Forget what you've heard about Microsoft (Nasdaq: MSFT ) being cheap.
By the numbers, there's no doubt it is. But you'll never see outsized returns owning this stock so long as the current management team is in charge. Major shifts are required. Mr. Softy needs to either:
- Replace CEO Steve Ballmer with a tech visionary.
- Hire a tech visionary as president and give that person the authority to challenge Ballmer in front of employees.
- Hire a tech visionary and strong operating chief to ensure that quality standards and delivery schedules are met while Ballmer focuses on sales.
Um, didn't you just say buy Microsoft?
Yes, I did. You can read the story right here. At the time, I was impressed by Mr. Softy's line-up of products and efforts to diversify. Ballmer was measured and intelligent on stage. He spoke authoritatively about a plan to use ARM Holdings chip designs to expand Windows' footprint. And he oozed confidence (rightly) in talking up successes with Windows Phone 7 and Kinect.
Two things have changed since then. First, over the weekend Microsoft PR tried a stunt in which it tied retweets from its @bing Twitter account to the size of a proposed donation to relief agencies dealing with the fallout of tragic events in Japan. Mr. Softy has since backed off this stupid marketing effort, but the very idea shows not just callousness but also a woeful lack of strategic thinking.
Second and more importantly, a new report says that it'll be at least 2012 before Microsoft will have a tablet OS to compete with Apple's (Nasdaq: AAPL ) iOS and Google's (Nasdaq: GOOG ) Honeycomb edition of Android.
"If 2011 is the year of the tablet wars, Microsoft will be awfully late suiting up for that battle. It's not a good position to be in," Gartner analyst Michael Gartenberg told Bloomberg, which first reported the news.
Forget for a moment that Mr. Softy has given its two most dangerous competitors a massive head start. What's most embarrassing about this is that we know there's interest in Windows tabs. At CES, Chinese industrial products maker and Buffett-favorite BYD showed of a large-screen tab powered by Windows 7.
It was a hack job and therefore inoperable, but the point remains. Interest is interest, and Microsoft's two key PC partners -- Dell (Nasdaq: DELL ) and Hewlett-Packard (NYSE: HPQ ) -- have turned elsewhere for help launching their own tablets. Dell to Google, and HP to Palm.
Actually, it's worse than that. HP isn't just foregoing a Windows tablet. The nation's top PC maker now says it will include a copy of Palm's WebOS with every desktop and laptop machine it ships next year. Users will get to compare HP's and Microsoft's offerings, side by side, and decide which is best.
Strategy, or strategery?
Combined, these missteps tell me there's no central strategy for moving Microsoft forward. You might argue the same about Google given its own execution issues. I'd counter that The Big G has built cheap experimentation into its culture and that new CEO Larry Page knows exactly who his customers are: advertisers and developers.
Microsoft, on the other hand, can't seem to figure out which group it most wants to sell to. Are businesses more important? Consumers? Who's the ideal customer for Microsoft products? The answer varies by industry, I'm afraid. And that's not OK. Either Microsoft needs to get Ballmer help with figuring this out, or he has to be replaced by a team that has both vision and verve.
Microsoft lost vision when it lost Ray Ozzie. It lost verve when Bill Gates decided the world was more important than the company he co-founded. Judging by a long history of missteps (Beta News writer Joe Wilcox does a good job recounting them here), Ballmer alone simply isn't enough to fill the void.
Do you agree? Disagree? Let us know what you think about Microsoft's strategy, Ballmer's performance, and whether a Windows tab will gain enough share to matter when it's finally released to market using the comments box below.
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