Micros-okia: Steve Balmer’s Swan Song
I’ve been flaming Microsoft and its leadership for a very long time.
The non-innovative model of copy and commoditize has worked poorly for just about everyone. The strategy of always contributing to the value of the Windows franchise (with very, very small number of exceptions) is both uncompetitive in the non-Windows market, bad for shareholders (therefore), bad for employees who get lulled into a sense of satisfaction with themselves without really being exposed to the full forces of competition (Bing anyone?) is a losing proposition long-term, particularly considering the recent decline of Windows PC computers. Who needs a virus-collector anyways?
Partly why I’m so down on MSFT is because one of my previous employers (Nortel) had people there, with the same philosophy. They all thought it was more important to make the new product work better with the sister product regardless of the competitor offering. I hated it. I insisted that any of the products or services I was involved with, had to be cognizant that customers wanted the best technology in that category and our brand/channels were merely a matter of convenience. I knew they weren’t willing to take less than competitive from the vendor they had spent money on before. Because, customers always have choices. Sadly, they’re still in the throes of chapter 11, although the going concerns have been sold off to Avaya, Ericsson, Ciena and a few others, I think.
Anyways, last night, on the drive home from a long weekend in LA, I laughed a hearty laugh.
Microsoft announced that they’re spending $7 billion to purchase the NOKIA mobile telephone business. Might as well have been $70 billion. Still will make no difference.
Yuck. If ever there was a union of two ugly dogs, this is it.
Somebody asked me some time ago if Apple should buy BlackBerry. I replied ‘no way.’ That’s because Apple subscribes to the value-added model of Merger and Acquisition (also known as the BORG* model). This Value-added approach makes you purchase small, young technology companies with capabilities you don’t have so you can add their ‘biological and technological distinctiveness’ to your own. This process means that the technology will explode inside the larger eco-system and accelerate growth, revenues and value for customers. For Apple (like Cisco used to in the 1990s), the impact is immediate and powerful and positive differentiation and growth. Buying BlackBerry will save a valuable franchise and a few niche markets (US Government for example), but do nothing else for Apple shareholders. It’s a deal looking like $1 spent generates $0.85 in value. BORG deals, done well generate $10 or $100 of value.
THIS MICROSOKIA DEAL, on the other hand, is classic Balmer: all noise, arm waving, but no value for shareholders. Micros-okia will truly ‘soak’ shareholders (of MSFT) for another $50 billion before they make any money. This is two losers combining to make a winning deal? Don’t think history will play out like that. Maybe Ballmer should have bought out Vodaphone’s stake in VerizonWireless for $130 billion (Verizon also announced this yesterday).
I bet this deal was to get the CEO of NOKIA to rejoin Microsoft as Steve’s successor. Which, if it holds true, is especially sad for MSFT shareholders. Because, a good head hunter could have done this deal for 1% of the money, without the continuing aggravation of having to manage a money losing device business.
* with apologies to Gene Roddenbery and the Star Trek franchise.
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