IBM Purging The Old Guard, More Unofficial Layoffs

May 1, 2012

John Simonds Cloud, Health, healthcare, ibm, obvious, predictions, screw ups , , , 1 Comment

Any other company in this age of litigiousness would be suspect, perhaps for alleged age discrimination.  Fortunately, IBM has been in enough lawsuits that the wording, terms and coercion are carefully crafted and legally reviewed……Heck, we couldn’t use the word monopoly in any press release decades after the monopoly lawsuit.

Here it is ->

IBMers who are qualified to apply are:

• Employees who received a satisfactory or higher performance rating in 2011
• Employees who participate in IBM pension plans currently or by Jan. 1, 2014
• Have met the criteria of at least 30 years of service regardless of age
• Are at least 55 with 15 or more years of service
• Or are at least 62 with five or more years of service
• Or are at least 65 with one year of service
• More recently hired IBMers who participate only in IBM’s 401k “Plus” plan if they are age 62 as of Jan. 1, 2014

I know a lot of folks who fit in this class. They are smarter and wiser than those who will be filling their shoes.  In some cases, they are some of the smartest people in IBM like Rod, Jeff and maybe even Bob.

This has the outward appearances of a Wall Street promotion.  Stocks have a tendency to rise when companies announce anything tantamount to layoffs and as I detail later, IBM seems to be focusing on EPS more than innovation.

HOW TO MASK ANY DISCRIMINATION

This program is made “voluntary” with a guarantee of no RA or resource action (being fired in IBM speak) if you promise to retire in 2013 (loads of part time work).  You can logically deduct that there will be more people RA’d as predicted a while back here and here (as far back as February).  You can bet there is a slice of this population that will benefit from this as they would have been RA’s later this year.  The alternative is that a major division such as GBS or GTS which both are treading water could be sold off.

It’s roots go back to the FAP (financial assistance program) back when Gerstner took over and got rid of all the dead weight roaming the halls of IBM (which may be why they are doing it again).   Give them enough money to leave and be quiet and you can dump any crowd you target.  Most people rarely get this good of an out, so watch the IBM passengers jump the ship like it was sinking.

IT’S WHO IS LEAVING THAT IS IMPORTANT

Remember that at the end of the day, IBM is still a mainframe company despite the barrage of services and software messaging and reporting…..their job is to service the mainframe .  Most of the software they sell is for the mainframe as it is “middleware”.

Over 40% (48 I think is the number so almost 50%) of Systems and Technology Group (STG or the Mainframe group) are in this retirement category.  That means those with all the knowledge of how stuff works is leaving.  Sure there will be a lot of youngsters who can tweet, but veteran VLSI chip designers and circuit board layout engineers for the next Cloud server are gone.

This means the will have to hire back the folks that know what is going on, or know how to program in COBOL.

WHAT HAPPENS WHEN THEY ACCEPT THE BUYOUT?

Nothing.  That’s right, even for the most conscientious of employees, people are going to stop working with them so it is a vacation the rest of the year.

You see, IBM is a place where you call around to get someone else to handle some or all of your work especially in an emergency (it always is when Ginni says get it done which gets thrown around in vain now).  If first choice (the person in charge of the product) is not available, you move on to the next likely source until you get someone to take on the task.  When you know a person is only in for 3 days a week, you stop going to them as the pressure is so high that to get your job done you will go elsewhere.  This of course puts the burden on everyone else to do more with less knowledge, hence a job done worse or you get time back due to not enough people to hold the meeting ;-)

THE PENSION PLAN

A while back, if you did not have 20 years of service, you got moved off the pension plan (the gravy train) and onto a cash balance plan (401k with your money and a little bump from IBM) to placate any hint of discrimination, an event which can clearly be tied to this announcement.

I got a letter from IBM that said the plan was only funded to 88% this year.  They need to get people off this plan so IBM is not required by the government to make it 100%.  While it is an off balance sheet item for now, it still is a liability.

IT ALL COMES DOWN TO THE 2015 EPS CLAIM

IBM made a prediction that it will pay $20 EPS in 2015.  I believe it will with this announcement.  Older workers make more, have more costly healthcare and can’t be persuaded to work 100 hours a week as easily as millennial’s.  You have to make sales, tough in this economy or cut expenses.  Payroll (including benefits) is a big number on any company’s financials, so this is a good place to drop the knife.  Nothing stands in the way of this number.

They are going to buy back $7 billion in shares, get rid of expensive employees and cut to the bone any group that isn’t highly profitable and bingo, $20 it is tattooed on the backs of the employees known as Roadkill 2015.

