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

    Chechen Suspected in Istanbul Attack, but Questions Remain

    Turkish sources say North Caucasus militants involved in bombing at Ataturk airport, but name of at least one alleged attacker raises doubts

    With Johnson Out, Can a New ‘Margaret Thatcher’ Save Britain?

    Contest to replace David Cameron as Britain’s prime minister started in earnest Thursday with top candidates outlining strategy to deal with Brexit fallout

    US Finds Progress Slow Against Human Trafficking in Africa

    Africa continues to be a major source and destination for human trafficking of all kinds -- from forced labor to sexual slavery, says State Department report

    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.
    Clinton Leads Trump, But Many Voters Don't Like Eitheri
    X
    Jim Malone
    June 29, 2016 6:16 PM
    In the U.S. presidential race, most recent polls show Democrat Hillary Clinton with a steady lead over Republican Donald Trump as both presumptive party nominees prepare for their party conventions next month. Trump’s disapproval ratings have risen in some recent surveys, but Clinton also suffers from high negative ratings, suggesting both candidates have a lot of work to do to improve their images before the November election. VOA National correspondent Jim Malone has more from Washington.
    Video

    Video Clinton Leads Trump, But Many Voters Don't Like Either

    In the U.S. presidential race, most recent polls show Democrat Hillary Clinton with a steady lead over Republican Donald Trump as both presumptive party nominees prepare for their party conventions next month. Trump’s disapproval ratings have risen in some recent surveys, but Clinton also suffers from high negative ratings, suggesting both candidates have a lot of work to do to improve their images before the November election. VOA National correspondent Jim Malone has more from Washington.
    Video

    Video Slow Rebuilding Amid Boko Haram Destruction in Nigeria’s Northeast

    Military operations have chased Boko Haram out of towns and cities in Nigeria’s northeast since early last year. But it is only recently that people have begun returning to their homes in Adamawa state, near the border with Cameroon, to try to rebuild their lives. For VOA, Chris Stein traveled to the area and has this report.
    Video

    Video New US Ambassador to Somalia Faces Heavy Challenges

    The new U.S. envoy to Somalia, who was sworn into office Monday, will be the first American ambassador to that nation in 25 years. He will take up his post as Somalia faces a number of crucial issues, including insecurity, an upcoming election, and the potential closure of the Dadaab refugee camp in Kenya. VOA’s Jill Craig asked Somalis living in Kenya’s capital city Nairobi how they feel about the U.S. finally installing a new ambassador.
    Video

    Video At National Zoo, Captivating Animal Sculptures Illustrate Tragedy of Ocean Pollution

    The National Zoo in Washington, D.C., is home to about 1,800 animals, representing 300 species. But throughout the summer, visitors can also see other kinds of creatures there. They are larger-than-life animal sculptures that speak volumes about a global issue — the massive plastic pollution in our oceans. VOA's June Soh takes us to the zoo's special exhibit, called Washed Ashore: Art to Save the Sea.
    Video

    Video Baghdad Bikers Defy War with a Roar

    Baghdad is a city of contradictions. War is a constant. Explosions and kidnappings are part of daily life. But the Iraqi capital remains a thriving city, even if a little beat up. VOA's Sharon Behn reports on how some in Baghdad are defying the stereotype of a nation at war by pursuing a lifestyle known for its iconic symbols of rebellion: motorbikes, leather jackets and roaring engines.
    Video

    Video Melting Pot of Immigrants Working to Restore US Capitol Dome

    The American Iron Works company is one of the firms working to renovate the iconic U.S. Capitol Dome. The company employs immigrants of many different cultural and national backgrounds. VOA’s Arman Tarjimanyan has more.
    Video

    Video Testing Bamboo as Building Material

    For thousands of years various species of bamboo - one of the world's most versatile plants - have been used for diverse purposes ranging from food and medicine to textiles and construction. But its use on a large scale is hampered because it's not manufactured to specific standards but grown in the ground. A University of Pittsburgh professor is on track to changing that. VOA’s George Putic reports.
    Video

    Video Orphanage in Iraqi City Houses Kids Who Lost their Parents to Attacks by IS

    An orphanage in Iraqi Kurdistan has become home to scores of Yazidi children who lost their parents after Islamic State militants took over Sinjar in Iraq’s Nineveh Province in 2014. Iraqi Kurdish forces backed by the U.S. airstrikes have since recaptured Sinjar but the need for the care provided by the orphanage continues. VOA’s Kawa Omar filed this report narrated by Rob Raffaele.
    Video

    Video Re-Opening Old Wounds in a Bullet-Riddled Cultural Landmark

    A cultural landmark before Lebanon’s civil war transformed it into a nest of snipers, Beirut’s ‘Yellow House’ is once again set to play a crucial role in the city.  Built in a neo-Ottoman style in the 1920s, in September it is set to be re-opened as a ‘memory museum’ - its bullet-riddled walls and bunkered positions overlooking the city’s notorious ‘Green Line’ maintained for posterity. John Owens reports from Beirut.
    Video

    Video Brexit Resounds in US Presidential Contest

    Britain’s decision to leave the European Union is resounding in America’s presidential race. As VOA’s Michael Bowman reports, Republican presumptive nominee Donald Trump sees Britain’s move as an affirmation of his campaign’s core messages, while Democrat Hillary Clinton sees the episode as further evidence that Trump is unfit to be president.
    Video

    Video NASA Juno Spacecraft, Nearing Jupiter, to Shed Light on Gas Giant

    After a five-year journey, the spacecraft Juno is nearing its destination, the giant planet Jupiter, where it will enter orbit and start sending data back July 4th. As Mike O'Sullivan reports from Pasadena, California, the craft will pierce the veil of Jupiter's dense cloud cover to reveal its mysteries.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.

    Special Report

    Adrift The Invisible African Diaspora