Here's a question worth asking. In 2017, what and how big will Microsoft's major revenue streams be? Even discounting hindsight, that's a lot harder to answer than the same question ten years ago: As Vista has proven, XP is good enough: that wasn't the case for Windows 95 or NT. Office is finished, please God. There's fun to come with servers, but in many-core and virtualisation technologies, it's not Microsoft making the running.
So Microsoft is a huge company with a fuzzy future. In many respects, it's underperforming, if not stalled. Apart from a question of scale, that makes it a classic target for acquisition.
The idea of Microsoft being taken private by a group of investors should be too enormous to contemplate, but it makes a lot of sense. The company has huge stockpiles of cash, no debt, an enormous and predictable cash flow – and almost entirely stagnant growth prospects. It's got so much money it can lose tens of billions on a new project like the Xbox, and still keep the thing going. It can take five years to produce an update when its competitors are doing it every six months, and nobody cares. It has one mode of operation, and that's to charge ahead like a stegosaurus: its upper management, plentiful enough by themselves to populate an entire Jurassic landscape, rarely show signs of evolved thinking. When was the last time Microsoft surprised you with an unexpected sparkle of intelligence?
In shape and prospects, Microsoft is an unreformed infrastructure company with a lock on the market. There are huge savings possible by culling management and R&D, neither of whom seem to have the slightest positive effect on sales or products. That's the perfect target for investors looking for guaranteed revenue with minimal investment and long-term prospects.
But while the idea of the company being seized by predators and viciously right-sizedis appealing, the moment for that to happen may have passed. After the money market temblors of the past month, debt is dangerous and liquidity is everything. Few people would want to sink the required 40-odd billion dollars of ready cash into such a deal, let alone take on the hundreds of billions of debt.
That's not as comforting to Microsoft's upper echelons as it might seem. The company's shares are mostly owned by outsiders, who are fed up with getting poor returns on their investments while they watch the cash either locked up or washed down the drain. Disquiet is evident within the company too - well-informed insider blogs may not be objective, but they correlate well with what leaks out through other holes.
This is the weather for a coup, whether by a posse of external shareholders with inside support or a rebel group of managers with help from the investors. The trigger point isn't far away – we're nearing the end of the multi-year transition period that's seeing Ray Ozzie and Craig Mundie replace Bill Gates. By now, the changes in Microsoft should be visible – but it's not looking that good. The two big moves – into advertising, and into Net-delivered cloud services – look more like Google-chasing than anything else; neither address the many and extremely deeply ingrained reservations even Microsoft's closest partners have about dealing with Redmond. Neither properly answer the question of revenues in 2017.
The financial, market and practical pressures are just too great. There is no way that the current state of Microsoft is the answer to any question concerning the sensible use of the resources within the company, and the massive inertia it possesses can only protect it for so long: either outside pressures will overwhelm it, or it'll collapse under the weight of its own contradictions.
My money is on sooner, rather than later: if the markets get really messy, then much sooner. At some point, that cash cow's going to look like a piggy bank.