Conversely, if you read the book by Thomas Watson Jr., he quoted that his father (founder of IBM) always hired in times of trouble so he could be ready for the time things turned around.  I’m trusting that IBM will make a move to hire a lot of new graduates to work in the USA as replacements.

WHO GETS HURT

The Customer, period. (editors note: the employees that make it to 2015 except those in the NY club get it also)

Cut out the product knowledge and you have marketing messaging for your products (Smarter anything is the nom de Jour). You’ll see innovation suffer due to this talent drain.  There are really smart people at IBM and I’m sure there will be more, just without the benefit of the person who blazed the trail).  When you let the bean counters make the decisions for the future, cutting expenses is the goal.  Perhaps, IBM will find the next Mark Zuckerberg to work for Big Data?

So expect some letdown in quality and surely morale, just like the rest of the industry (prediction, Apple’s next product will be google wave or plus or Newton capable).

In a way, this even’s the playing field and will be fun to watch unless Oracle, Google, Microsoft and HP can screw up worse.

BIGGEST LOSS OF ALL?

Steve Mills has been there over 30 years and qualifies.

UPDATE

It seems that for those who qualify, this is a wildly popular program.  It is a once in a lifetime (for most) to get paid to leave and work less in the transition while planning your retirement.  There is some high fiving in the hallways knowing that the light at the end of the tunnel just got brighter.  They say it’ll be one big long vacation for the old timers to end their career.

Is Steve Mills Running IBM?

April 19, 2012

John Simonds apple, ibm, predictions, technology , , , , , , , , 6 Comments

To start out this article, IBM just reported the smallest earnings growth since late 2009.  IBM should be scouring the land for the next Lou Gerstner.  I know there are a few internal executives getting in line for the next changing of the guard, but they are a mediocre crop at best.  My experience is that they are bunch of screamers and schemers with large ego’s (except around Steve).  I don’t know how they are going to make the 2015 earnings commitment, but I will project pain for employees getting there.  They will also have to buy back a shedload of shares (which just happened after I wrote this) to make the numbers or kill employee morale as noted in the turnover rate getting there

WHO IS REALLY RUNNING THE PLACE?

While Ginni Rometty is the new President it still seems like she is a front (wo)man while the person that holds the keys to the company’s operations is Steve Mills.  He of fame for building the software business, the part of the company that keeps it profitable.   If she can just keep the company from getting in trouble circa the Akers years, she’ll stay out her welcome.  Any hiccups won’t allow her to finish at 60.  One of the hiccups is that it will be hard to do it without Mills.  She fit the diversity model (which really isn’t that great at IBM when you consider how many who abuse the system) and she is polished and was fit.  The internal grapevine mentions her name in triviality that never was even thought of in the Gerstner/SJP years with her name being thrown around in vain to get something done.

I have witnessed Mills at work personally, watching him dust off General Manager’s who thought they were important, address Wall Street, IT analysts, reporters and various other constituencies, it was clear who is holding things together.   It appears he lost out in the age game for the President position, but he was the right guy.

He runs both the most profitable division and is now trying to save the dinosaur businesses for IBM, those being Software Group and Systems Group (servers mostly, and mainframes mostly).

SERVICES

First, let’s take Services out of the equation.  Not to mention that IBM is blowing it by firing the wrong employees.

Services is low margin/high volume was essentially flat in first quarter so while it is important to IBM (if you include Global Financing and you have a much worse number), it is almost a legacy now and is not the growth engine it once was.  It provides a needed pipeline of business to service (sorry) HW and SW sales, options competitors don’t have or try to copy with varying degrees of success…. too bad that ship sailed years ago.  It is neither the mainframe model nor future for the company as the industry changes, but it does provide top line numbers crucial to financial statements.

SOFTWARE AND HARDWARE

Software was up as usual as that is the model and umbrella for the future.  It is a high margin business as long as you remember a caveat.  Let’s be clear that upwards of 80% of the IBM software is sold for the System Z or “The mainframe”.  Conversely, the mainframe business (let’s quit messing around with the Systems Group moniker here) is down a lot.  Guess who is going to catch hell and budget cuts this quarter.  Because the economy is down around the world, these numbers are down. I’ve got news for the industry, it will not turn around next quarter or next year.  Growth is 5-10 years away and who knows which company will be in the drivers seat for that timeframe.

As stated earlier, Mills is approaching 60 which as far as I can see was the deal breaker for him becoming the next president.  No one other than Palmisano understood the company as well and as long as Mills does.  He also knows where the company should be.  He’ll get to go out on his terms, but IBM should make him stay on for another 5 years to keep things going until the world economy and job market turn around.  He is the glue that keeps things together and would be a bigger loss to IBM than even Palmisano was, because that one was so orchestrated.

