Ballmer's billion-dollar blunders: When he gambled Microsoft's money and lost Less than two years into Satya Nadella's tenure as CEO of Microsoft, he's already had to report a lossmaking quarter. It's only the second time that's happened in the software giant's three decades as a public company, and the $8.44bn write-off Redmond posted earlier this week is the largest in its history. Don't blame Nadella …
Yeah, except that Windows 1 0 is shaping up to be another bloody fiasco again.
This maddening obsession with tiles is not going to do Microsoft any favors with the PC crowd (they still exist, there are just less new ones coming in), and Microsoft's bull-headedness when it comes to the UI is becoming legendary.
It already cost them the tablet market, I wonder when they learn ?
Ah, I'm sure that, when Microsoft only has $10 billion left, someone will start yelling "fire !".
You always get more value for your cockups if you play them in pairs.
I don't know of anybody that uses or even has used the (lets copy the Nintendo Wii) Kinnect on the Xbox. It seems to have no real purpose that a gamer would want given the Xbox has always been pushed as having more "hardcore" (i.e. FPS) games than anything Nintendo would consider decent on it's consoles.
Now couple that with effectively destroying Rare as a credible Games producer by forcing them to make second rate games just to support the Kinnect.
Bingo - Two plagues on the bottom line for the price of one.
At least now Rare can, hopefully, get back to producing the quality games, of a type Nintendo would approve of and therefore attract the audience you just alienated.
Sorry, forgot, all the top talent got that pissed off by being forced to produce rubbish that they all left.
I would bet those pair of mismanagements have cost the best part of a billion.
Adjb,
Err gonads matey, (small boy) has a lot of fun with Kinect sports, dance, adventures etc...
His cousins and schoolfriends also find the above most enjoyable, as do I after a beer or two!
Methinks he is a little young to be chasing stuff/shooting it/blowing it up eh (that's my job)?
Horses for courses my friend...
Regards,
Jay
This post has been deleted by its author
"Sorry, forgot, all the top talent got that pissed off by being forced to produce rubbish that they all left."
I think that touches on the BIGGEST problem of Ballmer's reign. He was such a bloody asshat with the talent. All of the best and the brightest left or got fired because of Ballmer.
... Aces Studio were closed, developers laid off (5000 of them), and Microsoft attempted to sobstitute it with "Flight" and its "freemium" model which utterly failed with the flighsim customers.
Total lack of that market understanding.
If Flight Simulator didn't bring in enough revenues to live on they could have simply closed it, or sold it. Instead some bright minds at MS decided to force it into a fashion-driven product which didn't fit its real market.
MS became really too fashion driven in the past years. Unluckily, Nadella is not the right man to change this trend. He just has a different fashion to follow, and he's too arrogant too to really understand the market MS products should be aimed at.
Windows 10 is on track to be another big debacle it looks too much like a "revenge" over Windows 8, than a proper evolution fixing 8.x mistakes.
Lockheed Martin still makes money from it (they licensed it) as Prepar3D, selling it as virtual training facility wher eyou can control the scenario fully. As more and more complex drones are available, it makes even more sense.
If you believe there are just a few dozen nuts, you're like Ballmer and have the same market sensibility. You may wonder it is actually used by real pilots and ATC controllers as well to train themselves (up it was used to test new real procedures in the simulated environment), and there are a good number of software houses making money selling add-ons, even for a ten years old product still widely used. It wasn't billions, but it was an iconic product, and the oldest one then still made by Microsoft.
But what was more interesting, it's not only the shutdown of the PC game studios (believing probably that XBox would have taken the world...), but also the total lack of proper product managment. Had they closed simply a product line with little or no revenues, ok, that's business. But they didn't. They believed they could "reboot" it following the fashion and believing to extract more money from customers with the "walled garden" approach.
They took a product manager known only for the "Ants" game (or something alike), put him in charge of a product he didn't understand, trying to turn it into something appealing to console users, decided to kill a long product heritage and its large 3rd parties support to impose a "freemium" model (fully controlled by MS) about which many warned MS it couldn't work for that market sector - they stubbornly went on accusing critics of being simply "whiners" - then after eight months the new product was shutdown wholly because only a few liked it, no money were made, but of course it wasn't because it was a bad product noone wanted really, it was just because of the "bad press".
Can you see a pattern here? It happened more or less in the Windows 8 years - an indication that within MS there was a culture shift leading to some key people being able to force their own personal views despite many signals - inside and outside - they were very wrong. How many billions allowing this kind of culture inside MS costed? And it's not getting better under Nadella...
win 10 seems to be all SatNads problem. What the utter lack of consistency and continuity in the UI suggests that instead Sinofskis tyrannical iron fist approach they I've resorted to utter chaos with zero clear leadership.
