Is Microsoft/Nokia a sleeping giant or just sleeping?

  • Posted: 24 April 2011 12:34 PM #31

    FalKirk - 24 April 2011 12:14 PM
    Roman - 24 April 2011 05:38 AM

    I believe that’s the story I linked to earlier in this thread. I can’t emphasize enough that it is required reading before proceeding with further debates on the future of Microsoft. Seriously, if you haven’t read it, go read it.

    P.S. Did I mention you should read the story?

    Thanks for the link, Roman. I took your advice from your earlier link and read it last night.

    In my opinion, too many people think that Ballmer is the problem. I think Microsoft’s problems are far more pervasive than that. I think that Microsoft’s culture is the problem. Sure, Balmer has to go. But that’s only the first step in a very long journey.

    Very true.  Ballmer may be the king, but there are other MS royals that need to go for its culture to change.  The Old Guard could be hanging on to protect their legacy by rebuilding what it has lost.  It has ceased being about money many millions and billions ago.

    That article is not the first to draw the picture of current day Microsoft.  I live in MS’ backyard, and so I live among many MS employees, many of whom have been past and current friends.  The rank and file are more attuned to the problems of its culture than its leadership.  Understandably, the morale isn’t what it should be, for reasons that go well past its moribund stock (and the lack of stock option-based compensation).  A MS job has become job. Its employees have become a cog in a machine so large that it gets in its own way like government bureaucracy.  The dearth of new, change-the-world things coming out of it feeds this perception.  The Kin debacle, the late WinMo products (and still in catch-up mode), and the Zune funeral are convincing even the most faithful that something is not right in Redmond.

         
  • Posted: 24 April 2011 12:40 PM #32

    westech - 24 April 2011 03:11 PM

    I had read the story when it was originally posted, but I was aware of it earlier.  It was discussed on the MiniMicrosoft blog at http://minimsft.blogspot.com/.  This blog reveals a high level of angst in the Microsoft technical community.  It really is worth perusing.  Apparently Steve Balmer has managed to get rid of most or all of the senior leadership that disagrees with him.  The problem now isn’t just him.  The whole leadership has been crafted in his image.  Too bad for MSFT, but good for Apple and Google.

    I highly recommend the above link for those who might be inclined to dismiss the dysfunction inside new MS product initiatives.  I remember reading it at the time of the Kin embarrassment and was mortified how such beginner mistakes could be made by a Company that has had so much success.

         
  • Posted: 24 April 2011 12:46 PM #33

    Thanks for the discussion, that I first read this morning.

    On March 23 I purchased a small amount of NOK (@ 8.76) for the dividend yield portion of my portfolio.  It is currently yielding 5.4%, pays a dividend once a year and the ex-div date is May 4.

    My understanding is that you have to own it before then in order to receive the dividend, which is $.46 a share.  I’m down about 1.9% so far.  I plan to let it ride for the next year or so.

         
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    Posted: 24 April 2011 02:54 PM #34

    westech - 24 April 2011 03:11 PM

    I had read the story when it was originally posted, but I was aware of it earlier.  It was discussed on the MiniMicrosoft blog at http://minimsft.blogspot.com/.  This blog reveals a high level of angst in the Microsoft technical community.  It really is worth perusing.  Apparently Steve Balmer has managed to get rid of most or all of the senior leadership that disagrees with him.  The problem now isn’t just him.  The whole leadership has been crafted in his image.  Too bad for MSFT, but good for Apple and Google.

    Thanks for the Mini-Microsoft link. Now I actually remember coming across it 4 years ago or so… Just about the time I gave up on Microsoft completely. (Regarding the Fortune link, “read the story” was targeted at those who hadn’t seen it, not at you of course)

         
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    Posted: 24 April 2011 03:04 PM #35

    Fal & Mercel -

    True, if Ballmer went today, I still would be skeptical because other management would need to change. Besides, we’ll never know how it would have fared under Gates, had he stayed on. (After all, such problems as DOJ lawsuit creating “scare” on overly monopolistic growth, as well as “lack of taste” as Jobs put it 15 years ago, would still be there).

    But, just as I like to recognize great vision and leadership in the case of Steve Jobs and Apple, I would like to recognize the other Steve for MUCH of the destruction of value in Microsoft. As Tetra says, the engineers working on the ground really aren’t to blame. I’ve been coming across this in organization behavior, power, and strategy classes, but leadership and management are different things, and poor leadership at the top is hardest to replace.

