Jean-Louis Gassée is killing it with an analysis of the recent Microsoft management shake-up and the (gloomy) prospects ahead for Microsoft.
Monday Note - This past Tuesday, Steve Ballmer reorganized Microsoft’s Entertainment & Devices division, let go of its execs, Robbie Bach and J Allard, and moved a few more pieces around. All wrapped in the most mellifluous, Orwellian language we’ve seen from Microsoft in awhile. The full memo is here. We’re treated to encomiums to great work, friendship, spending more time with one’s family, leaving on a high note…under the guise of decency, this is indecent.
...Not everyone buys this BS. One blogger, Horace Dediu, offers what many believe is the right explanation: Robbie Bach was fired because he lost the HP account. As the largest PC maker, HP is a hugely important Microsoft customer. A few weeks ago, HP acquired Palm for its WebOS smartphone software platform. The slap in Microsoft’s face still resonates; it’s a verdict on the failed Windows Mobile offering and a negative prognosis on its upcoming Windows Phone 7 Series operating system for smartphones. Days after the acquisition, Mark Hurd, HP’s CEO, let it be known that WebOS will be used in connected printers. As a final blow, HP’s (future) Slate Tablet, once held high as a Windows 7 device, will also use Palm’s WebOS.
...Steve Ballmer has always been Microsoft’s most powerful salesman. That he lost the HP mobile devices account—and it was Ballmer who lost it, not Robbie Bach—is yet one more reason why Microsoft shareholders are troubled. Their unhappiness can be charted by comparing two stock price graphs, spanning the January 2000 - May 2010 period. Microsoft’s stock dropped from $56 to $25.80 while Apple shares rose from $25 to $256.88.
...One of Microsoft’s problems, paradoxically, is that it makes a lot of money. It can spend 15% of revenue in R&D—about $9B a year—with no market breakthrough to show for it. Great concept demos and prototypes… and then nothing.