Why Microsoft's Killer Instinct Must Return

Why Microsoft's Killer Instinct Must Return

Summary: Last week, the hearts of many Mac fans skipped a beat when the Mactopia web page on Microsoft's web site disappeared for several hours. As it turned out, it was just a simple glitch, and in a knee-jerk response to blogger Ted Bishop's inquiry about the health of the Mac Business Unit in general, Microsoft had this to say:While the group eliminated some positions, the essence of MacBU will not change.

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Last week, the hearts of many Mac fans skipped a beat when the Mactopia web page on Microsoft's web site disappeared for several hours. As it turned out, it was just a simple glitch, and in a knee-jerk response to blogger Ted Bishop's inquiry about the health of the Mac Business Unit in general, Microsoft had this to say:

While the group eliminated some positions, the essence of MacBU will not change. We are committed to delivering the industry standard in productivity software on the Mac. We are well under way with development of the next version of Office for Mac, and we recently released a beta version of Entourage for Exchange Web Services and will soon release a private beta of the Microsoft Document Collaboration Companion, both milestones in our product roadmap.

By all accounts, the Macintosh Business Unit does make a decent profit for Microsoft -- with an estimated yearly revenue of approximately $350 million. However, when you look at the big picture, 350 million dollars isn't really a large percentage of Microsoft's annual revenue, which is around 60.4 billion dollars, according to the most recently reported 2008 figures.

Click on the "Read the rest of this entry" link below for more.

In fact, given the current economy, and the stress that Microsoft is now under to retain market share and preserve its bread and butter business -- Windows and Office -- that maybe it is time for the company to reconsider whether or not operating a Macintosh Business Unit is really such a good idea.

We've all heard about the supposed obsession that Microsoft's CEO Steve Ballmer has had for "Killing Google". I think that energy is misdirected -- they should be focusing their efforts on Killing Apple instead and hurting them in their worst time of crisis. I know, it's a reptilian, bloodthirsty, and horrible thing to propose -- to pick on Apple when Steve Jobs is sick and everyone is worried about whether or not the company can weather the economic downturn with its luxury products. Exactly. I propose that you return to doing what you do best, Microsoft -- being bloodthirsty.

I know, I know, Microsoft made a 5-year commitment back in January of 2006 to Apple to continue to produce Office and other products such as Entourage for Mac until 2011. But 2006 is not 2009, at least in terms of it being an environment in which Microsoft can continue to try to be all things to all people, Even Microsoft is no longer immune to the effects of the economy, and that comes straight from the mouth of the company's own CEO, Steve Ballmer.  A large portion of the Microsoft Games unit was recently deep sixed, and there are rumors that the Zune division is also going to be eliminated as well. Sure, one could argue that the Mac Business Unit is profitable and the others are not, but profitable at what cost?

How much revenue and resources does operating a Mac Business Unit cost Microsoft? I would imagine that given the current climate, it's a huge distraction. Those 200-odd employees could be put to work doing other creative projects for the company, in the advancement of Windows and improving other Microsoft products, instead of helping to improve Apple's market share and making life easier for the users who chose to seek out a different platform than their own. How many Windows systems does Microsoft lose to Apple every year because Mac has their own version of Office as a viable alternative? I'm going to say a lot.

Killing the Mac Business Unit would not only help cut costs and improve focus for Microsoft, and create short-term havoc for Apple and the Mac, but it would also have a very desirable side effect -- it would very well cause Apple to re-think its relationship with the Open Source community. By all means, let Mac Office Suites and productivity applications become the Open Source Community's problem -- not Microsoft's. OpenOffice.org 3.0 for Mac is an excellent office suite, and with Microsoft washing its hands of Mac applications, Apple will be forced to become Open Source's new best friend -- something it should have done a long time ago.

Should Microsoft finally pull the trigger on the Mac Business Unit? Talk Back and Let Me Know.

