Microsoft's Bungie Jump
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Microsoft's decision to spin back out Bungie Studios foreshadows bigger things—and perhaps problems—to come. |
When Microsoft bought Bungie seven years ago, breakup loomed over the software giant. About two weeks before the acquisition announcement, U.S. District Judge Thomas Penfield Jackson ordered that Microsoft be broken into separate desktop applications and operating systems companies; earlier, the judge had ruled that Microsoft violated U.S. antitrust laws.
I thought then, and still think now, that Microsoft should have one-upped the government by voluntarily splitting into two or even three companies—the third for consumer products, including the Web. Microsoft escaped Jackson's breakup order, but its stock is stuck at early 2000 levels. A voluntary Microsoft breakup likely would have delivered more shareholder value and could have forestalled or even prevented the Google problem faced today.
Now, Microsoft must spin out Bungie—making it independent, again—presumably to save the talent. With Microsoft's stock languishing, and the prospect of new millionaire minting far in the future, why would developers of hot games want to hang around? Microsoft is going to find keeping the good talent increasingly difficult without the promise of big payback—like in the bygone days when the company had a hot stock and riches to share with employees.
Microsoft has gotten too much pot belly in its middle age. It's time for the company to lose some weight and have some progeny. Like people, companies grow old and they die. Who remembers FAO Schwartz, Montgomery Ward or Trans World Airlines? TWA logos appear in futuristic movies like "Blade Runner" or "2001: A Space Odyssey." But the airline had no future, at least as a brand, after 2001. Some companies, like AT&T, have gone through a death and reincarnation ritual. But die they did. Microsoft could live, and thrive, through its children. The spinoffs.
If Microsoft is to survive and thrive, there must be more Bungie jumps. I suggested a few months back that Microsoft should create small crack groups unfettered from current products to undertake new projects. That's not enough. It's time that Microsoft starts promising employees more spinoffs—that there will be the big stock pay off down the road. Why not make five-year plans? If such and such group achieves such and such goals, there would be a spinoff in five years.
The Bungie spinoff is a Microsoft crisis. While the spinoff is right, what necessitated it is not. Who wants to work for a coach potato that lives off the fat of the past? Office and Windows are still the main rainmakers. Microsoft has yet to score another big profit maker—and there have been many attempts. In the gaming category, Bungie is a winner, and one Microsoft couldn't afford to lose.
But how much other talent does Microsoft bleed? Bungie should be the first of many spinoffs. Otherwise, Microsoft will become that rich old fart who's in everybody's way, but has too much money for anyone to offend.
Comments (13)
Maybe spinoffs will be a way for the good and talented people in Micro$oft to rid themselves of the company's present predatory corporate culture that relies on dirty tricks instead of innovation to get ahead. Maybe a better, more scrupulous culture may emerge. That's perhaps one way to re-create Micro$oft from a company that deserves to be hated to one that truly serves and cares about its customers. Who knows, the spinoffs might even be smart enough to really develop and promote open source software.
Posted by Maddog | October 8, 2007 9:44 AM
The problem is obvious. Steve Ballmer and his cabal don't know how to grow the company past its legacy, cash-cow apps and licensing roots. Everything Ballmer, Bach, Allard, et al., have touched in the past six years has been a bust for shareholders.
They all need to go.
Posted by Ed T | October 8, 2007 9:54 AM
"..and perhaps problems to come" .
Again,Mr Joe Wilcox shows his negative sentiment.
To me , it is a right move as Microsoft is a technological company with programmers doing coding
To leave the artists to manage their creative part will definietly compliment Microsoft principal business activities and add synergy to expand their product line
Posted by Marty | October 8, 2007 10:24 AM
Yes, it is clever move
Novell + SUSE + Netware Directory = Titanic
Posted by John | October 8, 2007 10:26 AM
Joe,
The time is getting very close for Microsoft to go through discovery with the VCSY lawyers. That could be why the sudden departure of Bungie. Bungie would be using a totally different patent(521) of VCSY's in Halo3, than the patent(744) that VCSY is currently suing Microsoft over.
The reality is nothing innovative and creative can survive at Microsoft because they have too many internal "partners" who don't ever evolve and advance so they smother the newborn.
Microsoft management has fostered a me-too-ism mindset that ends up sucking the life out of Mom. They didn't apply the R&D to web interoperation and now they're stuck on the desktop struggling to get off while their competitors build more and more desktop elements that will carry off the Microsoft vision like so many ants carting a carcass away bit by bit so the "desktop" becomes the webtop and the world at large will have no need for the Microsoft originated product.
That's the future and you can thank Gates and Ballmer for holding the company back until their technological window in time has past. It's over. All they can hope to do now is play catchup as Adobe and IBM dismantle their playing field... and they will do it in a matter of months. Not years as the company had expected years ago. The years are past. Welcome to your future.
Posted by I-Man | October 8, 2007 10:28 AM
I do agree with the article about the problem MS faces with the company being too big to get the best hungry new talent, but I also think that when it comes to research money there is no competition and most scientist would die to work in an industry that have a chance at funding the future.
