. My best estimate is that they don’t understand the market or perhaps they are not comfortable with the underdog position in which they are – more so after having had a head start in the smart phone market with Windows Mobile. Windows Phone 7 is largely seen as a reaction to the modern and buzz inspiring exploits of the Apple’s iPhone and Google’s Android.

This is something that is increasingly more common with Microsoft: the company comes across as less certain of its own ability to take up new challenges and proceed to score major victories in the process. It makes one wonder whatever happened to the spirit that landed them in court for bundling a browser into the operating system in order to response to the threat that Netscape represented. While such bundling was anti-competitive and indeed led to Microsoft being declared a monopoly, their legal troubles seems to have had far reaching side effects than just reigning in their bad business practices.

It can’t all be blamed on their tussles with regulator since it is equally plausible that the current leadership of the company is no longer equally driven as compared to when the company was still starting – with everything to prove and nothing to lose. This tends to happen when companies grow up from their startup roots since they have largely conquered their competition and consolidated on two or three cash cows.

In all of this, please make no mistake that Microsoft is still innovating and improving its products but these innovations and improvements tend to be more vertical in nature i.e. improvements in desktop operating systems and any of the myriad of server software that Microsoft makes. All in all, all these innovations are geared towards protecting their primary cash cows: Windows and Office. Any foray outside of Microsoft’s comfort zones has not produced any breakaway successes.

I remember having a conversation some years back about the fall of Microsoft: this is not yet another declaration of the coming demise of Microsoft as it would be obvious to anybody that Microsoft is an important fixture in the IT industry but it is a fixture that is increasingly losing the central focus as computing leads off to slightly more nuanced but consistent shift towards mobile and web (cloud) computing model. The real danger to Microsoft’s continued relevance is how well it can adopt to these shifts and maintained its central position going forward. It is not impossible to consider the possibility of a few strategic acquisitions to get them back into the game a la Oracle but I doubt Microsoft’s culture would successfully survive such a move.

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