[poll id="4"]

Topics: Microsoft, Apple, Hardware

About

Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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136 comments
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  • You are ignoring the legal ramifications...

    Microsoft has proven already to be a pure monopolist. Killing this BU as you so describe would lead to an immediate lawsuit as there is no real reason for doing it outside of "killing" a supposed competitor. The cost and public image damage from such a move would be large. And let's face facts, if you are looking to redeploy the couple of hundred folks in this BU, you could easily redeploy the entire MSN, Live Search, Windows Mobile, and Zune teams and accomplish a whole lot more. Microsoft has created their own issues right now: substandard products that are searching for a market and "me-too" products that other people do better. Killing off a small BU that acts as a legal buffer is DUMB.
    Mike Cox
    • Somebody steal Mike Cox's ZDNet identity?

      This is not the Mike Cox we all know and love.

      I want the REAL Mike Cox back!
      j.m.galvin
      • It is the real Mike Cox

        He does a serious post every once in a while, though usually not about MS. In this case, he's absolutely right (even from MS' point of view).
        John L. Ries
    • This isn't Mike Cox...OK, *Who* are you?

      no drum roll for you!
      no_zd_user_name
      • I have an idea...

        Well, not to a specific identity, but as to why this Mike Cox doesn't write like we expect from Mike Cox.

        I've long susgpected that Mike Cox was an alter ego of some other ZDNet member. Think "frosted mini wheats". A wheat side and a sweet side. The serious side would be the wheat side, and Mike Cox side would represent the humorous, sugary side. I have a feeling that, instead of logging in as his wheat side to post a serious response, instead, he (or even she) logged in as the sweet side inadvertantly and posted that without realizing it. Well, at least that's what my Ovaltine Secret Decoder Ring says. ]:)

        Just a hunch...
        MGP2
        • Actually

          This Mike Cox has an extra space in their name. its a different person.
          Kid Icarus-21097050858087920245213802267493
          • re: Actually

            [i]This Mike Cox has an extra space in their name. its a different person.[/i]

            You sure, it looks like just one to me. I think MGP2 might be right.
            Badgered
        • Even still ...

          Even still, Mike Cox has a valid point.
          HouseOfZen
        • Sounds plausible. And in that case, the commentary is no surprise.

          For the MS hating "fish" that Mike usually reels in, this line of commentary must be blowing their minds.

          I can just see the lame brains who don't get what Mikey is really all about suddenly wondering what kind of drugs Mike is on...or perhaps off that gave him such a sudden awakening.
          Cayble
    • Absolutely right

      MS is in enough antitrust trouble as it is. Hopefully, Ballmer will listen more to his lawyers than to his salespeople.

      John L. Ries
    • Mike, has M$ axed your position?

      Ballmer made a big mistake by axing your position.
      Now the shilling and BS-ing will have to be done by Ballmer himself.
      Linux Geek
    • gobble-de-goop

      since when is NOT providing real and tangible support to your competition monopolistic and illegal. It is a bit like CocaCola saying, "oh, sorry we sell more soda than you Pepsi, why don't we develop a new drink for you, spend our R&D and marketing money so that you can slam us as uncool and stodgy."
      That isn't sound business. So long as MAC can 'compete' with MS office on MS's tab, why not...but it isn't good business. Is MS getting any software from Apple? You can bet that the instant iTunes isn't Windows compliant, that iPood sales would drop (until/unless MS got WMP to port to the most over rated MP3s on the planet (yeah I have one...yeah it sucks). Hey, that might even make Zune competitive (though I think the boat has long since sailed on that one).
      stone-cutter
    • That should read "...been convicted of...

      ...being a legal monopolist". If Microsoft was a "pure monopolist" there would be zero competition in the world.

      It's a fine line between a true monopoly and a legal monopoly. I think it has to do with how many whiners there are in the world that cry the playing field isn't "level" because Microsoft has a majority of the market. In legal terms, "majority" == "monopoly". As for the exclusivity terms that have not been in Microsoft's contracts for quite a few years now, in the US that used to be considered hardball business. It wasn't until the whiners got more socalist democrats into office and to listen to them before it became "illegal" to play hardball business.

