For Microsoft, Breaking Up is Hard to Do -- and Probably Won't Happen

Carl Weinschenk

A very interesting side note to Microsoft's shareholder meeting has been covered by numerous sites and publications. At the end of the meeting, which the coverage said was otherwise uneventful, a shareholder asked Bill Gates and Steve Ballmer if it is time to break up the company.

 

Odds are, of course, that it won't happen, and the notion was batted down by Ballmer and Gates. The surprise was that Ballmer's response wasn't comparable to what would have happened if somebody asked Lincoln if he thought South Carolina or Georgia should leave the Union. Reports are that Ballmer was measured and implied that it was a notion that had gotten some attention inside the company.

 

The basic premise makes a good deal of sense. The company provides products and services are aimed at audience as dissimilar to those that use, well, server software and Xbox LIVE. (It's hard to come up with a more extreme comparison to make the point).

 

It's beyond doubt, of course, that the line between consumer and enterprise telecommunications/electronics is fading. Apple can succeed in both realms with the same products: People use iPads and iPhones at work and at the beach. Microsoft's products-such as its personal productivity software and, it hopes, Windows Phone 7-are popular in both realms as well.

 

But there is another dimension of Microsoft. The company is as much an enterprise infrastructure company as it is a consumer company. That part of the company is, and will remain, completely disparate and separate from the company's consumer-oriented products. The technology-based ties binding the various groups still exists, but the landscape and context may be rendering them less important, or at least it seemed to the shareholder who raised the question. The case for separation is enhanced by the accelerating decline of the PC as the center of the electronic universe.


 

The question of whether slicing up Microsoft is a good idea will be answered by folks with far more technical, legal, financial and regulatory knowledge than I, and far more insight into the personalities driving the company.

 

For instance, from a legal/regulatory point of view, will splitting the company make it easier or harder for one of the newly minted companies to dip into something owned by one of the others? Will it be more difficult, for instance, for Windows Phone 7 to link to the company's productivity products?

 

At the end of the day, would the discrete companies be stronger than the monolith is today-which, of course, is the whole idea? Or is such a move prudent, but not likely, because the powers-that-be at Microsoft don't want to say goodbye to each other?



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