How Microsoft Can Rise Like a Phoenix

In my most recent blog post, I asserted that Microsoft is dying.

One paragraph summary:

MS is paying for software development that other companies are getting for free. Microsoft employees are writing worse code than their unpaid counterparts. Microsoft can't focus on their user experience, because they have to write more parts of their OS than others get for free.

But how can Microsoft reverse this downward trend that may accelerate into a death spiral?

Follow the plan below:

1. Dump the Windows kernel
2. Adopt an open source kernel, probably a POSIX compliant kernel (list of them here)
3. Adopt a creative culture of innovation and experimentation where failure is allowed
4. Spin off the following divisions into majority controlled subsidiaries:
   • XBox
   • Mobile
   • Server
   • Office
   • Kernel: this division would not write a kernel, rather it would adapt the open source kernel for Microsoft's use
   • Online communities
   • Cloud computing
   • Device drivers and hardware specifications
   • Microsoft Research
   • New market exploration

Microsoft should maintain a majority stake in each allowing it to direct the strategic direction and leverage synergies between them. On the other hand, they would operate separately and might have different cultures. They would need to pay for services inter-subsidiary services. This would force costs downward.

The parent company would be left as a hollow corporate shell. This would allow it to focus solely on broad market strategy and avoid the costs associated with managing operations across a vast corporate empire.

This prescription sounds drastic for a company that is sitting on huge cash reserves and is still quite profitable, but it is growing slowly in markets that are growing quickly. Its competitors are growing like weeds. Furthermore, Microsoft's technical strategy is out-of-date by twenty years in an industry that is moving at light speed. Soon enough, Microsoft will face a tipping point. It needs to take drastic steps before it falls off a cliff.