As vendors split and jettison, can Microsoft avoid the same fate?

The days of highly integrated, one-brand-fits-all computing are ending fast, and the challenge for the offcuts is to succeed where their lineage failed. But is the biggest split yet to come?
Written by Chris Duckett, Contributor

There used to be a time when an IT leader could sign one purchasing and support contract with a single vendor, and have all the computing hardware and software needed to conduct enterprise computing for the foreseeable future.

"Nobody ever got fired for buying IBM" was regarded as an axiom, and IT purchasers could get everything from mainframes, rack servers, thinkpads, and thinkcentres for corporate desktop needs, and everything in between.

It was an era where it made sense for those supplying computer equipment to integrate and upsell customers on as many products as they could manage.

Thus, we ended up in a place where it was conceivable, and often the reality, that a single IT vendor would not only sell hardware for datacentre, desktop, and laptop computers, but also have its own matching portfolio of software that included mail servers, office programs, communications software, and even operating systems and programming languages.

Enterprise computing was at the forefront of innovation, and it consequently set the tone for how the industry was viewed.

Then, as we all know, consumersation changed the way that computing was approached, and it turned out that those highly integrated corporate vendors that ponderously upgraded their hardware fleets at times of their own choosing were far from the be-all and end-all that customers wanted, or, more importantly, desired.

New brands with shiny hardware appeared on enterprise desktops, and, in parallel, open-source software and internet services were pushing aside the proprietary and expensive software that increasingly lacked features that users found outside of the workplace. Why wrestle with software like Lotus Notes and its associated baggage for email and calendaring when using a service such as Gmail was easy by comparison?

As the computing world shifted and left behind its old masters, those integrated multinationals found themselves increasingly irrelevant, and took to buying companies that offered a chance to reinvigorate and remake the parent corporation — but the theory rarely matched the reality, and often new and exciting companies became crushed with the weight of the parent corporation and its culture.

While the likes of HP were busy vacuuming up Autonomy, and eBay had its quick fling with Skype, the best example of the highly integrated corporate vendor, IBM, was beginning a process that would see Big Blue exit much of its hardware business. With the sale of its personal computing business to Lenovo in 2005, IBM was well on its way to becoming the consulting, research, and services company that it is today, instead of the hardware manufacturer of its past.

In that same year, Symantec picked up Veritas for $13.5 billion, giving an otherwise desktop security-focused company an ongoing storage management concern.

A decade later, Symantec is the latest company in a growing collection of major computing companies to divest or split themselves in recent weeks. In the case of Symantec, two brands will emerge, one to handle its security products and another to focus on "information management", which will include backup and recovery, archiving, eDiscovery, storage management, and information availability services.

Joining Symantec is eBay's divestment of its PayPal arm, and the split of HP into a PC and printer company and an enterprise services company.

For each of these transactions, the primary reason looks to be allowing each entity to be more flexible and focus on what it does best, without the drudgery of needing to confirm to the wider corporate objectives and budgets.

The phase "herding cats", or perhaps even cognitive dissonance, comes to mind when one considers how the leaders of large, integrated companies managed to wrestle and tried to control the disparate multi-limbed branches of these companies. In the case of Symantec, the rise of the internet and cloud computing have made any attempt to compare the storage and security markets entirely mute.

Likewise, pulling apart the enterprise services and Hewlett-Packard's remaining hardware divisions makes a lot of sense. It worked for IBM, and, if executed correctly, could similarly work for both the new HP Enterprise and HP Inc, both of which will still be large corporations in their own right.

The modern technology landscape dictates that in the time it takes a lumbering behemoth like HP to recognise and respond to the threat posed by a fresh, vibrant entrant in a market, the entrant may have already taken and eaten a significant amount of the behemoth's lunch. Breaking up and becoming more agile entities will allow these splitter companies to begin to fight fire with fire.

As the large vendors of the past 20 years become smaller, perhaps the greatest split is yet to happen. A quick glance of this collection of satirical organisation charts actually demonstrates which corporation, despite the calls of its previous CEO of a singular path for the company going forward, is ideally suited to becoming multiple entities.

After decades of riding the operating system and office software cash cow to the bank and home again, Microsoft says it is now focused on devices and services. The problem with this proposition is that while Microsoft's services and cloud computing is humming along nicely, its set of devices have hardly set the world on fire, and the old cash cows are still delivering.

As time goes on, and Microsoft becomes more open, it is refreshing to see Redmond creating software and apps that work on non-Microsoft systems, but this is also a recognition that it is not going to win the mobile operating system war any time soon. The problem here, of course, is that this runs in contradiction to its history, and short-term economic sense, by going against the aim of pushing Windows onto every device wherever possible.

There could be a time in the near future when Microsoft's services are pushing the company forward, and its devices and operating systems are comparatively holding the company back.

That future may already be here, as a look at the computing device operating system market in 2012 had Microsoft's share pinned at around a third of all internet-connected devices. The challenge Microsoft faces is that the prospect of Windows 10, as good as Microsoft may make it, is unlikely to force any significant number of users away from their Android or iOS-powered mobile devices, which is now where the battle for computing supremacy is played out. On the other hand, this is a space ideally targeted by Microsoft's internet services, which more and more include parts of the Office crown jewels.

Consumerisation, mobility, and the internet can already claim to have forced former heavyweights to change their game. IBM has repeatedly made the call before it was forced upon it, whereas Symantec and HP have executed their manoeuvres after much tumult and consternation.

The dreadnought that is Microsoft has so far resisted the maelstrom and storm clouds that have forced smaller players into more agile entities, but with its future seemingly headed in a different direction to its present and past, the issue of splitting Microsoft into its constituent parts, on its own terms, should not be ruled out.

There is already a large amount of jetsam floating around as larger companies attempt to avoid going under, so how long can Microsoft avoid needing to cast some of its non-core and underperforming cannons into an increasingly littered sea?

ZDNet's Monday Morning Opener is our opening salvo for the week in tech. As a global site, this editorial publishes on Monday at 8am AEST in Sydney, Australia, which is 6pm Eastern Time on Sunday in the US. It is written by a member of ZDNet's global editorial board, which is comprised of our lead editors across Asia, Australia, Europe, and the US.

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