EARNINGS

IBM  has laid out a plan for investors which makes it a top IT company.   Much of this based in belief of the endless story of Big Data (and cloud, but who cares about software delivery, we’ve been doing that in different ways and will continue this trend by calling it something new soon).  It has much upside, but will not save a company by itself (diversifying is something IBM has done better since almost committing hari kari in the 80′s-90′s).  However, there is always a bigger fish in the IT sea.  Will  Watson be the next big thing?  Name me any huge sales of a Watson unit.  It is an ingenious marketing plan that shows IBM can do something others can’t.  In reality, only the top Data consumers can afford a real Watson and the army of IBMers to keep it running as  it is already a product with the name System P and fancy software (see an Analyst Group who defines IBM Here).

MAKING MONEY

You make money by increasing sales and/or reducing expenses.  Guess what, revenue was just discussed and sales are going to be tough for a while.  300-400K employees are tough to keep employed in this situation.  This means new rounds of layoffs, travel restrictions, expense cuts and other austerity measures are on the way before 2015.  Keeping them happy will be next to impossible without turnover. It appears that the employees are mocking the new system too with the 2015 projections internally code named Road Kill 2015.

These are tough times and even if you’ve cornered a portion of the market such as Apple right now, you are just another fish in the sea, and never the biggest.

The man who has been tested for these tough times is Mills.  Underneath, I think he’s running most of the company which for their benefit he should be doing rather than planning his retirement.

Bottom Line: There will be a big hole to plug when he leaves and life is going to be a lot harder for Rometty as the Mills replacements are OK at best.

MY FAVORITE PR STUNT OF ALL TIME – THE WORLD’S FIRST LOW TECHNOLOGY ARTIFICAL REEF

March 15, 2012

John Simonds history, humor, ibm, technology, Work , , , , , , , 2 Comments

HOW IT STARTED

This story actually began with the unplanned running aground of the Mercedes I in Palm Beach.  It desecrated the private holy grounds of the hoity toity for over a hundred days in late 1984.   About the same time IBM introduced the PC-AT, billed as the most powerful personal computer ever built.  It had one problem though as internally sat a 20 MB disk drive made by CMI.  It was based on stepper motor technology and it both failed at alarming rates and was as slow as cold honey.  It was that flaw which gave birth to the drive aftermarket in the PC industry and caused one of the biggest black eye’s to the PC’s reputation.

CORE INTERNATIONAL TO THE RESCUE

A small disk drive company in Boca Raton – the home of the IBM PC saw the obvious problem and created a marketing campaign which recalled the IBM drive.  It then sold you a 40 MB drive made by Control Data Corporation and re-badged as CORE product for $2,595, gave you a $1000 rebate and ran an ad claiming it was going to build an artificial reef out of the CMI drives (you can buy gigabytes now for less that $100).

Here is  a portion of the ad which created a sensation in the print media, as both IBM and the PC had been infallible up to this point.

PC MAGAZINE CATCHES ON

At this point Paul Sommerson, Bill Machrone, Bill Howard and other writers contacted CORE and asked for pictures of the reef being built.  Said owner confided in me that he was really going to send the drives back to CMI for a rebate  and not to lose too many, so we tried to stage the event.  We took his boat, the MEGABYTE out of Jupiter (not Boca) and made it look like we were really dumping the drives into the water.  I’m sure the Nanny state EPA would have been all over us had we really done it, but the rest of the story is that we only dumped the drives in the picture (note the false bottom).  I finally convinced him that we needed to actually throw some drives overboard and that one shot is now etched into PC history.  It was the last picture on the roll of film (if you remember film).  We tried fishing for sharks to put a drive in one of their mouths for the table of contents and had one on, but it bit through the line and we ran out of time.

The film was immediately Fed-ex’d to NY as they were on deadline for what is known as the Fire Ax issue.  The title was “Is Your PC Safe”, but there was a fire ax coming down on a PC-AT and the picture was in both the table of contents and the article.

THE AFTERMATH

As I mentioned earlier, the boom of peripherals was starting and this poured gasoline on that fire.  CMI went out of business after losing their contract with IBM and CORE shipped hundreds of drives while becoming famous.

I personally conducted many interviews discussing drive technology and the stunt (if I recall, the story became better than the actual event) and the owner had to move his boat.  He had rented a slip from an IBM’er in Boca, but due to the kerfuffle he was asked to find another docking space.

