[FoRK] Anatomy of failure: Mobile flops from RIM, Microsoft, and Nokia

Stephen Williams sdw at lig.net
Sun May 1 01:23:03 PDT 2011

The more general problem:


Microsoft's office: Why insiders think top management has lost its way
March 31, 2011 10:47 AM

Steve Ballmer's slavish devotion to Windows and Office has made them cash cows, but some say revenues have come at the expense of 

By Gary Rivlin, contributor

The traffic jams begin at 5pm on the dot at Microsoft's Redmond campus.

FORTUNE -- What's the matter with Microsoft? After spending weeks tracking down and talking with a long list of former Microsoft 
(MSFT) employees, many of them veterans with fifteen or more years with the company, the question is how long do you have to hear 
the answer.
By all accounts, Microsoft can be the most political of workplaces. In the old days, when the company was the envy of the tech 
industry, its people knew the competition so intimately that the best product managers could rattle off the birthdays of the CEO's 
kids. These days, though, it seems the competition sits in an office one or two buildings over. One former exec spoke of a "moat 
around Redmond" -- and how little attention those inside the castle, especially those occupying management positions, pay to the 
world outside.

"Microsoft is such an inwardly-focused company," he said. "By the time you're in a senior position, it's like you spend 90% of your 
time focused on internal battles and internal power structures."
"Instead of a culture that said, 'Let's experiment and see which ideas work,' the culture is one of, 'Let's kiss enough ass so maybe 
they'll approve of our product,'" said Whittaker, who quit in 2009 to work for Google (GOOG). Maybe the worst of it: those in 
authority often attained their position because they had been lucky enough to be in the right place at the right time, succeeding 
when the company was riding high and despite producing a mediocre product.

"It's a culture that actually awards the political assassins," said a software engineer who thought he might be one of the 
exceptions -- an outsider able to thrive despite moving to Redmond mid-career. He was well aware of Microsoft's reputation for being 
hostile to those hired into senior positions from the outside but he was flabbergasted just the same when a top exec showed up in 
his office one day to spell out the facts of life inside Microsoft shortly after he arrived on campus.

"He's standing there telling me, 'I can have your team broken apart any time I want, just remember that,' " he said. As far as he 
could tell (he didn't last long), the coin of the realm within the company was one's relationship with Ballmer, Gates, or both. One 
of the "kingpins," as he described them, will drop that he recently had dinner with Ballmer -- and then hint darkly at how miserable 
someone of his considerable clout can make other people's lives unless they toe the line.
Microsoft alum generally give their former colleagues credit. (Well, except the rather bitter former top exec who said he was 
selling every last share of stock in a company because "there's something cancerous inside the company right now.")
More than one employed the vocabulary of a therapist describing an unhealthy, co-dependent relationship when speaking about Windows 
and Office. Small devices are the future and it's on this front that Microsoft is having its biggest failures. Yet Ballmer & Co. 
remain in denial, they say, because the great gushers of cash Windows and Office generate means they don't feel the urgency they 
otherwise would –shielded from the pain of its many disappointments by two of the more successful franchises in the history of business.

The company continues to thwart promising internal projects whose proponents who suggest a platform that isn't Windows-centric. Its 
people continue to write applications for Windows and then, after the fact, tailor them for use on a phone or a tablet or in a 
browser, no matter how ragged the fit. Meanwhile its in fifth place in the smart phone market, despite more than a decade of effort, 
with less than a five percent market share, and an after-thought at best in tablets.

"All their internal machinery is still pointed toward Windows," James Whittaker said. "Windows always has to be first and the web is 
second. So the entire company is pointed at a platform becoming increasingly irrelevant."
Maybe that's the most damning criticism offered by those who've devoted much of their work life to Microsoft: it is so unwieldy and 
complex a beast that even some of those who spent an hour or more telling me everything that's wrong with the company concede that, 
short of breaking it into two or more parts, the board has no choice but to stick with Ballmer and hope he can harness the company's 
considerable talents and turn things around.

