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Microsoft The Almighty Buck

Microsoft's Midlife Crisis 631

pillageplunder writes "This article from Businessweek covers the recent memo sent to all Microsoft employees by Steve Ballmer. Interesting tidbits through-out: how Microsoft will try to cut a Billion dollars in expenses, and its cost per employee is about $300K"
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Microsoft's Midlife Crisis

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  • by Sadiq ( 103621 ) on Thursday July 08, 2004 @01:43PM (#9645264) Homepage
    $300k per employee? I wonder how much of that is in weed.... could explain alot of things...

  • Pretty high cost (Score:5, Interesting)

    by 777333ddd ( 525062 ) on Thursday July 08, 2004 @01:43PM (#9645272)
    Includes stock?
    • Re:Pretty high cost (Score:5, Informative)

      by LostCluster ( 625375 ) * on Thursday July 08, 2004 @01:50PM (#9645393)
      $300k per employee is a high stat, but the typical office worker costs a company $100k-$150k a year when things beyond salary such as the cost of supplying that employee with the office space and supplies needed to do their job, insurance costs, administrative expenses, and other such costs are factored in.
      • That is high. They have to be including marketing into the mix. There is no way every Tom, Dick, And Harry at micrsoft is earning 6 figures.

        Unless of course they are top-heavy in the VP of VP department. Overlycompensated execs do tend to skew stats.

        • Re:Pretty high cost (Score:3, Interesting)

          by N3WBI3 ( 595976 )
          You would be surpised, my last job I was making 52K a year, but the cost to my company was on the order of 80K per year (benefits and ss add quite a bit). Now my salary is still well below 100K but my cost to the company is a touch over that.
        • Re:Pretty high cost (Score:5, Informative)

          by TopShelf ( 92521 ) on Thursday July 08, 2004 @02:10PM (#9645646) Homepage Journal
          The problem is the way they word the statistic, "$300,000 in annual expenses per employee." This could entail both fixed and variable costs, meaning that simply eliminating an average employee wouldn't shave $300,000 from the bottom line. If you're looking at employee-related expenses overall, SRC (Salary-related costs, such as benefits) would normally run something like 30-50% over and above the employee's salary. Of course, since they're in the Seattle area, who knows what their average salary is...

        • by tekunokurato ( 531385 ) <jackphelps@gmail.com> on Thursday July 08, 2004 @02:24PM (#9645838) Homepage
          Yeah--cost per employee is a common stat used to demonstrate the general average force an employee has in the business. Another common one is revenue per employee. High cost per employee frequently shows that a company is working hard to expand, spending a lot of money on something (whether it's R&D or plant infrastructure) to build capacity, technology, etc. It's good that ms is doing this--if they cut that much, the employees will, on average, not be as empowered to expand. Don't forget that microsofts market cap still assumes pretty high growth rates compared to the average (i.e. high P/E).

          Simple math would answer your question, too: the article says 57,000 employees, so do 57k * 300k and you come out with $17bb in expenses.
        • Re:Pretty high cost (Score:5, Informative)

          by Mongoose Disciple ( 722373 ) on Thursday July 08, 2004 @03:02PM (#9646329)
          I can believe it. The working conditions for developers at Microsoft are incredibly beyond anything I've personally seen at a company of any size elsewhere.

          I did an interview there back when I was in college. Mind you, I didn't like a one of the people on the team I'd have been working with, but beyond that I was just blown away. Developers in large, comfortable, well-furnished (and, importantly, to their wishes rather than a corporate mold) offices rather than cube farms. Employee cafeterias which blew away any cafeteria or buffet-like restaurant I've ever seen.

          For me, the really painful thing to pass up was the free beverage package. Sure, some of the places I've worked have had something like that. The words don't really describe Microsoft's setup. Imagine a huge wall of soda fridges like you'd see at most gas stations, except on a grander scale -- imagine they have every brand or flavor you've ever heard of, including some you were previously pretty sure they didn't make anymore. Imagine there's one or two of those on every floor on every building.

          You can say a lot about Microsoft's business strategy, ethics, products, etc. But as far as working environment goes, it's hard to beat. They mean to provide an environment that no competitor (as in for hiring their developers away, not as in for the marketplace) can match. I can believe the high price tag.

          • by killjoe ( 766577 ) on Thursday July 08, 2004 @03:54PM (#9646899)
            Free drinks are great but they don't pay all that well and make you work 60 hour weeks at a minimum.

            I was interviewing there and when I heard that they expected at least 60 hours per week I said No thanks. It's just not worth it for me to spend 60 to 80 hours per week at work no matter how great the cafeteria.

            It might be great for 18 year old kids though.
            • Not anymore (Score:5, Informative)

              by Anonymous Coward on Thursday July 08, 2004 @05:18PM (#9647605)
              We don't really work 60 hours per week anymore. Some chose to do so, and they do quite well for it. But many work 40 hours and do perfectly fine as well. I personally have done quite well in my first few years here, and I only work 40 hours a week. Like any software job, I have worked a couple of 50 or 60 hour weeks at deadlines, but by no means is this common.
            • Re:Pretty high cost (Score:5, Informative)

              by danheskett ( 178529 ) <.moc.liamg. .ta. .tteksehnad.> on Thursday July 08, 2004 @06:25PM (#9648179)
              That's an utter lie. I defy you to find anyone who is "forced" to work "60 hours a week" minimum at Microsoft.

