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Anyone familiar with the technology space should be well versed with the many problems software dynamo Microsoft (NASDAQ: MSFT ) is suffering from these days.
Chief among them is that game-changing mobile technologies like smartphones and tablets, and Microsoft's sloth in adapting to them, have placed Microsoft's uber-profitable Windows and Office products at risk of missing out on the most significant tech trend this side of the PC.
Microsoft is working like gangbusters to right this wrong, but a number of rumors have surfaced recently that led one veteran Silicon Valley insider to ask, "Has Microsoft gone crazy?"
Investors should take notice.
Micahel Mace, who's held svarious executive functions at tech names including Apple and Palm, posed this question in a recent post on his personal blog, The Mobile Opportunity, to address three rumors circling Microsoft that have him simply scratching his head.
Now, before diving too deeply into the specifics, it's certainly worth noting that we're examining rumors here, nothing concrete. However for what it's worth, each rumor was reported by a reputable source (Nos. 1, 2, and 3 here) and has apparently been supported by his own network.
So keeping that in mind, let's look at each of them, and what they can tell us about Microsoft today.
Redmond's rumor mill
The first two rumors Mace discussed hit home as the same issues for Microsoft, so I'll examine them for you together here.
Rumor No. 1 is that Nokia, whose deal to sell its handset business to Microsoft will close early next year, is still developing an smartphone that runs Google's Andorid mobile OS, and although it strikes me as a long shot, Microsoft might actually allow Nokia to sell it. The second rumor purports that Microsoft is thinking about eliminating the licensing fees it charges OEMs for Windows RT and Windows Phone.
These two items speak to the same problem Microsoft's facing in mobile -- namely, how to get its products into consumers' hands at a time when Android holds almost all the cards. Think about it. In an era where Google offers smartphone manufacturers its operating system free of charge, entirely open source, and has a massive lead with the developer community, why should a hardware OEM bother to pay for or use Windows Phone or RT? It's a tough question, with no simple solution for Microsoft.
The third rumor deals with the flurry of possible redesign changes that have surfaced for the Microsoft's coming Windows 8.2 update, codenamed Threshold. Chief among them are that Microsoft could take its Start button backtrack one step further with this release by also reintroducing some form of the Start menu.
Since we're of course dealing in rumors or items that haven't fully played out yet, it's hard to craft a firm takeaway here. However, especially taken in total, these rumors paint Microsoft as suffering from the same paralysis that has hurt it over the past decade or more.
Microsoft needs a change
Although the rumors speak to several different areas of Microsoft's business, they all highlight the same sad dynamic we've seen play out at Microsoft time and again -- namely, that Microsoft just can't seem to develop or stick to a robust long-term strategy.
Problems like a lack of decisiveness start at the top of any organization. Companies require strong leadership to weigh, make, and ultimately implement tough decisions when as they arise. Microsoft has certainly failed in this regard time and again over the past decade or so, and these reports certainly reiterate that perception.
However, there's also arguably more hope that Microsoft could change its ways and stop sitting on its hands than any time in recent memory. In a nod to the factionalism that's riddled the company and certainly stifled big-picture innovation, outgoing CEO Steve Ballmer reorganized the company around devices and services rather than specific products. And although this is an undeniable positive for Microsoft, culture changes require plenty of time to take firm root. There's also the much-watched change at the top, as Microsoft's board should find its next CEO some time early next year.
There's certainly reason to be optimistic that things are changing for the better at Microsoft these days. However, with negatives like these three rumors still surfacing, it appears Microsoft still has plenty of room to improve to truly alter its future course for the better.
Next year will be a critical one for Microsoft. However, as we saw once again here, despite reason for optimism, there's still plenty of reason for investors to be looking at Microsoft skeptically next year.
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