The first time I was really impressed by Microsoft was back in the 1980s. I was being given a private demonstration of a hot new program for the Macintosh. I was struck not just by the beta's cool new graphical interface – a clear advance on existing DOS programs like 1-2-3 – but also by the infectious enthusiasm of the Microsoftie showing me around the beta. The program, as you've probably guessed, was Excel; the person doing the demo was Bill Gates.
The next time I was really amazed by a Microsoft product was when Windows 3.1 came out. It was just so clearly right, and a winner. Similarly, when the betas of Windows 95 started appearing, it was a marked improvement on that achievement, whatever its manifest faults. In fact, I would go further: I think that Windows 95 will, in retrospect, be seen as Microsoft's apogee, the moment when it was truly undisputed master of the computing universe in terms of setting the agenda.
Fast forward fifteen years, and there is a growing feeling, not just that Microsoft is past its prime – as I've indicated, I think that's been the case for all that time – but actually doomed. Not in the sense that is about to go bankrupt, or disappear in the short term – both of which are clearly ludicrous – but simply that its fate is now sealed: for all its massive desktop market share, and enormous cash reserves, it is a spent force, unable to seize the initiative in any of the sectors that matter – online or mobile, for example.
I'm not going to go through the reasons why that might be an accurate analysis – you've probably read the articles, and either agree or don't. Rather, I'd like to ask, just assuming for the moment that it's true, what this might mean in terms of Microsoft's detailed short- to medium-term development.
As I've said, I don't think Microsoft is going to disappear in the next year or two, or even the next decade or two. But in what form will it continue? Are their multiple routes forward, depending on the choice Microsoft makes in the next year or so, or only one, that will happen whatever it does?
For example, one future might be more of the same: broadly stable market share on the desktop, where its stranglehold is pretty unbreakable; continuing massive losses online; disappearance in the mobile sector; invisibility in new areas like tablets. But is that kind of no-brainer cruising mode really an option? Surely one implication would be a static or even declining share price, and increasingly angry shareholders? At the very least, Steve Ballmer would be ejected, and fresh management brought in, which brings us to the second option.
Assuming that shareholders decide that drastic action is needed, and a new CEO appointed, who should it be? Someone from within the company, to ensure continuity? Is there anyone with the requisite vision and stature? Top executives seems to be fleeing at an accelerating rate, and it's not clear who is left that commands respect both within the company and with financial analysts. The latter are critically important because, absent a strong hand on the controls, they would probably write off the company completely, causing its stock to go into a death spin.
Maybe Microsoft needs an experienced outsider with no compunction in slaying the sacred cows of Seattle? And if so, from which industry? Another computing exec (I gather that HP may have one spare...), or from a completely different one? That was IBM's approach when, in its desperation to save the company from a terminal decline similar to Microsoft's, it brought in Louis Gerstner from Nabisco, a biscuit company....
That assumes that Microsoft stays intact: another option would be to break it up into a profitable core based around Windows, SharePoint and Office, and spinning out the Internet, gaming and mobile divisions. There would be advantages to doing this, not least in terms of allowing the mobile division to adopt Android, for example – something that is unthinkable at present, where it is forced to go through the clearly doomed motions of launching operating system after operating system without any real hope of making any impact on what is fast turning into a smartphone duopoly.
A more brutal version of this story would see a leveraged buyout of the company (helped by a nice $37 billion cash hoard) closing down the loss-making parts, and maximising the revenue from Windows and Office by exploiting the choke hold they have over users – increasing prices until the pips squeak.
What other futures might there be? How about rather unlikely ones – for example, Microsoft becoming a gaming outfit – or even an open source company? And do they include one where Bill Gates returns to save the company and starts giving passionate demos again...?