              Read the developer blogs over at blogs.msdn.com. These people love their jobs, but they all have vibrant social and family lives.

              Maybe 5 or 10 years ago things were different, but I know by e-mail and by longtime friendship several developers across the MS board and NONE work a regular work week more than 40-45 hours. Around shiptime do they work some long hours and short weekends? Yes.
        • by Vlad_the_Inhaler ( 32958 ) on Thursday July 08, 2004 @03:16PM (#9646484) Homepage
          You are forgetting the cost of the software licences for all that stuff they have installed. Most of that software will be from Redmond, but some will be from SCO (hey, they paid a lot for those licenses so someone must be using something).
      • by KilobyteKnight ( 91023 ) <bjm@ m i d s o uth.rr.com> on Thursday July 08, 2004 @02:53PM (#9646230) Homepage
        $300k per employee is a high stat, but the typical office worker costs a company $100k-$150k a year when things beyond salary such as the cost of supplying that employee with the office space and supplies needed to do their job, insurance costs, administrative expenses, and other such costs are factored in.

        Often one department in a big company "charges" other departments for accounting purposes. Perhaps the additional cost is the inter-department cost of licensing only Microsoft software.
  • by Anonymous Coward on Thursday July 08, 2004 @01:43PM (#9645273)
    Perhaps Gates knew exactly when the right time to leave was :)
  • by Coneasfast ( 690509 ) on Thursday July 08, 2004 @01:47PM (#9645325)
    i think steve ballmer reached his mid-life crisis long [ntk.net] ago [ntk.net].

    • you're confusing midlife crisis with puberty :-)

      Then again, midlife crisis is something associated with family life, which we nerds are ... um.. not hindered by ?
      • Re:mid-life crisis (Score:5, Insightful)

        by ReelOddeeo ( 115880 ) on Thursday July 08, 2004 @02:28PM (#9645898)
        Mid life crisis is exactly the right term. Please look at the following template, and see if it fits Microsoft.

        When a man reaches 40 or thereabouts, they suddenly realize their mortality. They suddenly realize that all those dreams they had and plans they made in their twenties are not going to happen. They aren't going to be able to build all of the software libraries they were imagining even in their early thirties. Furthermore, they find that the number of times per week that they have sex is less than the timer per DAY when they were ninteen.

        Usually, this results in: the sudden need for a boyfriend/girlfriend that is half their age. The kind of toys that they wanted at age 20 (usually a certian kind of mp3 player, 3D graphics card, or sportscar). I remember a dear friend describing the waitress he was dating, and one of the plus points was "well, she's at least almost half my age!".



        Different people have different views on what follows. I'll express my own view. This is highly personal. And not all people agree. I perceive that part of the issue is whether you have your eyes focused on this life or the next one. Since my real hope lies in what is to come, and not is what is present, I have not had, and don't expect to have a midlife crisis. Someone said something like: "where your stock options are, there your heart will be also.". Although I don't want to hasten the event, I'm ready to go, and frequently think about it.



        Back to the subject. So does this sudden middle age realization of ones own mortality seem to fit Microsoft? In other words, they might have as many years still ahead, as they have behind them, but suddenly, there is the realization.
        • Re:mid-life crisis (Score:4, Insightful)

          by CaptainCarrot ( 84625 ) on Thursday July 08, 2004 @05:35PM (#9647761)
          You don't seem to understand the syndrome very well here.

          Young men know they're mortal. It's just that their hormone-addled brains don't allow them to care much about it.

          I'm in my early 40s. When I was in my 20s, there were no 3D graphics cards for the consumer market, nor were there MP3 players. These were ipso facto not things I wanted. And I had a sports car back then. It was a tad beyond my income, but I determined, correctly as it turned out, that practical considerations would mean I'd never have another opportunity to own one.

          The typical dream of most young men is not to build some kind of killer software library. It has more to do with changing the world in a meaningful way. This typically requires a hardware-based solution.

          The difference between the sex you get when you're 40 and the sex you get when you're 19 is that when you're 40 it involved another person. This is way better even if it's (of necessity) less frequent. You're just going to have to take my word for it if you don't know this from personal experience.

    • by chadjg ( 615827 ) <chadgessele2000@[ ]oo.com ['yah' in gap]> on Thursday July 08, 2004 @02:04PM (#9645564) Journal
      So, does this mean that Win XP 2006 will get a Harley and start humping BeOS behind Ballmer's back?

      going to hell now...
  • be careful (Score:4, Insightful)

    by krray ( 605395 ) * on Thursday July 08, 2004 @01:47PM (#9645326)
    ...or you may just be holding microstock and the one left holding the bag...

    My stock and desktop GUI is now in Apple. And who doesn't love a cute penguin?
  • by LostCluster ( 625375 ) * on Thursday July 08, 2004 @01:47PM (#9645328)
    Microsoft's major problem is that it's been a long time since they've released a totally new line of products that has been sucessful. Aside from Open Source, Microsoft also has to compete with its own prior versions... Why does somebody who has Windows 2000 need Windows XP? Why does somebody who has Office 2000 need Office XP?...
    • by Pharmboy ( 216950 ) on Thursday July 08, 2004 @01:51PM (#9645402) Journal
      Why does somebody who has Windows 2000 need Windows XP?

