'

Jesse Berst: Wake up and break up

Microsoft can fuss around and whine, or take charge of its own destiny

Slap!

That's the sound of my cyberslap-upside-the-head-to-Bill Gates. Because he needs to wake up and break up -- before the decision gets taken out of his hands. News reports yesterday indicate the Department of Justice and state attorneys general have concocted a break-up plan for Microsoft. Whether the reports are entirely accurate doesn't matter. The legal handwriting is on the wall. Microsoft can fuss around and whine. Or take charge of its own destiny.

Here's the irony. If Gates implements a break-up strategy now -- and if he does it right -- Microsoft will be better off. Here's why:

Microsoft has become too big, too bloated, too territorial. It has brilliant people, but they're stifled by a ponderous corporate structure.Three or four leaner, meaner companies could react more quickly to competitors and market trends.

Microsoft could increase shareholder value by spinning off MSN, its Internet division.

The most recent government proposal reportedly divides Microsoft into three companies: an operating systems group, an applications group and a services group; the latter would presumably include its Internet division. If I were Bill Gates and looking for a breakup that makes business sense, I'd sort it out this way:

  • Online

  • Operating systems

  • Applications and services

But Bill Gates is a stubborn man. It won't surprise me if he continues thumbing his nose at the Justice Department. Insisting he's done nothing wrong. Blathering about his right to innovate, until he finds himself sitting on the sidelines while someone else dismantles his company.

Whack!

That's the sound of ZDNet readers hitting the mailroom button below to tell me whether they agree. Should Gates make a pre-emptive strike and break up Microsoft himself? Let me know.

What do you think? Tell the Mailroom. And read what others have said.