History lesson: Apple vs. Microsoft reorganizations

History lesson: Apple vs. Microsoft reorganizations

Summary: Back in 1997, Apple started a series of drastic reorganizations that pared down the organization and its product strategy. There's some comparison with Steve Ballmer's latest brainchild, the "One Microsoft" plan, but a "realignment" may not cut it when a real reorganization is needed.


Microsoft's latest company-wide reorganization was revealed Thursday with a memo released to the employees. The plan is called "One Microsoft."

In a posting on the Monday Note blog, Jean-Louis Gassée discussed Microsoft's moves from a divisional to a functional organization and the creation of functional groups that will hopefully work together to execute on a new "devices and services" strategy.

He compares Microsoft's reorganization with Apple's massive Black Friday layoffs that started in mid-March 1997 and runs down the differences between Apple back then and Microsoft today. And then there's the run of successes from Apple over the past decade. But Apple's problems back then were nothing compared with Microsoft today.

I greatly admire Ballmer’s determination to never give up, never admit failure, always look forward, attitudes that are well-served by his imposing physical presence, impeccable speech, and unshakable composure. But this change isn’t the sort of organizational tune-up that he has perfected over the last three years, it isn’t another iteration of spring cleaning that has resulted in the high-level departures of Robbie Bach, Ray Ozzie and, earlier this year, Steven Sinofsky (who was found guilty of Windows 8).

Removing a loyal but obdurate contradictor, sanctioning bad performance and foul politics is one thing. Reshaping the culture of a huge organization (97,000 employees) is a qualitatively and quantitatively different task. Habits of the mind and, even more challenging, of the heart are extremely hard to change. And, certainly, Microsoft’s culture needs an overhaul. It has caused the company to miss or mishandle Search, Social Networks, Advertising, Smartphones, and Tablets, and to make a meal of the latest version of their iconic Windows product.

Of course, execution is and has been a critical problem at every level of Microsoft, from Ballmer down to the lowest-level manager. Even Ballmer had to address it in his memo — somewhat.

It is also clear to me and our leadership that we must do an extraordinary job to succeed in this modern world. We have delivered many great products and had much success in market, but we all want more. That means better execution from product conceptualization and innovation right through to marketing and sales. It also means operational excellence in cloud services, datacenter operations, and manufacturing and supply chain that are essential in a devices and services world. To advance our strategy and execute more quickly, more efficiently, and with greater excellence we need to transform how we organize, how we plan and how we work.

The vision appears to be clear to Ballmer at least. Still, it took him some 2,700 words to communicate it, which must stand as another example of Microsoft's problems. He and his minions have been hard pressed to execute on any strategy in the past decade or so. Dare I remind readers of Longhorn and the first, problematic release of Vista? With a track record as spotty as theirs, can this new excellence push really be trusted?

At Monday Note, Gassée also wondered what will happen if Microsoft can't get back the market back on the traditional, cyclical upgrades.

The company was reasonably prosperous even before DOS/Windows and Office, but its never-before-seen riches came from a division of labor: PC OEM vassals were left to fight among themselves for market share while the licensing overlord enjoyed monopoly pricing for its Windows + Office sales. (When Ballmer cheekily says ‘We’re all about choice’, he means the choice between PC makers racing to the bottom, not choice between Windows/Office and alternatives.)

He warned that the traditional Microsoft business model is weakened by Apple and Android tablets. It's caught in a cascading failure of its revenues, particularly, in the higher-margin server products in the enterprise. "The once powerful tie-in between Windows and Office now turns against Redmond," he wrote.

I take issue with Gassée and other's shorthand Apple history. For them, there's the return of Steve Jobs to the company in 19997 and then iPod/iTunes, Apple Stores, iPhone, App Store, iPad, etc. There are historical gaps here and there, many spanning years.

Gassée boils down the differences between then and now, Apple and Microsoft, into three bullet points:

1) That "Apple was on the ropes" and this cleared executive minds for serious cuts and strategy revisions.

2) That Apple's business was "simple," comprised of Macintosh computers.

3) Steve Jobs returned and brought order and reason to the company.

I agree that Apple was on the ropes, with its developers and installed base. However, Apple's business was not so simple, it sold all sorts of branded hardware and software packages, from cameras to printers, hard drives and servers, peripherals of all sorts.

Check Out: Recalling a summer when Steve Jobs saved Apple and the Mac

My MacWEEK colleague, the late Don Crabb, wrote a special opinion piece on Black Friday, March 14, 1997. He said it was the dreaded corporate reorganization "that must define a corporation that can sell computers, service customers and make money." He said indeed, Apple had executed a reorg worthy of the name.

All the rest of the hardware it can either (a) outsource to an OEM (like printers, scanners and digital cameras), (b) dump entirely because it should never had gotten into the silly business in the first place (like Apple-manufactured hard drives, network hubs and routers, external CD-ROM drives, and piles more hardware flotsam that lose money), or (c) measure its strategic value and leave it alone (like Newton and eMate - where it continues the effort but considers spinning off the division as development continues).

This came to pass as Crabb predicted.

On that day, I wrote a story detailing some of the major projects that were cut and spared. Many units, such as Apple Imaging, weren't cut completely on the day, but were jettisoned over the course of a year or two. Longtime Mac fans will remember the OpenDoc and Cyberdog component-software architecture; HyperCard; Copland and QuickTime Conferencing. What nostalgia.

Apple didn't turn on a dime. It all took years. Apple refined its hardware operations and carried on development of Mac OS software while refining the NeXT OpenStep-based Rhapsody into an operating system that would be acceptable for actual work and to the installed base of Classic Mac users. And all that effort set the table for the consumer devices that now dominate the market.