    Remember, many of today’s complaints about Microsoft’s organization could be directly applied to the Apple of mid-90’s. Jobs came back, and we have the renaissance… Of course, he didn’t do it single-handedly, he picked Ive from a deep bench, brought Serlet with him from NeXT, then built a deep bench of execs such as Cook, and finally a great board of directors… But it starts at the top.

    I can only imagine what happened with Jony Ives and Bertrand Serlets of this world at Microsoft over the past decade. They’re probably all at Google, Apple, and Facebook now.

    Meanwhile, a business school friend was interning in Seattle in the summer and heard Ballmer, and said he was very persuasive. I was shocked, as she’s a smart cookie. So maybe it’s true and he still is a great salesman. Too bad a salesman should never lead a company if all he listens to is his own voice.

         
  • Posted: 24 April 2011 03:28 PM #36

    Roman - 24 April 2011 06:04 PM

    Meanwhile, a business school friend was interning in Seattle in the summer and heard Ballmer, and said he was very persuasive. I was shocked, as she’s a smart cookie. So maybe it’s true and he still is a great salesman.

    I’ve heard that Ballmer is very charismatic, very personable. John Gruber once talked about how Ballmer would probably be a great guy to hang out with. Unfortunately, such qualities don’t necessarily translate into an ability to run one of the largest companies in the world.

    We’ve all heard of the Peter Principle. The great salesman gets promoted and becomes a incompetent sales manager. An heroic Colonel makes a lousy General. And so on and so forth. Ballmer was probably a superb lieutenant, protecting Gates back as they both rose to the top. But as the head honcho, he’s severely lacking.

    I hate to be so trite in my analysis but in this case the popular answer and the blatantly obvious answer as to why Ballmer is failing appears to be the correct answer - The man simply has no vision. That, combined with the fact that no one has the guts or the brains to fire him plus the fact that he’s purging Microsoft of the best and the brightest leaving behind only the sycophants and yes men bodes very poorly for Microsoft’s future.

         
  • Posted: 24 April 2011 04:01 PM #37

    It’s interesting that it was SJ who talked about the danger of putting the sales guy in charge.  I wonder what he considers himself to be if not the sales guy?

    Signature

    I don’t mind being wrong…,I just hate being wrong so FAST!

         
  • Posted: 24 April 2011 04:38 PM #38

    Ballmer occasionally goes to the local Starbucks I frequent. He DOES have enthusiasm, there is no question about that—you can see it in his body language (and obviously on YouTube). 

    I had drinks with a MS employee on Friday and he shared with me the fact that many, many MS employees are closet Apple customers.  Funny.

         
  • Posted: 26 April 2011 08:53 PM #39

    The new tablets “are making a sea of Microsoft customers comfortable using an operating system different than Microsoft’s,” said Yoshikami. “You’re going to see a migration away from the monopolistic dominance that Microsoft had, and that’s worrisome for them.”

    http://mobile.reuters.com/article/idUSTRE73P5BY20110426?irpc=932

    Bingo.

         
  • Posted: 26 April 2011 09:51 PM #40

    roni - 24 April 2011 03:46 PM

    Thanks for the discussion, that I first read this morning.

    On March 23 I purchased a small amount of NOK (@ 8.76) for the dividend yield portion of my portfolio.  It is currently yielding 5.4%, pays a dividend once a year and the ex-div date is May 4.

    My understanding is that you have to own it before then in order to receive the dividend, which is $.46 a share.  I’m down about 1.9% so far.  I plan to let it ride for the next year or so.

    My little NOK position is now green

         
  • Posted: 28 April 2011 11:42 PM #41

    The real question isn’t really about Microsoft, but rather about Nokia and it’s customer base.  We in the “western” world have predominantly gone either iPhone or Android (and a few blackberry holdouts), but in Asia, South America and Africa, Nokia (Symbian OS) is the #1 player and both iPhone and Android are each struggling to go above 10% market share.  There’s a pretty nice web site ( http://gs.statcounter.com/#mobile_os-ww-monthly-200812-201104 ) that lets you look at mobile OS use by nation, continent, or even the whole world on a month by month basis for the last several years.  According to the latest data from this site, Nokia has ~57% of the Asian, ~43% of the South American, and ~73% of the African markets.  These three continents drive Nokia’s world wide mobile OS market share to just over 30% (iOS is #2 at ~24% and Android is #3 at ~16%).

