Deal sense: Operation timed out - The Deal Pipeline (SAMPLE CONTENT: NEED AN ID?)
Subscriber Content Preview | Request a free trialSearch  
  Go

Restructuring

Print  |  Share  |  Reprint

Deal sense: Operation timed out

by Jeffrey Kanige  |  Published February 25, 2013 at 1:05 PM
Bill Gates says Microsoft Corp. hasn't been performing well lately. That's a strong statement coming from the company's founder and one that raises an obvious question: Microsoft is still in business?

No. Microsoft can't possibly exist. First of all, the name itself is from a bygone era -- one in which technology companies used made-up words as corporate monikers. Where is Compaq? Or WorldCom? Or inktomi? Nowhere, that's where. Gone to the bottom of Irrelevant Ocean, wedged in between the submerged wreckage of AltaVista and CompuServe.

Second, anything worth paying money to own is made by Apple Inc. Oh. Sorry. You didn't catch that because you were listening to your Zune? No, you weren't. Nobody listens to Zunes except losers who used Bing to search for "good digital music players."

So it's not clear exactly what company Gates was talking about in an interview he gave to CBS recently. "We didn't miss cellphones, but the way that we went about it didn't allow us to get the leadership. It's clearly a mistake," Gates told the network. See, the Microsoft most people knew DID miss cellphones. What is this company that now produces smartphones that everyone is carrying around? Gates must be referring to some other, more nimble corporation that anticipated the growing importance of mobile devices and today produces a solid competitor to Apple's iOS. In fact, the only word in the previous sentence that anyone would associate with Microsoft is "other."

Gates isn't the only person associated with Microsoft who becomes inarticulate when describing the company. Asked by an interviewer from MIT Technology Review for his vision of Microsoft, CEO Steve Ballmer responded: "I would simply say we're about defining the future of productivity, entertainment, and communication -- in the new world [where] software is going to have to come in kind of an integrated form. Or at least a well-designed form that includes cloud services and devices." That reads as if Ballmer had been tutored to insert the terms "future," "new world," "well-designed" and "cloud" in his answers. If he'd gone to lunch before the interview, we'd be told that Microsoft's future lies in its ability to deliver pad thai functionality to every user's spring roll desktop.

If Microsoft is still in business -- and the evidence for that proposition is scant -- then Gates, Ballmer and the rest of company's executives need to prove it. Generally speaking, unverified corporeality is bad for sales. The problem is, once lost, an entity's reputation as an actual thing can be almost impossible to retrieve. See, e.g., Mark Cuban.

But it can be done. The recent history of U.S. business is replete with examples of executives who reinvented their companies, sometimes by appealing to nostalgia. Consumers often have fond memories of products that were once popular, but later eclipsed as tastes and technology evolved. American automakers, for example, revived their fortunes in part with models reminiscent of their big-selling, midcentury muscle cars. Could Microsoft regain its swagger with a similar strategy, harkening back to its own heyday of cutting-edge innovation? Of course not. No one will buy a kludgy, unreliable operating system delivered on floppy disks. And anyone who -- inexplicably -- wants such a thing can just go out and get a Windows 8 machine.

Microsoft's task, then, requires a bit more creativity. Fortunately, there is no shortage of tested ideas. For instance, many companies have found success through clever product placement -- paying to have one's wares slipped into movies, television shows, even video games. And herein may lie Microsoft's most promising avenue for a revival. The company should have no difficulty identifying appropriate backdrops for its offerings, given the current popularity of the zombie apocalypse genre. Let the survivors of "The Walking Dead" fight their way through a horde of flesh-eating Office 2010 license agreements. Ka-ching.

While the appearance of undead productivity software in a popular, critically acclaimed TV series would certainly help reanimate Microsoft's image, the company needs to tread carefully. One misstep could sabotage the entire turnaround effort. Consider Hostess Brands. The baker never recovered from its ill-advised attempt to capitalize on the popularity of "Downton Abbey." The show's discerning fans immediately recognized the incongruous placement of weaponized Ho Hos amid an epic clash of Dowager Zombies.

What followed, of course, was labor strife, a bankruptcy filing and the dismantling of the Great American Twinkie Factory. The demise of Hostess, though, offers another opening for Microsoft. The absence of sugary baked goods from the market's collective user interface just cries out for the introduction of pad thai functionality.

Share:
Tags: AltaVista | Apple Inc. | Bill Gates | Bing | Compaq | CompuServe | inktomi | iOS | Microsoft Corp. | Steve Ballmer | WorldCom

Meet the journalists

Jeffrey Kanige

Editor in Chief



Movers & Shakers

Launch Movers and shakers slideshow

KeyBanc Capital Markets hired Zachary Kau as a managing director in its public finance group and group head of its healthcare Finance business. For other updates launch today's Movers & shakers slideshow.

Video

T-Mobile USA's prospective suitor Iliad may seek help with bid

There may be a private equity role in the prospective takeover of mobile communications carrier T-Mobile USA. After the telecom's majority owner rejected a bid from France's Illiad, talks of partnering on a takeover are ripe. More video

Sectors