Topics: Apple, iOS, Microsoft, Operating Systems, Windows

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  • One Microsoft

    I really hope this new plan pans out and brings really innovative market leading ideas to market. Microsoft definitely has the brains, now they need the products.
    Dreyer Smit
    • Re: Microsoft definitely has the brains

      Curious, why you think so?
  • Typo

    "return of Steve Jobs to the company in 19997" 19997?? Time travel? hehe
    Aric Bolf
    • 1 vote for stupidity

      I gave you 1 vote for stupidity and childishness so enjoy.
  • Ballmer is no Steve Jobs...

    Mr Ballmer, I knew Steve Jobs, Steve Jobs was a friend of mine. You sir, are no Steve Jobs!

    As usual, Microsoft is playing catch up. Their betting they can once again copy Apple innovations, repackage them as great Microsoft innovations, and watch the suckers line up to purchase they're second rate copied goods. They may have gotten away with doing that in the past, but I doubt it's going to work this time around.

    Ballmer is no Steve Jobs. He lacks vision and has never had an original idea. His leadership skills are a joke. The man has embarrassed himself more times then I can count. His Monkey Boy routine being one of the most famous. I can't imagine what it must be like working for such a clown. Apple succeeded because Steve Jobs replaced the inept leaders running Apple. For Microsoft to succeed, Ballmer must be replaced with a new leader with the type of vision and expertise Steve Jobs possessed.

    Until Ballmer is replaced, Microsoft is doomed.
    • Ballmer is a visionary

      Microsoft isn't playing catch-up, they've done that with the release of Windows 8, now they're improving and building on that stable platform, Microsoft is bigger and better than the rest, even combined, maybe not in market-share nor value in American Dollars, but it is in (Cloud-)services and software, Windows components and video-games, enterprise software and applications. Steve Ballmer was one of the best things to have ever happened to Microsoft, heck to have ever happened to those United States of America.
      Taizong Yuan
      • Re: they've done that with the release of Windows 8

        Thing is, Windows 8 was not necessary.

        If Balmer was any intelligent, not even a visionary, he would have seen this.

        If it was Balmer, that happened to the US, then this explains the downward spiral...
    • No Room for Catch Up...

      The only reason Microsoft gained market-share in the 80's/90's was because Apple's price-points were too high for the "average" user. Well, in the mobile sector Google has now taken the lower price-point position, which means that Microsoft can't undercut Apple like they did in the past.
  • I only need a desktop OS

    I only need a desktop OS in my PC. I dont want an smartphone/tablet OS on my PC.

    I want a beauty OS on my smartphone and tablet. Sorry but Windows Phone and Windows 8 are ugly. Very ugly. Fat Is more beauty iPhone, iPad and Android.
  • iMac vs Surface Rt

    The (glaringly obvious?) difference between this proposed renaissance of Microsoft and the rebirth of Apple is that the wildly successful iMac came after Jobs' return while the less-than-stellar Surface RT came before Ballmer's plan. You gotta do the restructuring *before* you release your entry level all-in-one PC.
    Andrew Sturgess
  • The commenters appear to have drawn their conclusion... probable failure

    Mr. Morgenstern-- what's yours? Will they make it? If so, why? If not, why not?
  • Microsoft has been re-organizing since Windows 8 came out,

    Windows Live was one of the brands integrated into Windows 8 because of the re-organization, Microsoft wanted to put ALL their services and software into one place, and this software to run across all their devices, this is why Windows 8, Windows R.T., Windows Phone 8 and the Xbox One share the same Windows N.T. core, becuase Microsoft wants one consistent line of innovative devices and software with a seamless Cloud-experience across them all.

    Apple (as Google) is known for cutting entire divisions and stop supporting ancient software (heck, even popular software) simply because they can, while Microsoft makes sure that everything they do ''is tight to the past'' (backwards compatibility) and that you can seamlessly move from M.S. D.O.S. to Windows to the next version of Windows (all the way to the beautiful and innovative Windows 8).

    Microsoft didn't suddenly re-organize, this has been going on since the release of Windows 8.
    Taizong Yuan
  • RE: If we wanted Apple we would choose Apple not a Apple wanabee

    Windows 8 reminds me of the mothers in the mother/daughter teams you see in malls. Mom has the exact same hair and clothes as daughter but does look like daughter, just ugly and immature. Wanabee rarely works, Dick Clark was America’s teenager into his 70’s but he was a rare exception.

    If was not easy being a fanboy or just plain liking Microsoft products during the 1999 to 2011 Apple explosion. The only devices if you look at TV or movies are Apples. I had smug people always asking me how can you work on a machines where you are getting blue screens of death or viruses every minute. There was always many more of us then them but truth is while the White Sox might have at least won a World Series once since 1918 the Cubs were and always will be more cool. While as we were told over and over again Apple products “just worked” that was not really true for us, they looked like toys or we just did not like being locked down. Must be because we did not like change or just were moronic, unimaginative geeks we were told again and again. While none of some of the charges might have been true we held fast. A lot of us understood what “choice” and bring oneself was the best long range option for us. Most importantly we understood all the good if not unspectacular Windows OS important then cool.

    Then Redmond does this
  • apples 1997 vs ms today?

    apple in 1997 was losing money to the point where jobs agreed to bury the hatchet in exchange for 150million....
    The same "I'm willing to spend every last penny...fighting..." Job said he would bury the hatchet....

    so how bad must it have been?

    Microsoft... didn't they just have a terrific quarter? Granted changes need to happen... but I would see 2017 on the current path more analogous to apple in 1997 than MS today in 2013. seems a bit over the top sensational to me.