Bill Gates is no longer a day-to-day force at Microsoft Corp., but you have to wonder what he makes of the smackdown delivered by a former Microsoft vice president in the New York Times.
Dick Brass, who spearheaded Microsoft’s tablet PC effort, says the company has become clumsy, dysfunctional and uncreative. His tirade should give pause to any value investor who looks no further than Microsoft’s record earnings.
As Brass points out, most of the software giant’s profits are the results of Windows and Office programs developed decades ago. He tells tales of how efforts to develop innovative products such as e-books were regularly sabotaged by internal feuds and territorial wrangling among brand managers and vice-presidents.
The repeated failures ceded huge amounts of territory to Apple Inc. They also raise the question of how long Microsoft can continue to live off its past.
What should Microsoft do? One suggestion would be for it to transform itself into an investment holding company. Another would be to replace top management. But perhaps the most tantalizing idea of all would be for the company to take a page from Apple’s book and invite its founder back to the throne. Gates may be the only person who has the clout to shake up the company’s entrenched bureaucracies.
Freelance business journalist Ian McGugan blogs for the Financial Post.