A Little More Blush: Microsoft's Makeover
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Small fry can easily kick Microsoft because it's so big. But, watch out. The giant is about to roll over. |
Microsoft is in a state of reinvention not seen since Chairman Bill Gates' May 1995 Internet Tidal Wave memo set off the browser wars. To outsiderscustomers, partners and shareholdersthe extent of change may not be immediately obvious.
Whether Microsoft's makeover can succeed is something else. Kicking Microsoft is almost an international pastime, whether European Union trustbusters, open-source advocates, Windows Vista pundits or Web 2.0 snobs. Popular sentiment is rarely truth. The ground may yet shake under the kicks when Microsoft moves beyond its two core businesses of Office and Windows.
This first essay takes a broad-strokes look at the new Microsoft. Subsequent posts will delve deeper into the dramatic changes and what they mean for Microsoft customers and partners. Catalyst for this first post is Thursday's relaunch of Windows Live Search and today's Office Live and Online service announcements.
Microsoft is organized into three broad business groups that no longer reflect the company's technology alignments:
- Business (development tools, Dynamics, Office, server software)
- Platforms & Services (Live services, Windows)
- Entertainment & Devices (embedded, Mediaroom, Xbox, Zune)

Microsoft is rapidly becoming three "vertical" silos with one major horizontal business touching all the others. I make distinctions from a technological viewpoint. Microsoft's organization is all-together different when viewed from a channel, sales and marketing perspective. What Microsoft is becoming:
- Platforms: Since the 2003 release cycle, Microsoft has embarked on a fairly aggressive strategy to remake all desktop software as platforms and to more tightly integrate desktop and server software. As such, there is now tremendous feature and marketing crossover between Office and Communications Server, PerformancePoint Server or SharePoint Portal Server, among other server software products. While organizationally Dynamics and Office belong to a different group than desktop operating systems, technologically these products are aligned as platforms.
- Advertising and Search: While Microsoft has sold online advertising for years, the aQuantive acquisition resets, refocuses and redoubles the efforts. Microsoft is tight-fisted about acquisitions. The $6 billion aQuantive acquisition is uncharacteristic and so emphasizes the importance of online advertising to Microsoft. The business is unlike any other Microsoft runs and represents the potential future of the company.
- Consumer Electronics: Microsoft is rapidly becoming a major supplier of software or software and hardware to the consumer market. The company that long sold mice and keyboards has, since the turn of the century, expanded into Webcams, digital media players and game consoles. Microsoft also supplies software for media extenders, IPTV set-top boxes, cellular phones, PDAs and other embedded devices for the consumer market. Microsoft will do more end-to-end development in this category, like Xbox and Zune, while expanding its embedded devices to more product categories.
- "Live" and "Online" Services: Many people outside Microsoft view Internet services as the future of Microsoft, because of Web 2.0. No question: The Web platform is shifting computing and informational relevance away from desktop PCs. But there's no reason to expect the Web platform will be the death of the PC just as the personal computer didn't kill of the mainframe. Computers will get smaller and smaller devices will get more processing power; there will be increasing demand for more mobile informational access. Microsoft's services effort horizontally crosses its three vertical silos, bridging PC and server based software with anytime, anywhere and on-anything informational access.
Today's Office Live and Online services announcements are directionally foreshadowing. Last year, Microsoft moved its Server and Tools operation to the Business division. While Live services are organizationally part of the Platform & Services division, new server-based, hosted services are coming for Office. Overlap and organizational shifting will continue as Microsoft begins to properly align its business divisions with its broader business objectives.


Comments (12)
Joe Willcox,
I think a better name for your article would have been, "The future of Microsoft." Simply because that is really what its about.
Recently I came to this site with Opera, instead of using Firefox (with the excellent adblock extension), and what did I find, all the advertisements were from guess who? (Micro$oft) Had noticed a decidedly pro-M$ tone lately, but heck, we all got to pay the bills, and keep food on the table , right? We do understand that. At least you don't sound like a carbon copy of Neil.
Back on subject, the future of Microsoft.
