News / Science & Technology

    Microsoft Transforms, but Will It Leave Past Behind?

    FILE - In this Aug. 24, 1995 file photo, Microsoft Chairman Bill Gates sits on stage during a video portion of the Windows 95 Launch Event on the company's campus in Redmond, Washington.
    FILE - In this Aug. 24, 1995 file photo, Microsoft Chairman Bill Gates sits on stage during a video portion of the Windows 95 Launch Event on the company's campus in Redmond, Washington.
    ​Microsoft surprised analysts and investors on Thursday (October 24) when it posted a 17 percent increase in profits over the past three months. The profits come at a time of transition for the tech giant which recently reorganized itself as a “devices and services” company with two groups;  one focusing on devices and consumer products and the other on commercial products.

    • FILE - A 1984 photo of Bill Gates, founder and chairman of Microsoft Corporation.
    • A worker packs the shelves of the computer shop PC World, at Croydon in south London, Aug. 23, 1995, with copies of the Microsoft Windows 95 computer package.
    • Microsoft's Steve Ballmer (L) and Bill Gates react to a question during a news conference, Jan. 13, 2000 in Redmond, Washington, where Gates announced that Ballmer will become the new chief executive officer.
    • Microsoft CEO Steve Balmer holds a placard checklist for the new Microsoft Office XP at a release party for the software on March 2, 2001, on the Microsoft Campus in Redmond, Washington.
    • Jeff Bezos, founder and CEO of Amazon.com (L) meets with Bill Gates, Microsoft Corp. chairman and chief software architect, at a New York news conference to launch Microsoft's new software, Office XP, May 31, 2001.
    • Attendees of the Comdex computer show try out the new Microsoft XBox game, Nov. 13, 2001, at the Las Vegas Convention center.
    • Jeff Raikes, group vice president of the Productivity and Business Systems Group at Microsoft (L) jokes with Actor Rob Lowe, as he describes his experiences using a Tablet PC at the product launch event in New York City, Nov. 7, 2002.
    • Photographers surround the console of next generation video game and entertainment machine Xbox 360 during an unveiling in Tokyo, Japan, May 13, 2005.
    • Bill and Melinda Gates attend a forum of 300 malaria scientists and policy makers, Oct. 17, 2007, in Seattle, Washington.
    • Microsoft said on Jan. 22, 2009 in Redmond, Washingron it is cutting 5,000 jobs over the next 18 months - a sign of how badly even the biggest and richest companies are being stung by the recession. The layoffs appear to be a first for Microsoft, which was founded in 1975.
    • In this photograph taken by AP Images for Xbox, Actor Rich Sommer plays Kinect on Xbox 360 at the Xbox booth during the E3 2010 conference held at the Los Angeles Convention Center in Los Angeles on June 15, 2010.
    • Aaron Woodman, Microsoft's director of their Mobile Communications Business, talks about the Windows Phone 7 during Microsoft Corp.'s shareholders meeting, Nov. 16, 2010, in Bellevue, Washington.
    • Visitors try out Microsoft Corp.'s "Surface" touchscreen tablet computers, Oct. 31, 2012, at "Build," Microsoft Corp.'s developers conference, in Redmond, Washington.
    • Show attendees play the Killer Instinct video game on the Xbox One at the Microsoft booth during the Electronic Entertainment Expo in Los Angeles, June 11, 2013.

    Microsoft at a Glance:

    • 1975 - Bill Gates and Paul Allen found “Micro-soft”
    • 1980s – MS-DOS or Microsoft Disk Operating System – the main operating system for IBM compatible PCs launches
    • 1990s – Microsoft launches Various incarnations of Windows operating system; its first Internet Explorer browser
    • 2000 – Steve Ballmer is named Microsoft’s CEO; Windows 2000 launches
    • 2001-2006 – Microsoft releases Xbox, Microsoft Office, Windows Vista
    • 2008 – Bill Gates moves from day-to-day role at Microsoft to The Bill and Melinda Gates Foundation
    • 2009-2010 – Windows 7, Kinect for Xbox 360, Windows Phone 7 launch
    • 2011-2012 – Microsoft acquires Skype, releases Windows 8

    Source: Microsoft
    The reorganization will likely be the last major endeavor of CEO Steve Ballmer who recently announced he would retire from the company in 12 months. In a July letter to Microsoft employees, Ballmer laid out his strategy for the future of Microsoft.

    “Going forward, our strategy will focus on creating a family of devices and services for individuals and businesses that empower people around the globe, at home, at work and on the go, for the activities they value most,” he said.  

    Ballmer’s “One Microsoft” plan transforms the 37-year-old software firm to a faster- paced company that can carve out market share in a post-PC world dominated by rivals like Apple, Google and Amazon.