    If Nokia can convince it’s customer base in these three continents(especially Asia) to “stay on board” through their transition to “Windows Mobile”, then yes, “Microsoft” will be in the #1 spot, but only because of the market share Nokia holds with it’s current Symbian OS.  If on the other hand, a large number of Nokia customers “jump ship” during the transition from Symbian OS to “Windows Mobile” (and choose iOS/Android instead), then the game is over for Nokia and Microsoft.

    However, the data collected by statcounter has yet to show any signs of either iOS or Android seriously “taking off” in these three regions.  It’s for Nokia’s ownership of these continents that Microsoft worked hard to win over Nokia.

         
  • Posted: 29 April 2011 02:41 AM #42

    The way it appears, Microsoft desperately needs to wed itself to a hardware partner and Nokia needs to survive.

    The old Windows licensing model won’t work in the handheld device market and Microsoft needs to acquire as much market share as possible from the start.

         
  • Posted: 29 April 2011 07:20 AM #43

    Apple by all accounts is selling every phone it can push out the door. It is physically impossible for anyone’s numbers to “take off ” in Asia in a two or three year span. 

    Apple’s finance #‘s on the other hand .........

         
  • Posted: 30 April 2011 06:24 PM #44

    jimlongo—to your point about MSFT/NOK and an ecosystem, that is indeed what they appear to be in the process of creating.
    remember AAPL created the ecosystem in a fairly short time frame.  so could MSFT.

    johng—agree that there does appear to be some problems with the MSFT culture/leadership but i dont think its insurmountable.

    treehouse and mercel—- i think the so called MSFT self destructure culture might be overblown, but even if it is as bad as they say, i believe it will not meaningfully impact their ability to ship in quantity.

    mercel—you said: ” Both companies have very mixed track records of building hardware that people want at a price that generates gross margin.” i don’t understand this statement.  i don’t know what you mean about their gross margin. didn’t NOK build and ship hardware that people wanted right up until the day they were blindsided by apple’s mid 2007 iphone apocolypse?  didn’t NOK’s stock price reflect command a premium until then? 

    omacvi—your estimate of Mac OS marketshare of 25% in 10 years and 50% in 15 years are intriguing—sounds ambitious but i don’t think it’s out of the question. i wouldnt want to predict a timeframe.  of course i’d also hate to be the target of virus / malware writers that comes with 50% marketshare.

    roman - we see eye to eye on MSFTs tremendous R&D.  so clearly they have the know-how.  you make an excellent point that hp/palm, or rimm or htc, or samsung could be the victor given they strengthen their ties to GOOG.  in fact, i think they each present interesting and unique investment opportunities on their own.  HP seems to have already cast their bets with Palm OS but who knows even that isn’t cast in stone.  HTC-  I haven’t looked at the stock yet but i would think HTC is a strong case for investment, just like NOK. HTC was the contractor for many phones back in mid 2000.  the HP iPAQ range, even the palm treo 750’s were made by HTC. I had a HTC PPC in 2005, one of the first WM5 devices.  I kept it for only a month or so. The battery life stunk and it was too heavy and windows mobile 2005 at the time was very poor, not so much tailored to the moible space as palm was.  Samsung -  to me is too diversified in TV’s/panels etc that I am not convinced it is the best way to capitalize on the mobile space.  You said:  “I agree with Horace that the market is going to be a platform Oligopoly (rather than a Duopoly), and the space beyond iOS and Android is up for grabs. Microsoft is just one of the horses. Don?t bet on it to come out 1st.”  I agree with that.  But, not betting on MSFT to come in first place is quite different from declaring MSFT down and out for the count. It is this down-and-out-for-the-count viewpoint that i am strongly disagreeing with.  i really don’t know whether they will be first, second or third.  however my guess is MSFT will be first.  in terms of market share.

    JOHNG - you said: “What you are describing sounds like what happens after a ?tipping point? in consumer ?tastes?. i.e. in a post techie world people will migrate towards what?s simple and synergistic. This is the basis of Apple?s entire ecosystem. Having been a technologist for 35 years I crave simplicity. ”  Yes this is an excellent point, i 100% agree.  It really does feel like a tipping point is coming.  Omacvi said it above too.  You hit the nail on the head.  I believe Simplicity is the single word that truly somes up sjobs vision

    BillH - funny, LOL no i dont work for MSFT.  I guess i’m always evangalizing something.  whether it is AAPL, MSFT, or GOOG.  As far as your point about Nextstep, i’m not sure what it was.  Yes i understand the roots of where OSX came from.  My point was only that win95 was worse than its competition at the time, Mac os 7.5.  That did not stop Windows from going on to be the dominant OS.  It was good enough.  I’m not sure what your point was about porting Win7 to ARM.  Is that a pre-requisite for something?  Whatever Win7 Mango runs on, it runs on.