1. Platforms; Windows & Office. Looking into the crystal ball I see dark clouds here for the vole. Vi$ta is not going over as well as it should be. Office is getting free competition. Open Standards and the EU may become huge problems. And worse of all, the elections in the USA are getting closer, many many politicians with their hands out to grease for M$. Even that may not be enough, and if the right person gets in, we could see several MS companies. Mac and Linux are increasing share now. MS was forced to extend XP, as they will again in 5 months from now, or write off the bottom 1/3 to 1/2 of the slower new computers on the market, that really are not fast enough to run Vi$ta. Failure, that will start to impact the bottom line at some point in time. Did I mention all the patents lawsuits haunting MS these days? Just ask I-Man if you don't believe me.
2. Consumer Electronics: Xbox360 and the Zune. First of all the Zune is a joke, no need to discuss a product that won't even support or plays MS previous standard "Plays for Sure." A lot of partners got screwed with that one. The Xbox360, which once again a MS product that is not backward compatible with the old XBox, is a total disgrace of incompetent hardware engineering, by MS no less. The XBox360 is dumped on the market in an illegal "dumping" practice below cost, trying to increase sales, or eliminate a competitor, Sony. Sony is therefore forced to sell its PS3 below cost (dumping) as well. Only the Wii is making money at this point. Why, because the Wii in not breaking at every turn like the XBox360, scratching disks, and is priced for the market.
3. Advertising and Search: Silverlight, will never see the light of day on my computer. If pre-installed, I will remove it. MS will not make a dime off me every again. Novell and MS can port it to Linux, but I bet few will run it.
4. Live" and "Online" Services: Well, MSN search however revamped is still owned by M$. They have never been able to compete with Google. I suggest they sell it to google, and put their money in real estate.
Posted by chips | October 1, 2007 5:16 PM
It's really sad (By Portuno Diamo-Yahoo/Microsoft board)
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_M/threadview?m=tm&bn=12004&tid=1298583&mid=1298583&tof=1&frt=2
With all the information I've provided here I haven't seen one competent challenge from either pro-Microsoft or pro-competitor or pro-open-source posters.
The posters who used to be dominant have left the board. They simply couldn't argue the points, so they disappeared as Boyled said "let's go to the other board". So they pick up shop and move elsewhere instead of staying and contending.
So, the entire package of information that could be put here to refute what VCSY v MSFT has... is gone. Nothing. Not a word.
Do you know what that tells me? It tells me Microsoft has no defense and is hoping against hope it can survive publicity and the competition who will be shipping their next-generation services and SaaS systems while Microsoft continues their S+S strategy to maintain lock-in to their server packages... while not being able to allow non-microsoft clients to work offline. Why? Because, without 6826521, they aren't going to be able to work on anything other than a client running windows. And even there, they run the risk of bringing a lawsuit from VCSY for infringing 7076521.
So, Microsoft competitors are going to have a clear shot at linking up interoperable systems outside Microsoft reach and will commoditize Microsoft applications on non-server-based Microsoft platforms. In other words, all the millions of computers out there running Microsoft applications can be made interoperable with any other clients and servers using 6826744 technology without having to ever come close to a Microsoft Sharepoint server.
Meanwhile, Microsoft's interoperation will be limited to Sharepoint and Novell.
Good luck with all that, shareholders. Your sideways journey has just begun. And Google, and HP, and Apple, and Sun, and Debian are going to eat your marooned clueless meals right out of the box.
And you can look back to this board and the inability for all those great Microsoft minds to defend your views and promote your cause. And you will lose programmers and developers in droves because staying in Microsoft from here out will retard programmer and developer careers.
The EU commisioner will get her wish. Microsoft's market share will plummet because Microsoft can't hook up Vista with the kind of XML over http plumbing they need to make the OS interoperate with non-Microsoft elements... while all others will be able to move forward to uber-platforms that will dwarf Microsoft's proprietary and isolated efforts.
Basically, what is on this board are clueless trader-voices attempting to shepherd the ill-equipped into mindless market sweeps.
Looks like we killed off the "technologists" here and it's a barren wasteland.
Meanwhile, read the information we provided here so you can watch the VCSY v MSFT legal moves unwinding over the next few weeks and see if you can predict what's going to happen.
Meanwhile, we'll all watch to see what kind of "chance" Microsoft has of encurring an injunction against .Net and their derived products and client projects. Niro and the guys are pretty well up on all this and Microsoft's legal staff don't have a very good track record on litigation.
