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

    Video Democrats Clinton, Kaine Offer 'Very Different Vision' Than Trump

    In a jab at Trump, Clinton says her team wants to 'build bridges, not walls'; Obama Hails Kaine's record; Trump calls Kaine a 'job-killer'

    Turkey Wants Pakistan to Close Down institutions, Businesses Linked to Gulen

    Thousands of Pakistani students are enrolled in Gulen's commercial network of around two dozen institutions operating in Pakistan for over two decades

    AU Passport A Work in Progress

    Who will get the passport and what the benefits are still need to be worked out

    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.
    In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movementi
    X
    July 22, 2016 11:49 AM
    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video In State of Emergency, Turkey’s Erdogan Focuses on Spiritual Movement

    The state of emergency that Turkish President Recep Tayyip Erdogan has declared is giving him even more power to expand a purge that has seen an estimated 60,000 people either arrested or suspended from their jobs. VOA Europe correspondent Luis Ramirez reports from Istanbul.
    Video

    Video Scientists in Poland Race to Save Honeybees

    Honeybees are in danger worldwide. Causes of what's known as colony collapse disorder range from pesticides and loss of habitat to infections. But scientists in Poland say they are on track to finding a cure for one of the diseases. VOA’s George Putic reports.
    Video

    Video Wall Already Runs Along Parts of US-Mexico Border

    The Republican Party’s presidential nominee, Donald Trump, gained the support of many voters by saying he would build a wall to keep undocumented immigrants and drugs from coming across the border from Mexico. Critics have called his idea impractical and offensive to Mexico, while supporters say such a bold approach is needed to control the border. VOA’s Greg Flakus has more from the border town of Nogales, Arizona.
    Video

    Video New HIV Tests Emphasize Rapid Results

    As the global fight against AIDS intensifies, activists have placed increasing importance on getting people to know their HIV status. Some companies are developing new HIV testing methods designed to be quick, easy and accurate. Thuso Khumalo looks at the latest methods, presented at the International AIDS conference in Durban, South Africa.
    Video

    Video African Youth with HIV Urge More Support

    HIV, the virus that causes AIDS, is the top killer of teens in sub-Saharan Africa. But many youths say their experience with the virus is unique and needs to be addressed differently than the adult epidemic. VOA South African Correspondent Anita Powell reports.
    Video

    Video Poor Residents in Cleveland Not Feeling High Hopes of Republican Convention

    With the Republican Party's National Convention underway in Cleveland, Ohio, delegates and visitors are gathered in the host city's downtown - waiting to hear from the party's presidential candidate, Donald Trump. But a few kilometers from the convention's venue, Cleveland's poorest residents are not convinced Trump or his policies will make a difference in their lives. VOA's Ramon Taylor spoke with some of these residents as well as some of the Republican delegates and filed this report.
    Video

    Video Pop-Up Art Comes to Your Living Room, Backyard and Elsewhere

    Around the world, independent artists and musicians wrestle with a common problem: where to exhibit or perform? Traditional spaces such as museums and galleries are reserved for bigger names, and renting a space is not feasible for many. Enter ArtsUp, which connects artists with venue owners. Whether it’s a living room, restaurant, office or even a boat, pop-up events are bringing music and art to unexpected places. Tina Trinh has more.
    Video

    Video With Yosemite as Backdrop, Obama Praises National Parks

    Last month, President Barack Obama and his family visited some of the most beautiful national parks in the U.S. Using the majestic backdrop of a towering waterfall in California's Yosemite National Park, Obama praised the national park system which celebrates its 100th anniversary this year. He talked about the importance of America’s “national treasures” and the need to protect them from climate change and other threats. VOA’s Julie Taboh reports.
    Video

    Video Counter-Islamic State Coalition Plots Next Steps

    As momentum shifts against Islamic State in Iraq, discussions are taking place about the next steps for driving the terrorist group from its final strongholds. Secretary of State John Kerry is hosting a counter-IS meeting at the State Department, a day after defense ministers from more than 30 countries reviewed and agreed upon a course of action. VOA Pentagon correspondent Carla Babb reports.
    Video

    Video Russia's Participation at Brazil Olympic Games Still In Question

    The International Olympic Committee has delayed a decision on whether to ban all Russian teams from competing in next month's Olympic Games in Brazil over allegations of an elaborate doping scheme. The World Anti-Doping Agency recently released an independent report alleging widespread doping by Russian athletes at the 2014 Winter Olympics in Sochi. So far, only Russian track and field athletes have been barred from the Summer Games in Brazil. VOA's Zlatica Hoke has more.
    Video

    Video Scotland’s Booming Whisky Industry Fears Brexit Hangover

    After Britain’s vote to leave the European Union, Scotland’s government wants to break away from the United Kingdom – fearing the nation’s exports are at risk. Among the biggest of these is whisky. Henry Ridgwell reports on a time of turmoil for those involved in the ancient art of distilling Scotland’s most famous product.
    Video

    Video Millennials Could Determine Who Wins Race to White House

    With only four months to go until Americans elect a new president, one group of voters is getting a lot more attention these days: those ages 18 to 35, a generation known as millennials. It’s a demographic that some analysts say could have the power to decide the 2016 election. But a lot depends on whether they actually turn out to vote. VOA’s Alexa Lamanna reports.

    Special Report

    Adrift The Invisible African Diaspora