    Ballmer strategy could tie hands of yet-to-be named successor

    That push includes the recent $7 billion purchase of Finnish smartphone manufacturer Nokia – a deal that might give Microsoft a toehold in the smartphone market, says Lawrence Hrebiniak, Emeritus Professor of Management at the University of Pennsylvania’s Wharton School, although he cautions that Nokia “hasn’t been doing well.”

    But these are major changes for an outgoing CEO, says Hrebiniak, author of Making Strategy Work.

    “Normally, a new CEO comes in and makes his own strategic moves. But Ballmer is saying “I am leaving, but I’m going to buy Nokia” – a major move that he’s basically saddling the new person with,” he said.

    “All of the things Ballmer’s doing is basically a challenge to a new person coming in to make it work,” he said.

    Microsoft has declined comment. But Rob Helm, President of Research at Directions on Microsoft, an independent company that analyzes Microsoft for large organizations, says the Nokia deal represents Microsoft’s future in that it is going to have to take more direct control of manufacturing its own smartphones and tablets.

    “So as Steve Ballmer bids goodbye to the company,” he said, “the company is bidding goodbye to the business model that made it a success at its beginning.”

    Helm says Ballmer has changed the character of Microsoft, which built itself on PC software and computers controlled by end-users. Now, he says the company is being “forced by circumstances” to shift to computing that is centrally-controlled by a company.

    Windows success hurt innovation

    Microsoft facts:

    • There are currently 1.3 billion Windows users worldwide
    • More than 100 million Window 8 licenses have been sold to date
    • Office 365 Home Premium has 1 million subscribers
    • Windows Phone store now carries more than 175,000 apps and games
    • More than 76 million Xbox 360 consoles have been sold worldwide
    • Xbox Live now has over 48 million members in 41 countries
    • More than 24 million Kinect sensors for Xbox have sold worldwide
    • Internet Explorer’s usage share was over 56 percent worldwide in July 2013
    • Bing holds 17.86 percent of US search market share according to comScore Explicit Core Search

    Source: Microsoft
    ​Over the years, Microsoft created a culture around a few profitable products like its Windows operating system, which has some 1.3 billion users worldwide. That culture ultimately led to what Hrebiniak calls “silos or fiefdoms” among the company’s departments and prevented it from adapting successfully to market changes.

    Realizing this, Ballmer, who has run Microsoft since 2000, “created a new functional structure to coordinate things at a centralized level around new products,” said Hrebiniak.

    He also raised revenues, says Roger Kay, an analyst at Endpoint Technologies, a technology market intelligence firm, even though he was unable to extend the Windows franchise.

    According to Hrebiniak, Microsoft has some $61 billion in cash and, in its latest year, close to $78 billion in revenue.

    Around 60-70 percent of that is generated by Microsoft’s cloud-based enterprise business - remote servers that host software that businesses need.

    “That gigantic real estate, which we never see, has put it [i.e., Microsoft] on roughly the same footing as a company like Google,” said Helm.

    Pushing into the hardware market has been less successful. But it is “where the change in Microsoft’s philosophy is the starkest,” Helm said, because Microsoft has typically relied on other companies to build PCs and devices to run its software on.

    The company probably had no choice, he argues, given rivals like Apple, which controls its hardware end-to-end, and Google, which tries to set the bar higher with its hardware.

    But building computers and phones is a “completely different business,” he cautions, and one in which Microsoft will make some mistakes learning.

    And it “is going to have to come from behind” in both mobile and hardware markets, he added, and “win back some trust” because there is “a lot of suspicion of Microsoft” among phone carriers and retailers.

    Microsoft has been building its Xbox gaming system and PC peripherals for years, although its recent line of Surface tablets has faltered.

    And Kay says that with Surface, “Microsoft is competing with its own customers, the current source of much revenue.”

    Consequently, “those partners have been only lukewarm in supporting Microsoft’s recent initiatives in the critical high-mobility space, which includes smartphones and tablets,” said Kay.

    To be successful as a hardware manufacturer, Helms says Microsoft has to rewrite its successful applications for touch-based or high resolution devices and attract developers to build market share. Paradoxically, “they don’t have the market share to attract developers,” says Hrebniak.

    While Microsoft’s Windows phone has gained ground and is the third leading mobile phone platform, it still trails its rivals in apps.

    The road will be tough, warns Hrebniak. He says Microsoft needs an innovative CEO who knows more about mobile devices to see it through.

    Some say Microsoft is already changing. But Kay is skeptical. He says Microsoft’s “byzantine empire” is conservative and “falls back on its old ways – things that worked before” and “may not be working now.”