To some longtime Microsoft veterans, Ballmer's swift termination of Courier symbolizes a shortsightedness that has plagued the 
company's top management in recent years -- and has left the company eating Apple's dust. (And Google's. And Amazon's (AMZN).) 
Ballmer, a preternaturally optimistic man not inclined to second-guess himself, has been forced to publicly acknowledge many of the 
company's biggest misses. The Vista operating system frustrated users. The MP3 player, the Zune, has proved a dud. And then there's 
Microsoft's costliest blunder, its also-ran status on the device that is emerging as the personal computer of the 21st century, the 
mobile phone. "We were ahead of this game, and now we find ourselves No. 5 in the market," Ballmer said at a tech conference in 
June. "We missed a whole cycle." Or two. Or three.

But the root of Microsoft's paralysis seems to be Ballmer himself. Interviews with a range of former Microsoft employees -- from 
ex--vice presidents still on good terms with their former boss to middle managers and engineers who helped build the company -- 
paint a picture of an executive determined to protect the legacy (and legacy businesses) he inherited from founder and friend Bill 
Former employees and analysts say Ballmer's deep pride in Microsoft leads him to dismiss rivals' good ideas ("There's no chance that 
the iPhone is going to get any significant market share") and to suffocate anything, such as Courier, that might detract from 
Windows, despite the billions the company spends each year on R&D and acquisitions.
The Xbox gaming system still hasn't made back the $6 billion or so Microsoft invested in developing the platform, but it is a bona 
fide hit, with products in more than 50 million homes worldwide
"They paid all this money for our industry know-how and our experience, but basically no one listened to us," says Cid Halloway, who 
joined Danger in 2001 as a senior software engineer. Halloway tried to make suggestions when he could, but that only seemed to grate 
on people. "A few people openly said to us, 'We think you got lucky with Sidekick, so sit down, stop talking, and do what we hired 
you to do.'

"It was not a happy few years," Halloway said of his 30 months at Microsoft before his departure this past fall.

Microsoft released the Kin in April 2010. The phones were stylish, but the service, at a minimum cost of $70 a month, was expensive, 
and reviews were tepid. For a device aimed at tweens it missed the mark: It didn't have instant messaging, it couldn't play YouTube 
videos, and users couldn't buy online games. Only 48 days after the Kin hit stores, Microsoft announced it was discontinuing the 
phone. Insiders say Microsoft spent at least $1 billion and probably closer to $2 billion developing and marketing the Kin.

To many inside and outside Microsoft, the Kin debacle is another example of how Ballmer, an otherwise sharp and intuitive leader, 
seems colorblind and tone-deaf when it comes to anything consumer-oriented -- a big challenge given the role consumers are playing 
in dictating corporations' technology decisions. "You need people in charge who are able to say, 'You know what, we've spent a lot 
of money on this, but we've got to dump this before it really hurts our reputation,' " says a former executive.

Licking the cookie

Inside Microsoft it's known as "licking the cookie." That's when a group within the company, typically Windows, declares its 
intentions to work on a feature or a product, thereby preventing others within the company from taking it on. Often it makes sense 
for Windows to own a project, says a former Microsoft manager who still does consulting work for the company, but it also slows down 
development at a time when tech companies can scarcely afford to be piggy.

Others talk about what a few former employees call the "made men" -- those who earned their bones during the 1990s when Microsoft 
was riding high and now can do no wrong, even as they bungle decision after decision. "You want to innovate in mobile?" said a 
former top Microsoft engineer named James Whittaker before leaving to take a job at Google. "Then deal with the made men who run the 
relevant cartel. And if they don't like you or your idea, your innovation goes nowhere."
Still, Ballmer needs to do something to shake Microsoft from what, at best, seems to be a textbook case of corporate ennui: MIT's 
Michael Cusumano, who has featured Microsoft in several books, including the new work Staying Power, sees a company hopelessly stuck 
in neutral, in no small part because Microsoft has a weak board and no one expects Bill Gates, the company's top shareholder, with 
about 5% of shares outstanding, to oust the CEO, who was the best man at his wedding. "Ballmer has been a good steward of Windows, 
and that's about it," Cusumano says.

Is it too late for Microsoft? Certainly the company has made it harder for itself by squandering big leads. But it's still early in 
the competition for the tablet market, and the fight for majority rule in the phone sector began in earnest only four years ago with 
the first release of the iPhone. Companies with bigger hurdles to overcome than Microsoft (which sits on an amazing $44 billion in 
cash) have reinvented themselves. Apple may be the most famous comeback in technology, but Motorola (MSI) and Netflix (NFLX) have 
also come back from near-death experiences. The reason: strong leadership, and a willingness to cast off the past in favor of an 
uncertain but promising future.


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