Bill, The Blob And The Seven CFOs

Rupert Goodwins: Microsoft is restructuring, but the biggest changes may be yet to come.
Written by Rupert Goodwins, Contributor

In 1950s smalltown America, stuff falling from the sky was rarely good news. Take the meteorite that smashes into the ground at the beginning of The Blob: no harmless lump of space slag this. It's a galactic Greyhound bus, and its solitary amoeboid passenger is not here for the tourism.

Peckish after its interstellar trip, the eponymous protoplasm rampages through the locale, engulfing the innocent and growing like billy-oh. Its one mistake is to annoy the young Steve McQueen, who in desperation squirts the monstrous jelly with a fire extinguisher and saves the day for America, Freedom and teenage snogging.

The acting may be first class, but the biology stinks. You can't get a blob that size: the structural rules that keep an amoeba happily oozing break down once it gets past a certain limit. The solution is to split down the middle and go your separate ways: a simple idea, amoebae not being big on complex strategies, but one that's seen the humble speck of gloop through a billion years.

It's not a huge conceptual from the primeval gunge of the Proterozoic to the boardroom of Microsoft. The company has hired seven new chief financial officers, and not just your run of the mill glorified accountants, oh no. These are Dreadnought-class, iron-clad CFOs, battle hardened and fresh from the gore-soaked spreadsheets of the likes of HP, Disney and Exxon. Any one of them could run a small country without ruffling their hundred-dollar haircuts.

But seven? Ostensibly, they're on the payroll to manage the finances of each of Microsoft's divisions, but good CFOs are territorial beasts. A boardroom with seven of them trying to be nice to one another will have more gritted teeth than a convention of sand garglers, and the idea that they'll nicely cooperate over money, strategy and tactics is up there with Bush buying a retirement home in Baghdad in the list of things that won't happen any time soon.

It's true that any one division of Microsoft has all the attributes of a large company in its own right, but if you treat them as such then that's what they'll become. With the hiring of a job lot of beanmeisters Microsoft may be signalling the beginning of a new era. There's a distinct possibility that the company will voluntarily do what decades of prosecutors have tried and failed: it may be moving towards breaking up.

There are good reasons why Microsoft itself may want to fission. On the desktop, it defines the market. It's got all the money, and there won't be any more unless that market grows. Monopoly markets stagnate. Many of the normal frameworks that inform corporate behaviour go away once you've won, and Microsoft has not done well in being both a monopoly in desktops and a minority player elsewhere. One theory of creation goes that God got bored in his perpetual perfection and split himself into good and evil just to lively up the place: with Microsoft, it may be that it can't be both king and courtier in the same skin.

Another and more pressing reason is the big problem with being Goliath: it only takes one David, and £50bn in the bank is as tempting a target as slingshot ever saw. This could be happening already -- a 30-person company called InterTrust Technologies has a court case underway that claims Microsoft is infringing its digital rights management and trusted systems patents. If proven, InterTrust could force Microsoft to halt shipments of Office and Windows -- and the preliminary hearings have gone very much InterTrust's way. A sensible move might have been for Microsoft to buy the company out, had not Sony and Philips got there first: this particular David has already been bought for half a billion dollars just for those patents. It's not going away.

The reason companies exist is to make money for their owners, and to make more each year. You can't do this once you've exhausted the food supply by eating everything, and you can't do it if you've been punctured by a well-hurled missile. But split into separate companies, and you're much harder to attack, much freer to focus on the right strategy. And if you have seven independent blobs, the chances of one hitting the evolutionary jackpot and finding a new way to grow is much greater: seven independent focuses cover a lot more ground than one.

Against this idea is the knowledge that outside Office and Windows, Microsoft is less than a sterling success: Xbox, embedded systems and other bright ideas having failed to replicate the marvels of the PC market. Nevertheless, there's enough going on in each division to tempt our lantern-jawed superhero CFOs and in the end they must have the ability to survive on their own terms. Microsoft might survive forever as a giant amoeba, but evolving is just so much more fun.

Editorial standards