    You May Like

    Syrian Rebel Realignment Likely as al-Qaida Leader Blesses Split

    Jihadist group Jabhat al-Nusra splits from al-Qaida in what observers dub a ‘deception and denial’ exercise

    New India Child Labor Law Could Make Children More Vulnerable

    Concerns that allowing children to work in family enterprises will push more to work

    What Take-out Food Reveals About American History

    Carry-out food explains a lot about the changes taking place in society, so here's the deal with pizza, Chinese food and what racism has to do with taking food to go

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Uganda Unveils its First Solar-powered Busi
    X
    July 28, 2016 4:16 AM
    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Uganda Unveils its First Solar-powered Bus

    A solar-powered bus described by its Ugandan makers as the first in Africa has made its public debut. Kiira Motors' electric bus, Kayoola, displayed recently at a stadium in Uganda's capital. From Kampala, Maurice Magorane filed this report narrated by Salem Solomon.
    Video

    Video Silicon Valley: More Than A Place, It's a Culture

    Silicon Valley is a technology powerhouse and a place that companies such as Google, Facebook and Apple call home. It is a region in northern California that stretches from San Francisco to San Jose. But, more than that, it's known for its startup culture. VOA's Elizabeth Lee went inside one company to find out what it's like to work in a startup.
    Video

    Video Immigrant Delegate Marvels at Democratic Process

    It’s been a bitter and divisive election season – but first time Indian-American delegate Dr. Shashi Gupta headed to the Democratic National Convention with a sense of hope. VOA’s Katherine Gypson followed this immigrant with the love of U.S. politics all the way to Philadelphia.
    Video

    Video Philadelphia Uses DNC Spotlight to Profile Historic Role in Founding of United States

    The slogan of the Democratic National Convention now underway in Philadelphia is “Let’s Make History Again” which recognizes the role the city played in the foundation of the United States in the 18th century. As VOA’s Kane Farabaugh reports, local institutions are opening their doors in an effort to capitalize on the convention spotlight to draw visitors, and to offer more than just a history lesson.
    Video

    Video A Life of Fighting Back: Hillary Clinton Shatters Glass Ceiling

    Hillary Clinton made history Thursday, overcoming personal and political setbacks to become the first woman to win the presidential nomination of a major U.S. political party. If she wins in November, she will go from “first lady” to U.S. Senator from New York, to Secretary of State, to “Madam President.” Polls show Clinton is both beloved and despised. White House Correspondent Cindy Saine takes a look at the life of the woman both supporters and detractors agree is a fighter for the ages.
    Video

    Video Dutch Entrepreneurs Turn Rainwater Into Beer

    June has been recorded as one of the wettest months in more than a century in many parts of Europe. To a group of entrepreneurs in Amsterdam the rain came as a blessing, as they used the extra water to brew beer. Serginho Roosblad has more to the story.
    Video

    Video First Time Delegate’s First Day Frustrations

    With thousands of people filling the streets of Philadelphia, Pennsylvania for the 2016 Democratic National Convention, VOA’s Kane Farabaugh narrowed in on one delegate as she made her first trip to a national party convention. It was a day that was anything but routine for this United States military veteran.
    Video

    Video Commerce Thrives on US-Mexico Border

    At the Democratic Convention in Philadelphia this week, the party’s presumptive presidential nominee, Hillary Clinton, is expected to attack proposals made by her opponent, Republican presidential nominee Donald Trump, to build a wall along the U.S.-Mexico border. Last Friday, President Barack Obama hosted his Mexican counterpart, President Enrique Peña Nieto, to underscore the good relations between the two countries. VOA’s Greg Flakus reports from Tucson.
    Video

    Video Film Helps Save Ethiopian Children Thought to be Cursed

    'Omo Child' looks at effort of African man to stop killings of ‘mingi’ children
    Video

    Video London’s Financial Crown at Risk as Rivals Eye Brexit Opportunities

    By most measures, London rivals New York as the only true global financial center. But Britain’s vote to leave the European Union – so-called ‘Brexit’ – means the city could lose its right to sell services tariff-free across the bloc, risking its position as Europe’s financial headquarters. Already some banks have said they may shift operations to the mainland. Henry Ridgwell reports from London.
    Video

    Video Recycling Lifeline for Lebanon’s Last Glassblowers

    In a small Lebanese coastal town, one family is preserving a craft that stretches back millennia. The art of glass blowing was developed by Phoenicians in the region, and the Khalifehs say they are the only ones keeping the skill alive in Lebanon. But despite teaming up with an eco-entrepreneur and receiving an unexpected boost from the country’s recent trash crisis the future remains uncertain. John Owens reports from Sarafand.
    Video

    Video Migrants Continue to Risk Lives Crossing US Border from Mexico

    In his speech Thursday before the Republican National Convention, the party’s presidential candidate, Donald Trump, reiterated his proposal to build a wall along the U.S.-Mexico border if elected. Polls show a large percentage of Americans support better control of the nation's southwestern border, but as VOA’s Greg Flakus reports from the border town of Nogales in the Mexican state of Sonora, the situation faced by people trying to cross the border is already daunting.

    Special Report

    Adrift The Invisible African Diaspora