      Twice the eye candy, and its so much more powerful, you get to reboot twice as often.
    • by pavon ( 30274 ) on Thursday July 08, 2004 @02:18PM (#9645754)
      Exactly. And it is not just Microsoft - it is a general weakness in the shrink-wrapped software business model. In that model you depend on sales of the previous version to fund additional features for the next version which in turn drives sales, and the cycle continues. The problem is that at some point your product becomes mature, and you have already implemented 90% of the features that 90% of the people want. Now there is still alot of potential functionality to be added but, each feature will appeal to only a small audience. Therefore even though you may have done as much work between versions 5 and 6 as you did between 2 and 3, you have deminishing returns on the number of purchases. Lastly, ever since the dot-com boom ended the number of first-time purchases (as opposed to upgrades) has been going down dramatically as well, so you are much more dependent on upgrades sales, which we just determined will also go down with time.

      So basically the shrinkwrapped software business model sucks for mature software. Unless you can keep improving the software in a way that appeals to a large number of people, you will not be able to generate enough money from sales to continue development at your current pace. Then your product will stagnate, and newcommers who focus on different niche features that you don't have will eat away at your market share.

      Once your software becomes mature, you really need to move away from the shrinkwrapped business model to some type of service business model. Interestly enough, OSS kicks ass in just about any service business model. If you are being paid for the act of writing and deploying software, rather then selling it as a product, it doesn't matter if you control the software or not. It just matters that you have the experience and talent to improve an existing piece of software (ie helps alot if you wrote the software to begin with).

      OSS has the opposite problem - it is easy to get paid to improve mature products, but getting a piece of software to maturity is harder (financially).
      • So maybe, once products reach a certain maturity level and sales have dropped off to the point that support costs outweigh sales, they should be open sourced.

        A development model that plans on handing over the keys to users at a certain point is an interesting twist on both the traditional model and OSS. You'll get a bunch of early adopters willing to pay for features. And you would attract those who will only use OSS because they want assurance against your company's collapse.

        This model has already been used on such commercial cum open products as Netscape and RealPlayer. But it wasn't PLANNED. If I could call potential customers and tell them that, in five years or if my company goes under, they'd have a "trust" in place to give them the source and they could to hire someone else to maintatin and extend my software, they would be very interested -- turnover is a deadly problem in my industry.
      • by rewt66 ( 738525 ) on Thursday July 08, 2004 @03:24PM (#9646583)
        No, it can be fine, if you realize that you are in a mature market. See, once you have almost all the features anyone will ever need, you can get rid of most of your developers. Just add a few new features every so often, port it to the next rev of the OS, fix a few bugs. That's all. You won't have that many sales, either, just sales at the rate the market is growing. But if the expenses are down, you'll do all right.

        But companies don't recognize when they're at that point, or they don't accept it. "No, we have to have a rapidly growing market! Keep all the developers, have them develop something new!" And the "something new" never takes off in time to save the company...

  • by arieswind ( 789699 ) * on Thursday July 08, 2004 @01:47PM (#9645335) Homepage
    Dear Microsoft,

    Welcome to the real world, where your stock does not grow 10,000% in a matter of a few years, and companies have to *gasp* cut costs, or perhaps even *bigger gasp* innovate, to keep their companies from falling flat on their face.

    With much love(sorta),

    The World
    • Re:Dear Microsoft (Score:5, Informative)

      by Daniel Dvorkin ( 106857 ) * on Thursday July 08, 2004 @02:12PM (#9645677) Homepage Journal
      No shit.

      I love this bit from the article:

      Does Microsoft's midlife struggle signal that the glory days are over for tech? Not a bit. While industry revenue growth is slowing, there's still plenty of innovating to do. Microsoft just has to figure out a better way of going about it.

      No, it means the rest of the tech world will go on innovating, and Microsoft will go on copying, and make money -- not insane shit-tons of money, maybe, but plenty of it -- just like always. They've never innovated anything; they've always made their money by being clever businessmen, not brilliant inventors. Nothing has to change.
    • by GoofyBoy ( 44399 ) on Thursday July 08, 2004 @02:36PM (#9646014) Journal
      Dear World,

      You've been saying that for the last 10 years. Since then we've grown bigger, have more cash than the total worth of third world companies and are still own a huge percent of many software categories that others would die to have.

      See you in 10 years from now,
      Microsoft
    • by Mr_Huber ( 160160 ) on Thursday July 08, 2004 @04:05PM (#9646991) Homepage
      Oh, dear. This just flashed into my head...

      Bill, lying naked on a table: "Why do my dividinds hurt?"

      Linus, looking down, sad and concerned: "You've never issued them before."

  • by gr8_phk ( 621180 ) on Thursday July 08, 2004 @01:48PM (#9645338)
    They can keep all thoses perks and crap.
  • solution: (Score:5, Funny)

    by blue_adept ( 40915 ) on Thursday July 08, 2004 @01:48PM (#9645347)
    immediately discontinue the "one dollar for each reported bug" program.
  • Pit stains (Score:5, Funny)

    by bujoojoo ( 161227 ) on Thursday July 08, 2004 @01:48PM (#9645348)
    Maybe if Ballmer wouldn't charge his dry cleaning to his expense account, they wouldn't be in such dire straights...

