I know how that headline looks, but this isn't an existential question. No prior knowledge of Kierkegaard or Nietzsche is required for reading this story.
All that's necessary is an inquiring mind, because if we're going to honestly assess what Ray Ozzie's leaving means to Microsoft
Microsoft by numbers
We can answer that question in a variety of ways. The best, I think, is with numbers:
Business Segment |
Fiscal 2010 Revenue* |
Fiscal 2009 Revenue* |
Fiscal 2008 Revenue* |
---|---|---|---|
Windows & Windows Live Division | $17,800 | $14,690 | $16,815 |
Server and Tools Division | $14,878 | $14,276 | $13,217 |
Online Services | $2,198 | $2,110 | $2,164 |
Microsoft Business | $18,909 | $18,864 | $18,904 |
Entertainment and Devices | $8,114 | $8,035 | $8,502 |
Corporate and Other | $597 | $462 | $818 |
TOTAL | $62,484 | $58,437 | $60,420 |
Source: Capital IQ, a division of Standard & Poor's.
* Numbers in millions.
Interestingly, the only consistent growth segment by revenue is Server and Tools, which includes Windows Server and Microsoft's cloud-computing effort, Windows Azure.
The numbers don't change much when you head further down the income statement:
Business Segment |
Fiscal 2010 Operating Income* |
Fiscal 2009 Operating Income* |
Fiscal 2008 Operating Income* |
---|---|---|---|
Windows & Windows Live Division | $12,089 | $9,569 | $11,876 |
Server and Tools Division | $4,990 | $4,638 | $3,845 |
Online Services | ($2,436) | ($1,760) | ($619) |
Microsoft Business | $11,664 | $11,454 | $11,681 |
Entertainment and Devices | $589 | ($3) | $314 |
Corporate and Other | ($2,798) | ($3,535) | ($4,826) |
TOTAL | $24,098 | $20,363 | $22,271 |
Source: Capital IQ, a division of Standard & Poor's.
* Numbers in millions.
What this says to me is that Server and Tools is the future of Microsoft. It's the division best positioned to deliver the growth that value investors hope for. It's also the group Ozzie has been most closely associated with.
Ouch.
What's next?
Ozzie apparently hasn't decided what's next after Microsoft. Between now and his leaving, he'll be working on entertainment projects, presumably to boost the appeal of the Xbox gaming platform in its battle for market supremacy against Sony's
My guess is that Ozzie will also assist with a mobile-gaming strategy for Windows Phone 7, since this is an area where Apple's
Two scenarios: one awful, the other good
Investors worrying about Ozzie's departure have good reason to be scared. Too many of Mr. Softy's top executives have left for competitors.
The most oft-cited example is Stephen Elop, former head of Microsoft Business, who is now CEO of Nokia
More worrisome to me Don Dodge's departure for Google
Vic Gundotra at Google was the first one to contact me with an opportunity ... 90 minutes after the news of the layoff hit. That fast, decisive action was refreshing, and such a contrast to the slow, secretive bureaucracy at Microsoft. That speed and decisiveness also reflects different approaches to hiring great people, building great products, and serving customers well. [Emphasis added.]
You know who else is widely respected among developers? Ray Ozzie. He cut his teeth coding and is widely considered the genius behind the creation of Lotus Notes, the productivity software that proved so attractive to IBM
If, like Dodge, Ozzie joins Google, Apple, or another of Microsoft's rivals to help create cloud computing's next great killer app, it would clarify just how out of touch with developers the company has become.
On the other hand, if Ozzie leaves to take another stab at being an entrepreneur -- he's helped create two software companies that were later acquired -- it would be good for the software industry writ large. And in a time of flux, the industry needs as many proven, fast-moving innovators as it can find. Few have a better track record than Ozzie.
I'm betting on the latter, if only because Ozzie is more creator than implementer and entrepreneurs never really stop being entrepreneurs. Think I'm wrong? Have a different view? Please vote in the poll below and then leave a comment to explain your thinking.