Either that or they simply can't defend their records here.
Posted by I-Man | October 1, 2007 5:24 PM
Joe, don't worry, when the time comes i'll make sure they know you didn't stop me from informing the public. You're OK in my book!
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http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_M/threadview?m=tm&bn=12004&tid=1298610&mid=1298722&tof=4&rt=1&frt=2&off=1
I ignore those things because any company with the relationships and patents VCSY owns and the position they have in a lawsuit against the largest software company on earth can convince creditors to wait for the final act before walking out.
And you know it.
What's frustrating you is I don't play by your expectations and your limited strategies. VCSY has what they have and Microsoft is going to have to explain in the upcoming hearings just what the c:!### they were thinking when the made all those projects and told their clients they could do the kind of things 744 says.
Wow. What a screw up THAT was, huh? Do you think the magistrate will have a sense of humor? No? I don't either. In fact, I think MSFT will have an injunction so fast they won't know which blogger to attempt to spin first.
Don't worry. The VCSY longs will all be there to help and there are plenty of bloggers who will certainly want to know what happened.
(Again Joe, I got your back)lol
Posted by I-Man | October 1, 2007 9:46 PM
I-Man wrote: "When the time comes i'll make sure they know you didn't stop me from informing the public."
I would never censor you, I-Man, as you already observed. :)
Joe
Posted by Joe | October 1, 2007 11:19 PM
Chips wrote: "Had noticed a decidedly pro-M$ tone lately."
Hi, Chips, no pro--or con, for that matter--intended. It just happens to be topics. These things go in waves, I think. Microsoft just happened to catch a good wave.
Please keep up the informative comments.
Thanks,
Joe
Posted by Joe | October 1, 2007 11:22 PM
Re: There was a rumor back somewhere around May/June...
(From Portuno-Yahoo/Microsoft board)
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_M/threadview?m=tm&bn=12004&tid=1298739&mid=1298739&tof=3&frt=2
... do you know what it was? The rumor was that Microsoft had a settlement worked out with VCSY and only needed a little more time to work things out. Thus, MSFT asked for an extra 60 days to... you know... "work things out". VCSY graciously said "sure" and MSFT took the 60 days VCSY gave them in good faith.
Well, sir, the 60 days came and went and no word of Microsoft fulfilling any agreement sooooo... here we are now about a week away from the beginning of hearings in the no-foolin'-'round Texas Federal Court and we are all wondering what's going to be said... because it DOES ALL have to be said this time around, you see?
Read the post I gave from one of the VCSY board longs detailing what the hearings ahead require of both parties. You really do need to read them (and no I won't repost the URL. You're all going to have to grow up like hawcreek and learn to be responsible for your oversights) and see what is facing MSFT.
IF MSFT started an agreement with VCSY and reneged? Whooooooweeee what a scorching screwup THAT would have been. You shareholders can only hope those 60 days extended by VCSY upon MSFT's request were because one of their lawyers was lost on a mountain top or some such delaying nonsense and not an abortive settlement.
Glub Glub.
Anyway, that was the rumor and we'll be able to tell is that was a rumor or not because at some point the legal proceedings (seeing as how they're between two public companies and all) will become public and there are plenty of VCSY long Spartaci who will be more than willing to fill up the text boxes on the net with all the juicy details... come what may.
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My my my - what happens if the rumor is true? What happens to Microsoft's case if they began negotiating a settlement with VCSY and backed out of it? Were they buying time? Were they going to until they saw what it would cost? Were they going to until they found out what would have to be made public?
Either way, if they bailed out of a negotiations and especially if they bailed out of a good faith attempt by VCSY to settle... what chance do you calculate they will be able to convince the court they were always going to fight on principle?
On principle of mens rea, is what. And THAT is what the good judges will presume.
Not a good position to have going into this kind of "chances".
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Posted by I-Man | October 1, 2007 11:54 PM
The "internet tidal wave" memo was hard to read...probably scanned or something?...but it was still a very interesting look into how Chairman Bill was making some pretty visionary projections. Even back then, the company just didn't seem to be aware of what was happening in the internet's growth and development area.