    DEVELOPERS, DEVELOPERS, DEVELOPERS!!!!
  • process optimization (Score:5, Interesting)

    by rnd() ( 118781 ) on Thursday July 08, 2004 @01:49PM (#9645362) Homepage
    Any business can benefit from optimizing its processes. Microsoft has been very good at making profits... it will be interesting to see if it will succeed at creating business processes that capture the imagination of its employees and make them feel like part of a well oiled machine.
  • $300K Not Unusual (Score:5, Informative)

    by 4of12 ( 97621 ) on Thursday July 08, 2004 @01:49PM (#9645364) Homepage Journal

    If you've costed in the salary of a professional, fringe benefits, vacation, employer's contribution to social security, etc. and then add in a multiplier to account for the infrastructural overhead services (people in accounting, facilities maintenance, management, etc.) in a large corporation or university, this figure is not at all unusual.

    That said, however, Microsoft enjoys a surfeit of talent that, like ATT Bell Labs in its day (when it, too, had a monopoly) could afford to do lots of interesting work.

    Unfortunately, the need for innovative work to reinforce and expand the existing business model and never ever undermine it is constraining and prevents the company from releasing the full talent of its employees.

    So what you see instead are people leaving Microsoft to start entirely new ventures.

  • by cOdEgUru ( 181536 ) on Thursday July 08, 2004 @01:49PM (#9645372) Homepage Journal
    Now..now..play nice.

    Everyone look at poor M$ in the corner, dying a slow death for the lack of another Billion in the bank.. Lets not let that happen..shall we..being the good neighbours we are..

    So here is what I recommend.. The slashdot community will, painful as it is, will map out the various product lines of Microsoft with their perceived value, which needs to be truncated or snuffed out completely. Once we are all in agreement as to the total worth is a Billion, Cmdrtaco, the chosen representative, will submit said list to the powers that be (read: Balmy Balmer) for review and acceptance.

    So get your thinking caps out, check your emotions , pay no heed to the thousands of M$ programmers who will obviously hate you for nixing their much loved products, let reason run rampant..and lets choose what Microsoft needs to put another Billion in the bank!
  • Vision Thingy (Score:5, Insightful)

    by Shadow Wrought ( 586631 ) <shadow@wrought.gmail@com> on Thursday July 08, 2004 @01:49PM (#9645374) Homepage Journal
    What the company needs is a new vision of itself

    Those whom the Gods would destroy they first give a vision statement to.

  • by oldosadmin ( 759103 ) on Thursday July 08, 2004 @01:50PM (#9645386) Homepage
    My first thought about Microsoft is that the fact they are Anticompetitive HAS to make their distributers bitter. I mean, think about it. Dell, HP, and other manufactuerers are slowly moving to linux -- they, like many technical users, are tired of being pushed around (owned?) by Microsoft.

    I think that when Microsoft got too cocky, and too intrusive, they sealed their own doom. They aren't going to be "destroyed"... but I feel they will be forced to remake themselves in a similar way to IBM.
  • by Zorilla ( 791636 ) on Thursday July 08, 2004 @01:50PM (#9645387)
    In other news, Microsoft is nearing the release of their two newest products: Microsoft Combover and Microsoft Penis Car
  • by kevin_conaway ( 585204 ) on Thursday July 08, 2004 @01:50PM (#9645388) Homepage
    ...for backwards compatibility. I think they use a lot of their manpower to maintain backwards compatibility for not only their own software, but other high profile apps that run on Windows. I dont really have a solution for them, just felt like pointing that out :)
  • Costs catching up? (Score:5, Informative)

    by Dark Paladin ( 116525 ) * <.jhummel. .at. .johnhummel.net.> on Thursday July 08, 2004 @01:51PM (#9645398) Homepage
    I wonder if this is an example of Microsoft trying to be the "end all, be all" of everything, and it's finally catching up with them.

    So far, they have 4 sources of real revenue:

    Windows OS/Server
    Office
    Development Tool Sales
    Some hardware (mice, keyboards, etc)

    Everything else that MS is involved in has been money losing ventures. Cell phones, PDA, cable TV, "Ultimate TV" - heck, the "raging successful Xbox" has lost over $2 billion for the company (and if that's success, I'd hate to see what failure is).

    MS has $56 billion in the bank (some cash, some investments), and so far, revenues are still outstripping costs. But I think Ballmer can look ahead and read the writing on the wall. Other than the MS tax on computers (yes, it exists, deal with it), people aren't rushing out to upgrade with every new OS release. Lots of folks are still on Windows 98/2000 Server and Office 95.

    So what will be cut away? WIll they just reduce the number of employees? Shift more developers to India? Or cut on some projects and say "OK, so we're not going to take over the cable market."

    The Xbox2, for example, is being retooled not to be "successful" (as in "Beat Sony!"), but "profitable", which should be their focus: making a game system that is cheaper to produce, harder to hack, and even if they aren't #1 in the game industry they can make money at it (wait - that sounds like another console company out there). Why be #1 in the home media player market when [nintendo.co] sometimes being #2 makes money too [apple.com]?

