A lot has happened since my last post about Microsoft. There has been rampant speculation about who should be the next CEO. The company acquired the mobility business of Nokia, perhaps signaling that Stephen Elop is the man to beat for the top job.
But an article in today’s New York Times offers a perspective that aligns most closely with my own: That the company is too big to manage, too unwieldy to be agile, that the Nokia acquisition makes this problem worse, and that Microsoft would be able to compete better if it split itself into smaller, more focused companies.
The fact is that Microsoft will not solve any of its problems by growing. More products, more markets, more features: These go-to plays fueled the company’s past growth. To get itself unstuck, the company now needs to do much less: Fewer strategies, fewer products, fewer features, fewer businesses, fewer employees. Microsoft will need to make a difficult pivot in the near future if it wants to remain relevant, and it’s far easier to turn a small ship than a large one.
So I’ll add my voice to those calling for Microsoft to split itself into several smaller companies that will be easier to manage.
One of the mini-Microsofts might focus exclusively on corporate customers. The winning strategy here is customer intimacy, not product leadership. The company can run a successful business catering to the needs of enterprise IT customers for many years with only modest incremental enhancements to its current set of products, but not if they are undergoing the kind of rapid change necessary to compete effectively in the consumer market. This mini-Microsoft might end up looking a lot like Oracle.
Another mini-Microsoft might focus exclusively on consumers. The goal here needs to be to pursue product leadership, to run faster, to recapture lost mojo, and to establish a thriving developer ecosystem at the low end of the overall software market where customer expectations are relatively low compared to those of enterprise IT. If this mini- is successful, consumers will drag its platform into the enterprise market the way they did with Windows 20 years ago, and they way they are doing with the iOS and Android platforms today. This business will benefit from shedding the Microsoft brand. Its product portfolio might end up looking a lot like that of Apple.
Finally, there will be leftover pieces of the company that will need to be either sold to strategic buyers or spun out on their own. I like the NYT article’s suggestions that Bing would pair well with Facebook and that the Xbox business might make a nice stand-alone company.
There are thousands of ways that a company with hundreds of businesses might be sliced up. What other combinations of Microsoft businesses do you think would stand a chance of success on their own?