It still seems like Redmond is still chronically behind the curve and has to play perpetual catch-up.
I'm going to try the Office hosted service beta, (or whatever the heck its name is) just for grins.
One major problem Microsoft has is their inability to name a product or service and then stick with that name long enough for people to figure out what the heck it is.
Posted by mgo | October 2, 2007 12:52 AM
All companies have to change to meet market realities. One change I would really like to see in Microsoft: the company should decide to compete as a decent corporate citizen, meaning through better products, services, and offerings. Right now, its strategy involves blatant disinformation, half-truths, monopolistic leverage, unfounded patent threats, and similar unfair (and immoral) business practices.
No wonder so many people are ticked off at Microsoft.
For sure, competing on such decent terms will be difficult, but it can be done. Microsoft will have to overhaul its corporate brain trust, perhaps even laying off the thugs that run it from above. It will have to invest in new technologies and undertake a major rewrite of its codebase. It weill have to do a lot of things, but these will, in the end, be good for the company and consumers in general.
Decency is good business. Dirty tricks will eventually get you in trouble. Microsoft should know. But will it ever really learn its lesson?
Posted by Maddog | October 2, 2007 7:44 AM
Does anyone else see the irony of this? It's to late for me(VCSY Shareholder) to feel the "love"!
Microsoft Partner Program Aimed at Small Businesses
By Peter Galli
October 2, 2007
Some 5,000 Microsoft partners meet the IT needs of small business.
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Microsoft is reaching out to help small businesses find IT support by introducing the Small Business Specialist Community, some 5,000 Microsoft partners who have gone through training, passed exams and been designated by the software maker as being able to meet the IT needs of small business.
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Each partner is able to offer technology advice, support and service to small businesses, which Microsoft, of Redmond, Wash., defines as having 50 or fewer employees, and can also use the new Microsoft Small Business Specialist Community logo.
Given that there are about 20 million small businesses in the United States alone, the move should help Microsoft sell more of its solutions, while its partners get to rack up consulting and support fees.
And, as many of those partners are small businesses themselves, "they truly understand what it means to run a small business," said Eric Ligman, Microsoft's senior manager of community engagement for small business in the United States.
Microsoft's small-business Web site now also contains a new tool that customers can use to type in their ZIP code and be presented with a list of small-business specialists in their area.
Windows Small Business Server 2003 R2 provides a full stack of basic network services at an affordable price. Read more here.
"We hope by raising awareness of our program that small-business owners will recognize the qualified help that may be right in their neighborhood. We value the direct and powerful impact on the U.S. economy that small business brings and hope that with this program we can make a difference," Ligman said.
Microsoft also announced Oct. 1 a new service, Office Live Workspace, that will let customers access, share and collaborate on documents online.
The existing Office Live offering will be rebranded Office Live Small Business, a change announced by Microsoft CEO Steve Ballmer at the company's Worldwide Partner Conference in Denver in July.
Posted by I-Man | October 2, 2007 9:49 AM
@MAddog: Right now, its strategy involves blatant disinformation, half-truths, monopolistic leverage, unfounded patent threats, and similar unfair (and immoral) business practices.
That sounds like every major business in the United States, and (patents aside) just like the US government. The US economy and the laws/lawmakers that guide it, push corporations completely in that direction. Microsoft keeps a patent portfolio to protect it against patent sharks. If it did differently, then its directors would probably be sued by its shareholders.
Posted by Ned | October 4, 2007 4:59 PM
The wave Microsoft is riding is the wave your boss would have picked too if he had the chance!
Microsoft Office is used by 90% of the companies and home-users. Everybody is familiar with the UI...So NO CFO will come up with the idea "let all our employees work with a strange and new interface...yeah let's spend our money on that!!"
But remember that Microsoft and the rest of the Vendors only deliver Tools that can be used by partners (ISV etc.) to provide Solutions for their customers. If the partners don't know how to use the tool, their solution will be everything but a solution. So instead of crying over spilled tears, use that energy to create something good for your customers. what ever platform you chose.....
Posted by W@arlord | October 9, 2007 10:14 AM
Bravo!!
Microsoft Rocks.
Posted by Windows Web Hosting | October 22, 2007 9:55 AM