    Odds are, MS is, as the article mentions, just going through a "mid-life crisis". They'll either recoup, tighten down, and keep chugging along - or just proceed with "business as usual" for all their talk, then wonder 5 years from now why all of the business are running Slinux (simple Linux - easy enough for Grandma to figure out how to change the screen resolution) or Apple OS X instead of Windows.
  • by hoferbr ( 707935 ) <fabiomNO@SPAMgmail.com> on Thursday July 08, 2004 @01:51PM (#9645401)
    excerpts [nwsource.com] from the memo (not included in the businessweek article):

    On growth and costs: "We have as much opportunity to grow as any other company in the world. That's a big statement, but the opportunities we've scoped out are very big. Make no mistake -- we must grow our revenues to grow profits. We cannot just cut costs. At the same time, we must ensure a competitive cost structure, or competitors will offer prices, services or innovations that we cannot afford to match. Other companies have been severe in tightening costs the last few years -- layoffs, major benefit reductions, etc. We have not done those things and want to be prudent now so we avoid severe measures later."

    On the need to innovate: "The key to our growth is innovation. Microsoft was built on innovation, has thrived on innovation, and its future depends on innovation. We are filing for over 2,000 patents a year for new technologies, and we see that number increasing. We lead in innovation in most areas where we compete, and where we do lag - like search and online music distribution - rest assured that the race to innovate has just begun and we will pull ahead."

    On Microsoft's share price: "Obviously, we all want to increase the value of our stock, and we have the best opportunity to do that since the end of FY98. Our stock was around $25 then, as it is now, and we have more than doubled our operating profits since. Shareholders then were betting we would work hard for all these years to make the company worth that mid-98 stock price. We have done so."

    On aiming products at various markets: "Our products must also be better segmented for different users with different needs. And we must evolve marketing to focus more squarely on the value proposition throughout the product lifecycle, not just at launch. So many customers have yet to deploy our most recent advances, so we must not only help them understand why to deploy, but also demonstrate the benefits of deploying before we reach the Longhorn generation."

    On perceptions of Microsoft: "We must also work to change a number of customer perceptions, including the views that older versions of Office and Windows are good enough and that Microsoft is not sufficiently focused on security. We must emphasize key positive perceptions of the strong manageability, and developer and information-worker preference, for our platform."

    On avoiding the trappings of size: "Nothing solves 'big company' ills quite like a strong focus on accountability for results with customers and shareholders. Innovating, growing share and profits, and serving customers all ensure that we have no time for wasted motion. To do this, we need to prioritize the things that matter the most with our customers and for the company, and then be accountable for executing on those choices."

  • by Anonymous Coward on Thursday July 08, 2004 @01:51PM (#9645406)
    By switching to Linux and OpenOffice/KOffice on their desktops. Not their development or testing machines, but just their accountants, security team, and call centers.

    Dang! Wait a sec...Windows and Office are free to them, so it only saves on the cost of anti-virus + downtime/patch maintenance, so that's probably only $50 per user or so.
  • MS News? (Score:3, Interesting)

    by fiannaFailMan ( 702447 ) on Thursday July 08, 2004 @01:51PM (#9645408) Journal
    You hear about wonderful things in Microsoft's lab. One project, called News Junkie, sifts through articles on the Web and presents to you only the ones you haven't seen before.
    I think the google news [google.com] service is pretty hard to beat.
  • by Allen Zadr ( 767458 ) * <Allen DOT Zadr AT gmail DOT com> on Thursday July 08, 2004 @01:54PM (#9645437) Journal
    The article seems to imply that Microsoft needs to find a new and interesting way to innovate.

    Seems to me that Sun led the way back in the early 1990s when they developed Java. Take 1 really talented software engineer, and give him something to work on. Allow him to pick 5 to 10 other talented people, and sequester them from the rest of the company for 1 year.

    At Microsoft's level, they can probably afford to do this with 20 or 30 such groups in parallel working on the same or similar ideas.

    After a year, dump the projects that are not going well, and refocus those groups on other ideas. Innovation is rarely done by large commitees.

  • by bheer ( 633842 ) <rbheerNO@SPAMgmail.com> on Thursday July 08, 2004 @01:54PM (#9645442)
    Companies don't mature until they go through a couple generations of management and product lines. This is one of the criteria used in Built to Last [amazon.com], one of the few biz books I can say were a *good* use of my time (the other IIRC was the ability to deal with failure and bounce back).

    Basically, MS has been under the same management (Gates, and even Ballmer has been around since the beginning, pretty much) since its inception. Product lines -- well, in a way it has been through three: command line (DOS-era), early GUI (Win 3.x and Win9x) and modern OSes and platforms (NT, networking products), but it has shown considerable difficulty getting out of the "sell boxes of software" model.

    Given all of these, I'd call MS a very immature company even now. Midlife crises will come the day Linux is just as good on the desktop as OSX is, and MS is forced to look in the mirror and ask, "what now?"
  • by gelfling ( 6534 ) on Thursday July 08, 2004 @01:55PM (#9645450) Homepage Journal
    Most of MS costs are labor - people. How you reduce labor costs is to pay less and pay fewer people.

    Expect cuts. All this talk about how MS is no longer going to pay for shiatsu massages for your 'animal companion' is just their way of saying "Hey dickheads the 90's are really fucking over". Next stop - "Microsoft is just like everyone else, move to India or get fired!"
  • 300k Per Employee? (Score:4, Interesting)

    by mattyohe ( 517995 ) <matt@yohe.gmail@com> on Thursday July 08, 2004 @01:56PM (#9645461)
    Thats 17 Billion dollars right there!

    Just cut it down to 282k per employee. There are 57,000 of them so that would apporoximate a 1 billion dollar cut right there.
  • by mcc ( 14761 ) <amcclure@purdue.edu> on Thursday July 08, 2004 @01:56PM (#9645465) Homepage
    Well, the last time I checked, that was roughly how much they'd lost over the previous four quarters on the XBox venture... and roughly how much they'd lost onthe XBox venture over the four quarters before that...

