Would Microsoft ever split itself up?

Might a Gates-less Microsoft be rethinking whether a more decentralized Microsoft might be better able to fend off its growing list of competitors?
Written by Mary Jo Foley, Senior Contributing Editor

Conventional wisdom has it that Microsoft's brass would never choose to break up the company -- even in the name of making it more agile.

After all, when Judge Thomas Penfield Jackson, as part of the U.S. Department of Justice antitrust case against Redmond, ruled in 2000 that Microsoft should be forced to be halved (into an operating system and application company -- a judgement later overruled -- Chairman Bill Gates & Co. was dead-set against such a plan.

But might a Gates-less Microsoft be rethinking whether a more decentralized Microsoft might be better able to fend off its growing list of competitors?

In a July 27 article in the Wall Street Journal about Microsoft CEO Steve Ballmer, there are hints that the new man-in-charge at Microsoft might be contemplating far-reaching changes to the company's organizational structure. From the article:

"At the center of Mr. Ballmer's dilemma is ongoing tension over whether Microsoft's huge business divisions should have wide freedom to set their own course -- or be more centrally planned, a strategy that could meld expertise across the company in ways that provide an advantage over rivals with narrower technology portfolios. In the (Ballmer 2007 "The CEO Evolution") memo, according to Microsoft executives, Mr. Ballmer cites lessons from both the Wal-Mart and GE experiences.

"'We're not a conglomerate, but we're not a monolithic operating company,' Mr. Ballmer said in a recent interview. 'The question is, "are we always hitting the right balance?"'"

Perhaps Ballmer and his lieutenants are not thinking about something as drastic as cleaving Microsoft into three (or more) independent entities -- Platforms & Services, Business and Entertainment and Devices. After all, when Microsoft was contemplating buying Yahoo, a number of folks wondered whether Microsoft might be planning to meld its Online Systems Business with Yahoo to create a separate company or wholly owned subsidiary.

Or maybe Ballmer and his inner circle are simply thinking about letting more groups have more autonomy in crafting their product plans (a la the Xbox and Zune units).

If Ballmer does end up reassembling the org chart, I wouldn't be surprised to see the Windows Mobile unit (at least the part focusing on the enterprise side of the house) move over to the Windows side of the world (and out of the Xbox/Zune organization).

Do you think Microsoft could -- and should -- proactively break itself into mini Microsoft's? Should it at least allow newly incubating product units to work independently from the mother ship until they are ready to ship? Or would such a course backfire and take away the (what some claim are unfair) information-sharing advantages that various Microsoft units currently enjoy because they are all part of a single entity?

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