Given that I question how much control SatNad has over his managers. They each seem to be doing their own thing.
Both the Google thing and the Apple thing are understandable as defensive plays. The objective was not to be good at it, but to stop Google and Apple from being good at it.
Google maybe King of Search, but GMail is very visible and appears to be the precursor to moving computing to the web. Its an end-run around the Windows OS which is key to MS' success. MS might survive as an enterprise server OS company, but that would be a totally different beast from Gates/Ballmer era. The double-whammy is the cloud where compute is centralised into a few mega-corps none of which have a desire to pay OS licensing fees and all of which have the resources to not need MS.
Likewise with Apple. MS' problem was (and still is) that Apple created an alternative compute platform. First it made Windows look a bit rubbish and non-Windows cool with the e-/i-Mac. Then it seduced users away from Windows and the PC as its primary compute interface/platform with its phones and tablets. All the work in building up an impregnable ecosystem was undermined by tiny, weak, battery-powered devices. Linux added more cool to non-Windows bringing pain to the server end. Linux also brought a threat to the client end with a competent desktop which just needs an ecosystem.
Sadly MS' execution has been awful in their non-core areas. Interestingly, even their core areas of OS/GUI design have looked awful too. I wonder how much fail has been generated by them never really needing to compete since Novell collapsed. Suddenly, they are hit with competition and potential competition at both the server and client ends and they are... struggling.
It certainly isn't the end of MS. They have a competent if uninspiring core OS with a GUI which can be fixed. They have a couple of killer apps which provide OS lock-in in the enterprise market.
Personally, I'd like to see more secure desktop OS design, more fine-grained control of applications. I wonder if they will risk meddling with what they have or be imaginative enough to launch new products which might cannibalise the old.
You miss the embedded... (now called "IoT") it appears to be taking over.
It already took over supercomputing...
It already took over the stock markets... booting Windows out as "too slow", "inflexible", and crashes.
it already has a bit over 50% of the servers...
Phones are just a branch of embedded.
As I have said many times before Ballmer is Microsoft's answer to Derek "Del Boy" Trotter. Always looking for a deal, a scam, "Gaw on darlin', giz a couple of sovs for it! Luvvly jubbly!". Sadly Ballmer isn't anywhere near as smart or lovable as Del Boy. Where Del Boy is just unlucky, Ballmer is just a prat!
Almost all entrepreneurs make the comment that to succeed, you have to be prepared to fail; and to succeed big, you have to be prepared to fail big.
This is something that the US seems to accept much more easily than in the UK, where there seems to be a culture of standing around waiting for someone to screw up, so that you can applaud as they wallow in the sticky brown stuff.
This attitude will actually cause people to hold back from having a go; and that will be to the detriment of business in the UK.
This is something that the US seems to accept much more easily than in the UK
The bankruptcy laws have a lot to do with that. In the US if you fail bad there's little to stop you walking away from the debt and starting all over again. There are attendant tax-breaks for those lending the money so venture capital is far less risky than it might appear.
You forgot the Xbox 360. To sell it in the EU they had to switch out the solder, lead based wasn't allowed here so they went for the cheapest possible lead free stuff they could get their hands on. RROD!
Bloke does into see ole Steve and says "yeah, to fix this cock up, gunna cost us over a billion" and Steve goes "okay, do it"
On the one hand, we have the mighty cock up of using cheap solder which couldn't stand the heat generated, causing RROD's, that's the cock up that cost the billion+. But then we have Steve okaying spending that billion+ to save the Xbox brand, so, not all bad I suppose (unless you're in Japan, where the Xbox One struggles to sell triple digits a month)
In spite of this though, I don't think you can really count the Xbox 360 as a failure though. It's a pretty dominant force in the last gen console markets.
And for what its worth, I got my original when they were a couple of months old and never had an RROD. My housemate bought his at the same time and got one after a couple of years. I think it was one of those things where you had to just roll the die.
To be fair, the entire industry switched away from lead about that time and not only in the E.U. The first generation of replacement solder materials seemed pretty sketchy. It wasn't just the XBox 360 either. Lookup the "nVidia graphics recall" sometime. 21 million dodgy laptops due to bad "plastic" solder there. You might also Google "non lead solder problems".
That was the most cringeworthy article that I've read in a long, long time. The truly sad thing is that this really is only the short list and it's bound to get longer still. I think the only upshot of the Ballmer era is the huge volume of business case studies that MBA programs will produce on what not to do.
Microsoft also went and purchased a substandard 3D modeling package with a substantial user base and then closed down the company. That never made any sense to me. Why did they buy truespace to start with? Seems to have nothing to do with their core business.