    In a company where pretty much everything except Windows and Office is the company just tossing money at an unprofitable venture for the privilige of having a product in that area, finding a billion dollars to cut shouldn't be that hard...
  • next big thing (Score:5, Interesting)

    by happyfrogcow ( 708359 ) on Thursday July 08, 2004 @01:59PM (#9645507)
    a key focus now for Ballmer is "process excellence," which seems unlikely to inspire Microsoftees to stay up all night creating the Next Big Thing.

    The Next Big Thing *is* process excellence and the goodies that come about through that, like secure software with minimal bugs. Ballmer atleast has that right. Now if he can have his developers find their idea of a Next Big Thing, while keeping true to the real Next Big Thing (process excellence) then you might see MS leave the doldrums of midlife crisis.
    • Re:next big thing (Score:5, Insightful)

      by asr_man ( 620632 ) on Thursday July 08, 2004 @03:37PM (#9646716)

      What is this, a troll? We had this crap all through the 90s boom.

      The Next Big Thing *is*
      $MANAGEMENT_FAD and all the goodies that come with that, like $SOFTWARE_BUZZWORDS.

      "Process excellence" in software is usually the wishful thinking of a management that believes dehumanized industrial optimization techniques apply to a creative craft practice. The "process" typically accelerates the exodus of the most knowledgeable and productive employees to less mind-numbing work environments. Show me one good process that produces excellent software despite being run by idiots. Focusing on process is what companies do when they've become so clueless they can't find their *ss with both hands. Of course, most companies enter such a phase in their evolution, perhaps it is Microsoft's turn.

      "Just enough" process is the right amount. Just enough to keep release cycles sane. Just enough to keep the product evolution from becoming too unstable. But not enough to distract people from focusing on their real work, doubt their better judgement, or prevent their creative juices from flowing. Any more than that and the perpetrators should be smacked repeatedly on the head with a rolled-up gantt chart.

  • by thpdg ( 519053 ) on Thursday July 08, 2004 @02:02PM (#9645535) Journal
    Coming off the heels of Nintendo rereleasing Super Mario Bros 1, and Zelda, I think we need to see the same from Microsoft. Who here wouldn't lay out $19.99 for a copy of early DOS and Windows. And hey, no fair answering if you've still got the install floppies on your desk. Atari and Activision have those game controllers that hook to the TV and have like 10 classic games in them. How about a keyboard that has Word 5 in it? A USB port for a keychain on the side. I bet we could have it running Linux in no time. Imagine a beowulf cluster of THOSE!

    Ok, ok, enough joking around. I hate to say it, but Microsoft needs to learn how to make a buck off of Linux. They could create their own distro and do their own API and app porting to it. For the same reason people love that OS X is built on *nix, people wouldn't mind a Windows built on it. The best of both worlds. Sign me up for that.
    Thanks, you can have the podium back now.

  • by MoOsEb0y ( 2177 ) on Thursday July 08, 2004 @02:03PM (#9645547)
    Microsoft is dying.
  • by weeboo0104 ( 644849 ) on Thursday July 08, 2004 @02:06PM (#9645594) Journal
    Quick! Someone send Steve Ballmer a TCO study that shows how much money they will save if Microsoft migrates to Linux!!!
  • by MacDaffy ( 28231 ) on Thursday July 08, 2004 @02:14PM (#9645698)
    Microsoft's strength has always been embrace and extend. Its weakness comes in the decisions on whether to "exploit" or "extinguish." It has killed a legion of technologies/business/competitors whose contributions to the world of computing have come to nothing or have been FUBARed--just because Microsoft feared the competition.

    It has bowdlerized standards when it could for its own gain (e.g. Kerberos, SMB, etc.). Microsoft sees computing as a zero-sum game where it MUST win and everyone else must lose. Rather than compete by making itself look good (innovation, quality, service), it has been always willing to win by making others--including itself--look bad.

    Then comes Open Source--a game where they either play fair or they don't play at all. Now, Microsoft is stuck with having to REALLY innovate. Linux and Mac OS X are running rings around Redmond and Ballmer's only answer is to exhort the troops. That won't work.

    Microsoft needs to adopt open source, retool its operating system and--for once--put all that money toward excellence rather than bullying the market, ripping off innovators and/or buying ascendancy via restrictive contracts with manufacturers. If Apple announces Mac OS X for x86 or some other innovation comes along, the good ship Microsoft is going to have a BIG hole below its water line and not enough buckets to bail with.

    The history of personal computing is comprised of sea changes. Ballmer's memo acknowledges that. He remembers the position he was in ten years ago.
  • by kallistiblue ( 411048 ) on Thursday July 08, 2004 @02:19PM (#9645762) Homepage
    Or at least they did.
    That's one of the reason that MicroSoft doesn't pay any corporate tax.

    Alternative Fuel [alternativ...odesel.com]
    • Mod parent down (Score:4, Informative)

      by kylef ( 196302 ) on Thursday July 08, 2004 @10:16PM (#9649361)

      This is a completely misleading statement. The fact that Microsoft expenses options is a *Good Thing* and is something that all corporations should be doing in the wake of recent accounting scandals.