    [ Edited: 30 April 2011 07:40 PM by steves ]      
  • Posted: 30 April 2011 07:37 PM #45

    westech—good points in general, but why does MSFT/NOK need to make a great product which is at least as good as AAPL for WMC7 to succeed?  MSFT is in it for the long haul.  They can endlessly funnel money from their cash cows to their new unprofitable ventures like Xbox until xbox can stand on its own 2 feet.  They are in the process of doing that now for bing.com.  while you see bing.com as potentially a failure and certainly not a game changer, MSFT is taking the long view and slowing stealing from google, building up their ad business.  whether NOK/MSFT can work together seems to be the big question i am hearing.  I dont think this is an issue.  Rather than risk a botched partnership, they installed a MSFT employee in as NOK’s new CEO. I think its safe to say MSFT will be steering the direction of NOK now.  I think you are correct that NOK does not have the expertise to design the whole OS and is looking for MSFT to do it.  As for whether MSFT can take guidance from NOK…. I am sure that areas that natural lines of influence already exist, such as NOK’s wide distribution channels and MSFT will likely defer to NOK on these issues, so long as the new NOK ex MSFT CEO signs off.
    MSFT has has been playing a very slow game here, but their pieces are congealing.  great link to the minimsft blog. 


    roman—ok - great article…  It’s likely the 5th or so highly negative article I’ve about the culture of in-fighting. Thus I am now more inclined to believe the truthfullness of these articles discussing deep cultural problem. And yes, I see Ballmer has made some tremendously bad decisions.  I had never even heard of the Kin.  A cell phone for teens w/o text messaging?  Ridiculous.  I agree with the VMWare exec.  Split MSFT into autonomous divisions. I’d make Ballmer the head of the Enterprise division.  Hire Bach back for gaming division…etc.

    danthemason - interesting thoughts that the ipad competition never showed up, i like it

    mercel - thanks for confirming the MSFT angst from the locals.  Yes, your comparison to a government bureaucracy is fitting, it is what i was thinking reading about the cultural issues protecting legacy divisions.

    roni - thanks for the heads up about the NOK dividend on May5.  that gives me some motivation to buy prior.  can one buy on may 4th, and sell on may 6th, and still receive all the dividend?

    roman - well said about the Jony Ives and Bertrand Serlets of this world not being recognized at MSFT.  Yes, MSFT is truly in need of a leadership change.  I am fairly convinced Ballmer is not the right person for the job.  Yes, he must be a great salesman, very persuasive.  But that a visionary does not make.  I’ve argued here, and still stand by, that MSFT does not need a visionary.  They simply follow AAPLs way.  But when the leadership is so poisioned it is another story entirely, then there is also a failure to execute.  That failure to execute is what we have witnessed for the last few years.

    falkirk - exactly. you said: “obvious answer as to why Ballmer is failing appears to be the correct answer - The man simply has no vision. That, combined with the fact that no one has the guts or the brains to fire him plus the fact that he?s purging Microsoft of the best and the brightest leaving behind only the sycophants and yes men bodes very poorly for Microsoft?s future.”  Its the second part thats the problem.  Vision is not required, but get out of the way.

    BillH - SJ considers himself to be the visionary, the artist, one of the Think Different poster people (ghandi, ali, picasso), somewhere who dares to see things differently.  Not a “sales guy”, he’d think its banal.


    mercel - you said: ” many, many MS employees are closet Apple customers.  Funny. ”  -  This isn’t funny.  it’s scary (if you are an AAPL investor).  It shows that the design and vision of AAPL will assimilate as usual into all MSFT products, and MSFT will eventually take over, regardless of in fighting.  MSFT will eventually produce last years ipad.

    greatgazoo192 - BINGO BINGO BINGO.  The real question here is NOK not MSFT.  You rightly brought up NOK’s deep distribution channels.  I forget which group…IDC, gartner, etc..  One of them predicted an astounding 100% conversion rate from Symbian to WMC7.  That would be incredible.  I dont think its that unlikely… at least 80% would keep NOK.

    DT - really, MSFT just needs to buy NOK.  But giving the MSFT infighting, it would just as likely destroy NOK.  So I am happy with “billion dollar deal” flowing in both directions that they inked.  I think the smartest play is on NOK however. 

    danthemason - appl selling out every phone made has no bearing on whether anyone else’s phone could take off.  the mobile market is in its infancy