But that is the whole problem : Microsoft's core business is disappearing. Windows is being replaced by something else everywhere that matters (iPhone and Android, and virtually no tablets on the market have Windows), and the upcoming generation is growing up without looking at the Microsoft logo.
Office is disappearing because Google Docs, which explains Office 365 which only has a chance because everyone is used to Office. Except that governments the world over, thanks to Snowden, are starting to push for Open Standards, in other words ODF.
ODF is the death knell of Microsoft. If Microsoft cannot hold its customers to Office format, then any office suite will do - and Libre Office is free and Open Source.
Microsoft HAS to find another way to remain relevant. Cue The-Interface-That-Used-To-Be-Called-Metro and all the hoopla around the App Store. Microsoft will not change that because it cannot. It has to look like Android because otherwise it is doomed.
Although some will argue that it is doomed anyway.
They, and a lot of other software houses, are seeing the same problem. So when faced with two choices what would you, as a customer and developer, want to follow:
1) Build on what you know to make a product that does what the customer wants, reliably, and securely.
2) Dick around with the GUI and look for ways of whoring your customer's data to advertisers?
Now ask yourself what most MBA type running those companies go for...
Maybe it was for patents Truespace had given their tenure in the field dates back to the Amiga.
I'm not sure what was going on in the 3D space in 2008 when they bought Truespace but in a few cases Microsoft has purchased companies just to shut them down and keep the technology away from other companies.
$264m profit, on a 33% share of the international calls market, and it is a very mature market with little growth prospects.
Vodafone trades at 11x earnings. Skype, probably less than that, because Vodafone has spectrum licences that other potential new entrants don't have.
$1bn would have been a good price. $1.5-$2bn would have been an OK price. $9bn was way too much.
Once Microsoft was able to sense what people needed and provide it in a way that made their lives easier.
Somewhere along the lines they seem to have decided that they could tell people what they should want, and to make matters worse, to race after the leading competitor products that people really did want at the same time.
You must be confusing the destruction of other companies because they created better products with Microsoft creating the products for its customers.
Are there any products Microsoft created out of thin air(ie before anyone else in the industry) and was successful? Everything I can think of was either purchased companies or products or copies of products others created and became popular.
I don't remember writing that Microsoft invented stuff.
Just that they spotted what the users wanted and gave it to them.
MS-Dos was beautiful after CP/M
Win 3.1x was very good for its time.
Word under MSDos was really easy to use, and Word for Windows was very good.
Win 9.x too.
And even XP
But somewhere along the lines we started getting delights such as "documents and settings" folders - as if the two things naturally sat together, and Office "ribbon" designed to stop users hiding away the clutter they'd never use, and Gawd 'elp us, WIn 8.1 for touch screens stuck on our non-touch computers.
> I don't remember writing that Microsoft invented stuff.
My point was that Microsoft didn't get market share because they had better products, they didn't.
> MS-Dos was beautiful after CP/M
MS-DOS 1 was complete crap: no hard disk support (CP/M did), corrupted diskettes if you swapped them (CP/M checked), EDLIN. MS-DOS 2 was not much better.
CP/M had been around for 6 years by the time MS-DOS came out and DRI had brought out MP/M - multi-user and pre-emptive multi-tasking (1978), MP/M II (1980) MP/M-86 (1980) and was demonstrating Concurrent-CP/M - pre-emptive multi-tasking with virtual screens.
MS-DOS was always behind the curve, limited to 32Mbyte partitions until MS-DOS 4 (though Compaq and others implemented patches to avoid the limit), MS-DOS 5 was nearly 2 years behind DR-DOS 5 and then DR-DOS 6 went to another level.
> Win 3.1x was very good for its time.
Yes, it took 3 versions plus a subversion to be better than GEM which preceded Windows 1 by a year and a half.
The really object lesson here is the strange behaviour of giant money printing companies when their core business slows down. If Microsoft had stopped at o/s and productivity and released all of the extra money to shareholders as dividends then I'd guess Bill Gates would have an extra $10bn of cold hard cash to solve the world's problems with. Their share price would now be gracefully declining as the market matures away from them, but shareholders would have had large sums to reinvest to better effect than this.
Of course, if they'd stopped at just o/s they'd be a smaller company and possibly have been taken over so this isn't a tirade on takeovers per se, but that's where real management comes in. Complementary products which are well integrated into your core, good! (at least for you. Not necessarily for the people who have to support or use more of your crap). Random purchases of free IP phone brands and hardware manufacturers with no obvious synergy, bad!
Amazon and Apple have been spectacular at this, at least so far. Discretely purchasing $10-$100m sized capabilities to speed up your R and D is tremendous management and even if you have a 50% complete failure rate it affects neither your bank balance nor your brand.
Google have been less good, and HP have probably pissed away more than half of their shareholders equity on Autonomy and Compaq alone.
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