      And by saying "MS doesn't pay any corporate tax" you are insinuating that it somehow is hiding revenue, which is ludicrous. Recently, MS stock options have been "underwater" so they have not been popular to exercise. But any money that *is* spent on exercised option discounts is written off as additional employee salary expenses, which it is (the number of options purchased times the difference between the option strike price and the cost basis is added to the employee's W-2 taxable income total). MS should certainly not have to pay taxes on employee salaries: the employees already pay taxes on their salaries! Making the company pay taxes on the same money would amount to double-taxation. This is how all companies handle their options plans, assuming they are expensed on their books. If not, then investors beware...

      Now, whether this deduction alone can wipe out the total taxable corporate net income of Microsoft is a different story entirely. There would have to be a LOT of options exercised to amount to that kind of money, and in recent years it just hasn't happened. Back in the late 90's, it's possible. MS net profit was much smaller back then. Today, with MS stock price stagnant for 5 years and profits stronger than ever, there is no way that options deductions could come close to offsetting their tax burden.

  • by MagikSlinger ( 259969 ) on Thursday July 08, 2004 @02:24PM (#9645833) Homepage Journal
    Dear Steve,

    If you had really paid attention in your Harvard business classes, you would have learned the story of Standard Oil. A big monopolistic oil company that was finally forced to break up into pieces. Mr. Rockerfeller was sad until he suddenly discovered his stock portfolio went through the roof. Apparently, when Standard Oil became a bunch of smaller companies [wikipedia.org], they grew the market and their collective market capitlization was far, far greater than they were in one company.

    You've had the opportunity several times now, and the last time had the feds suggested it too. But maybe it's not too late. It's time to knife the baby [com.com] and split Microsoft into two or more companies. Split applications from OS. Create an Internet technology group separate from the others that encompases IE as a pluggible component for Windows or any OTHER Operating System, and provides search, MSN, Instant Messaging, VOIP, etc.. Move the Entertainment group into its own company and let it succede or fail on its own, and more importantly, let them have the freedom to chose the technologies involved. XBox has fans now, and it has a bright future. But only if the XBox division is no longer distracted by trying to save the OS group.

    Come on, Steve. You know the time is right, and this is so the right thing to do.
  • by c0d3h4x0r ( 604141 ) on Thursday July 08, 2004 @02:38PM (#9646037) Homepage Journal
    DISCLAIMER: I work at Microsoft as a developer. Nothing I say here is official company stance. This is just my personal opinion based on my time both before and after joining Microsoft.

    Microsoft's main problem is a refusal to take quick action by trusting in common sense and instinct.

    For example, it took upper management over a decade to finally see that users didn't trust Microsoft products. The rest of the world knew it all along, but management had to wait for mountains of hard data to come pouring in before taking any action. The Trustworthy Computing effort is genuine, sincere, and effective, but it's also about fifteen years overdue.

    Do you think Bill Gates wrote BASIC for the Altair, or pulled off his buy-an-OS-and-name-it-MS-DOS move, based on mountains of official market research and hard data telling him that it's what people wanted? I'm betting he didn't. I'm betting he did it because he was smart and trusted his own instincts -- just like a professional chess player who doesn't realistically have the time to scientifically evaluate every possible move at every turn.

    Microsoft isn't a bad company. People here really do care about satisfying customers and making the best stuff in the world. I really hate the false accusations so many people make about this company. But I also have to say that this company has grown timid and too slow to act, and that is our real challenge.

    • by dbarclay10 ( 70443 ) on Thursday July 08, 2004 @03:43PM (#9646795)
      Microsoft isn't a bad company. People here really do care about satisfying customers and making the best stuff in the world. I really hate the false accusations so many people make about this company. But I also have to say that this company has grown timid and too slow to act, and that is our real challenge.

      You work in a big company, so you're going to have to get used to it. Parts of your company engage in dirty, despicable "business" tactics to get on top, at which point they ignore the user base and move onto the next hill. These actions directly harm people. If you can't take that, then maybe you shouldn't be working for them.

      (P.S.: Next time an MS representative tries to go over my head [I'm head IT guy at a mid-sized company] by going directly to the executives who now *willingly* admit that they don't have the expertise necessary to make good IT decisions, we begin our full migration to Linux. The execs have told MS representatives twice already that they are *not* interested in buying some widget so they can get their business done, and when it comes to IT, I'm the guy. Of all the needlessly harmful and destructive things MS can do, marketing directly to executives by taking them out for ski-weekends and fancy lunches is the worst. You guys nearly ruined the company I work for because of these tactics, and we're not the only ones. If their last IT guy hadn't quit [he didn't have the skill required to get the executives on "his" - aka the company's - side], they'd be out of business by now. I'm not exaggerating, it's a genetics company and their entire revenue stream is based on their data warehouse. When your company finally gets their act in gear by making realistically decent products, *and* stop preying on professionals like myself by going over their head to make the sale, maybe you'll get a modicum of respect. Expect it to take at least a decade for it to become a healthy amount of respect.)

      • by scrytch ( 9198 ) <chuck@myrealbox.com> on Thursday July 08, 2004 @04:28PM (#9647197)
        Microsoft took their sales upstairs. Welcome to the world of sales, any good salesman will go to the person making decisions as far up as they can go. The sales tactics you outlined sure as hell are NOT limited to Microsoft, it's just that MS can afford the sort of potlach that selling to the top execs takes. As head IT guy, you have to wade in to some of those politics yourself, or at least get the CIO on your side. Ultimately either your execs respect your technical acumen, or they don't and it's time to find another shop.