Since the topic is on a Video game company let's look at the Xbox 360. As a piece of hardware it is a huge failure, but because MS made it easy to program for and offered a framework to give dev's a headstart not only do you see a lot more 3rd party support but also much better results and in the end sales. Then there is XNA which is really something! In the past it would have just been a dream to be able to make games for a video game console, but now every programming hobyist can do so and with Xbox Live being a framework pretty much every single game features some form of online capability and the reason they probaly see their future no longer relying on one franchise.
Microsoft has always been about making their environment the easiest to create applications for. Sure it might not be the job the average joe will ever see or acknowledge, but it is the foundation for the future and where the real money is because of course you will need to use their foundations to use it. If they all the sudden decided to take their research away from the future and put it all into these small divisions that made mainstream applications I would see it as a dissapointment.
The MSDN website is probably the greatest example of what I see MS's focus being. As a programmer they give me everything I need to make things happen and therefore I mostly write code for their frameworks and OS's unless the job forces me not to. And I really just cannot say enough about C# and the .net framework and what it means to internal programming especially on the small business side of things. Before when contacted about making apps for small businesses I used to turn them down because I knew it would be too expensive, but today I do a lot of it as donations it is so streamlined. WPF is another big one and over the next couple of years I see a lot of companies making a lot amazing apps with it. Right now it is still too risky to use, but once Silverlight becomes a standard and businesses are forced to move to vista it will really make a difference.
Maybe the problem is a lot people want ms to be google or Adobe? Don't get me wrong, the fact MS makes these products and keeps the competition going in the market helps keep the industry moving but these are not the areas MS should be focused on. These are simply areas they need to be aggresive enough at to keep the industry moving and the apps exciting on their OS but in the big picture MS is much more than the applications that run in an environment.
Posted by Jesse | October 8, 2007 12:31 PM
"stock is stuck at early 2000 levels"
just ignore the 15% dividend-related gains along the way.
Posted by uhura | October 8, 2007 4:34 PM
It's one thing to look at the Bungie episode as a unique occurrence at MSFT, something else altogether when you realize the company has a poor record of integrating creative companies into the fold, as I explain here:
Bungie: Creative "sharks" can't survive at Microsoft
http://counternotions.com/2007/10/05/bungie-creative-sharks-cant-survive-at-microsoft/
Posted by Kontra | October 10, 2007 5:47 AM
Kontra
Nowhere on the Bungie site does it say anything like your heading "Bungie creative sharks can't survive at microsoft".
Another beat up ....again !!
With microsoft maintaining a "minority" shareholding in Bungie they would have (and could have said anything they wanted to, but they said nothing like what you said). Why ? Simple Bungie (as they themselves have said on their site) have done well out of the association with Microsoft.
Posted by Neil | October 10, 2007 8:45 PM
Neil: "Simple Bungie (as they themselves have said on their site) have done well out of the association with Microsoft."
Did the fact that Bungie left Microsoft escape you? As did SOFTIMAGE.
Here's what Bungie founder Jason Jones said...again:
"But Bungie is like a shark. We have to keep moving to survive. We have to continually test ourselves, or we might as well be dolphins. Or manatees."
IOW, Bungie (creative sharks) didn't want to turn into dolphins at Microsoft, expressed in their own language.
I'm not sure if I can make this any simpler for you.
Posted by Kontra | October 10, 2007 10:32 PM
Kontra
Can't YOU read !
I said that Bungie never said "Bungie creative sharks can't survive at microsoft".
And they didn't you did !!
Under microsoft they have gotten bigger than what they were before and now need even more room than they did before.
So YOUR STATEMENT that "Bungie creative sharks can't survive at microsoft" is totally wrong because they have actually grown.
If something can't survive they get smaller...bungie has gotten bigger !!
Posted by Neil | October 10, 2007 11:18 PM
Split will Make MS more strong and it can focus on respective markets in a better way.
Posted by Windows Web Hosting | October 22, 2007 10:00 AM
>>Can't YOU read !
Maybe its about thinking too?
>> I said that Bungie never said "Bungie creative sharks can't survive at microsoft".
Not in so many words, but if they were fine at MS, why would they leave? I would think Bungie did say that, but not in so many words.. I mean MS did help them out a lot, so I'm sure they dont want to offend.
>> Under microsoft they have gotten bigger than what they
>> were before and now need even more room than they did >> before.
The Bungie shark has grown and moved at Mircrosoft, but they seem to find that they can no longer do this ... therefore, Bungie (I would guess) feels it needs to move on, to find bigger waters, etc...
>> So YOUR STATEMENT that "Bungie creative sharks can't
>> survive at microsoft" is totally wrong because they have
>> actually grown.
So Microsoft was right for Bungie for several years, and they both worked well for a time. That time has come to an end... for one or several reasons.
Posted by drx1 | October 22, 2007 3:34 PM