      Alas, the world will be a sad place when the socalists rule all. They've got a strong start in the EU, Massachusetts, most large metropolitan cities, the UN and in WashDC.
      PollyProteus
      • Please...

        Can all the historical revisionism stop now that it's main cheerleader is no longer President?

        Microsoft is a tried and convicted monopolist. the damage that Microsoft has done to personal computing and the resultant lack of choice have been entered into evidence and proven to be real.

        MS never had a "killer instinct", they had a killer monopoly. They had power which they abused to destroy competition, a monopoly that was handed to them by IBM. It's why they can't advertise to consumers, because they haven't had many customers, just a lot of vassals. As soon as people wake up to the alternatives to Microsoft's obscenely priced office suite, the cash flow will dry up as fast as you can say "convicted monopolist"...
        His_Shadow
  • Wait a minute Jason

    [i]Microsoft made a 5-year commitment back in 2006[/i]

    A commitment is a commitment, you can not turn around and say "well, sorry we cannot honor that contract"

    Would you happily walk away if ZDNet approached you and said one day "Granted, we signed a contract that commited us to pay you for 5 years worth of blogging on our sight, but you know, this is 2009, not 2006, so we changed our minds"?

    No, you would hold up your contract and proclaim "Hello, you commited to 5 years worth of money, so...."
    GuidingLight
    • Is it a legal commitment or simply a promise?

      Any contract that Microsoft got into with Apple -- should such a legal commitment exist, would have clauses for escape. There's no way Microsoft signed any sort of agreement that didn't include some way for them to get out of it, be it some sort of financial penalty or whatever.

      And as to your ZDNet comparison -- I don't have that sort of contract, ZDNet can terminate their relationship with me anytime they want. That's the nature of the publishing business. If my blog performs poorly or if ZDNet performs poorly I can be thrown out just like anyone else.
      jperlow
      • It was just an analogy

        I had a good idea how it worked, it was just a a simplistic example.

        But at the same time, I am sure that Apple would not sign a contract with Microsoft that would allow for them to walk away, leaving Apple without one of the more sought after softaware packages for OSX.

        And I am pretty certain that a contract was signed, as an agreement or pledge between rivals allways has the cooperative agreement written in stone
        GuidingLight
        • Another option is...

          ...that Microsoft could simply Open Source Office for Mac. It would solve their legal conundrum and Apple would continue to have Office. Of course this would mean they'd have to embrace open standards for document formats (.ODT, .ODS and .ODP), but OpenOffice does a good job with .DOC and .XLS today, and whoever chose to develop Office for the Mac could leverage the OpenOffice code to make it work with the standard formats. Win-win IMHO.
          914four
  • Legal implications

    I tend to agree with one of the other posters in relation to
    this... Microsoft needs Apple to hang around to present as a
    "competitor" in the OS space. Without them, they would be
    flagged as a monopolist and the government would start to
    regulate them as such. Without Apple, Microsoft would be
    reduced to having their products' prices much more in line
    with other software prices in the world.
    Note: software prices become cheaper over time rather than
    more expensive (the MS way).
    merlin747
  • Vision

    Killing MBU won't save MSFT. It will just speed up the loss and kill off a major source of revenue.

    It's true that MSFT lost their vision. They've become complacent and lost their will to be bold all in the name of profits for Wall Street.

    We all believe they have a major R&D unit - Sync and Surface are clear evidence - but they lack the 'nads to make a big commercial go of it. To thrive, they need to out-innovate Apple and Google. They need to push the boundaries so Apple, Google and the rest look stale and old. MSFT has enough cash reserves to make this happen, but the bureaucrats need to step aside, stop watching their stock ticker so closely, and take some risk.
    Chad Strunk