        I would submit however, that "threatening" to move to Linux as a defensive move against a sales tactic does nothing to sell a Linux solution within your company.
        • by dbarclay10 ( 70443 ) on Thursday July 08, 2004 @04:40PM (#9647332)
          Microsoft took their sales upstairs. Welcome to the world of sales, any good salesman will go to the person making decisions as far up as they can go. The sales tactics you outlined sure as hell are NOT limited to Microsoft, it's just that MS can afford the sort of potlach that selling to the top execs takes. As head IT guy, you have to wade in to some of those politics yourself, or at least get the CIO on your side. Ultimately either your execs respect your technical acumen, or they don't and it's time to find another shop.
          I would submit however, that "threatening" to move to Linux as a defensive move against a sales tactic does nothing to sell a Linux solution within your company.

          Read both of the rants in their entirety - most of what I'll say below I already said.

          First, just because selling to idiots is the "world of sales" doesn't make it right. Microsoft's products are either used or maintained by *professionals*. Maybe it doesn't matter when you're trying to sell a glass figurine, but it sure as hell matters when you're trying to sell surgical instruments. You can be damned sure that the executives in a hospital are made up largely of people who are medical experts, who used to be, or who know to delegate such decisions to the experts. In the case of IT, the products are no less important, and maybe MS could get away with selling crap to senior execs ten years ago, but those days are numbered.

          Second, I know these tactics aren't limited to Microsoft. Duh. In fact, the worst boondogle(sp?) I've seen in an IT rollout was using products from a vendor other than MS. I actually give them credit where credit is due here; their products may be sub-standard, but they're better than some of the *real* crap that people buy.

          Third, I don't like the word "politics". There's a negative connotation to that. As I said in my last rant, the last head IT guy at this company here wasn't able to communicate as effectively as MS' salespeople, to the point where the executives trusted the MS reps more than their own employee. He left, and now I'm here, and my first job (took at least three months) was getting the executives to realise the mistakes which had been made in the past, and getting the gears in motion on correcting them. It wasn't an easy job, so don't bother trying to tell me that it's hard ;) The last IT guy was decent, but not great. He had too much attitude.

          Lastly, I've already sold the "Linux solution" within my company. We're already using it extensively. After six months, two different MS representatives have been kicked out of executives' offices and told to talk to me. The executives have made it clear in no uncertain terms that if MS tries to take advantage of them again, MS will not be getting any new business from them. Right now we've got a good amount of Microsoft software, and we plan on upgrading them as time goes. If, however, MS tries its bullshit sales tactics again (trying to sell them high-margin software which MS *knows* is unsuitable for the task [or software they *should* know is unsuitable for the task]), we'll instead begin migration plans. Don't mistake a plan of action for a baseless threat. There's only so many times a merchant can knowingly perform actions which would be of great harm to the customer before the customer says "okay, enough of this, you guys just can't be trusted for even the most basic things."

          In short: don't teach your grandmother to suck eggs :)

    • by melted ( 227442 ) on Thursday July 08, 2004 @05:05PM (#9647520) Homepage
      The problem with this company is that you have to make a lot of random people feel good about themselves before you get a go ahead on anything. You want a permission to fart in your office? Ask a dozen other teams what their policy is, schedule two dozen meetings, negotiate, negotiate, negotiate and only then will you get a go-ahead.

      You know why this is? This is because of lousy management. A lot of people have become managers at MS simply because they wanted to become managers, not because they have necessary skills or are particularly fit for the job. A repercussion from this is that there's certain lack of leadership and vision from the very bottom to the very top.

      This is unfortunate, because as a company Microsoft can kick everybody else's ass. We have SIXTY BILLION bucks and the best talent in the world, yet we still sit on our butts and wait until somebody else invents something to buy the company outright.
  • by mrscott ( 548097 ) on Thursday July 08, 2004 @02:48PM (#9646166)
    Microsoft could save a lot in licensing fees if they just switched to Linux and OpenOffice.
  • by Pan T. Hose ( 707794 ) on Thursday July 08, 2004 @07:39PM (#9648653) Homepage Journal

    My open letter to Steve Ballmer:

    Dear Mr. Ballmer,

    As a scientist and developer developer developer developer, I believe I can answer some of your concerns [nwsource.com]:

    We must also work to change a number of customer perceptions, including the views that older versions of Office and Windows are good enough [...]

    I can sincerely assure you that I, for one, have never considered older (or newer, for that matter) versions of Microsoft Office and Windows good enough. Not even once. You can stop worrying about that.

    On the need to innovate: The key to our growth is innovation. Microsoft was built on innovation, has thrived on innovation, and its future depends on innovation. [...] We lead in innovation in most areas where we compete, and where we do lag [...] rest assured that the race to innovate has just begun and we will pull ahead. [emphasis added]

    Now, no matter how much you believe your developers developers developers developers to innovate innovate innovate innovate, saying the above as a company which, in fact, has never contributed a single notable innovation to any computer-related field [harvard.edu]... Well... What can I say? You are not only doomed. You are already dead.

    Sincerely,
    Pan Tarhei Hosé, PhD.

Egotist: A person of low taste, more interested in himself than in me. -- Ambrose Bierce

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