IBM had a PR nightmare on it’s hands now.  I’m told that Lou Gerstner’s personal speech writer was called in to clean up the mess.  CORE (meaning me as I handled all of PR at this point) got years of mileage from this event.  We even took a drive to trade shows for over a year and put it into a fish tank with fish.  Everyone in the industry knew about it and we even had hats made up saying things like:

My drive won’t stay up, I built the PC that IBM didn’t, My Drive is bigger than your drive and others.

We gave away thousands.  In fact I think we invented the hat give away in the mid 80′s (one time while leaving the show, we saw a drunk bum on the street with a CORE hat on).

 

It didn’t kill IBM’s business, but it seemed to help the sales of clones which took off and thus began the downfall of IBM’s dominance in this space.

EPITAPH

It is funny to me that I was hired by IBM to do PR for them 14 years later, and even did a stint in the PC division.  IBM had dropped to 6th place in PC’s by then and I recall that the PR department was led by two nincompoops when I got there.  I wonder if they had known it was me that helped cause one of the great PR nightmares for them, would I have gotten the job?

Was IBM’s Watson a Breakthrough or Very Cheap and Creative Advertising?

January 8, 2012

John Simonds ibm, ibm research, obvious, technology , , , Leave a comment

Update: Watson is in the next publicity stunt with Wall Street as sales seem to be lagging.

As we all know, Watson appeared and won on Jeopardy last year.  It was the culmination of years of work and manpower to build a machine that could react faster and be programmed to win a game show.  It was brilliant, but more for promotion than technology (as evidenced so far).  There is little doubt that the promotional value was priceless to the IT industry and an easy calculation by IBM to one up the competition.

The two humans were limited to their capacity, whereas Watson was a massive computer with incredible storage and processing capability.  It was programmed specifically for the game, so while not a slam dunk, inevitability wasn’t in much doubt.

I don’t know about you, but as I get older, I forget things and computers don’t.  You can add memory, processors and build it big enough to recall more than any amount of humans.  Jeopardy had two champions,  so it wasn’t really a fair fight.  You ultimately can overpower any certain situation with billions in technology (which is what it cost to win), but throw something like emotion or nuance into a situation and computers are lost.

It was the perfect set up.  Everyone loves to root for the underdog even though the humans really fit that role.  It was accomplished by putting the biggest two winners ever on Jeopardy up against poor Watson.  The truth was that it never was going to be close given the confines of the rules of the game.  In real life, with unforeseen issues, the humans would have a fair chance.  That was never the point of Watson though.

IBM got to promote a research facility, executives, technology and almost a free ticket for three days.  Jeopardy also was a winner with dominant ratings.

I don’t want to debate the possibilities of Watson’s future contribution to technology other than stating that it is another step (and possibly direction)  in data analytics, and it increases the perception of IBM’s lead in this area (thanks to a lot of M&A and some folks that worked without getting enough credit).  It hasn’t been the breakthrough that companies have jumped on like an iPhone, yet billions of dollars have been spent on the same hardware used to build Watson since Jeopardy for traditional IT.  Time will tell.

ADVERTISING

For now, the real victory was exposure.  How much would it cost to purchase 1.5 hours of prime time advertising for a 3 day period where you basically get to change the rules of advertising to where you don’t even have to pretend that an ad agency was involved (also saving millions).  Here is the breakdown of advertising to program, but in reality the big IBM Watson Avatar is a commercial by itself every time Alex said the word Watson.

From a Mad Men point of view (advertising show for those who don’t know) this was a stroke of creative genius that began with winning a chess match against Gary Kasparov, then moving to prime time TV when new exposure was needed.  I saw people glued to their seats and talking about it the next day at a conference.  Nevertheless, it still has all the appearances of a publicity stunt. Unfortunately, it saddled IBM with a 2015earnings projection claim that Palmisano left Gini Rometty to figure out.  With this economy, it has Sham’s chance of beating Secretariat in the Belmont Stakes to make it.

There will be claims that further technology is Watson legacy and success, but it is not what was intended by the efforts which related to making sure it beat the humans on Jeopardy.  That is supposed to come later.

CURING THE COMMON COLD

It has been suggested that Watson technolgy is being used to cure cancer.  I like others wish for this as I lost my mother to that disease.  Along with AIDS and the common cold, I have my doubts that we’ll really see this in our lifetime.  By then, trillions will be spent.  Like Global Warming, we could do more by helping to feed the starving and providing help and aid to millions.  This is not what Watson is about though last spring, it was the advertising win of 2010.

So the jury is out on whether it will succeed in medical or some other breakthrough.  For now, it was the promotional prime time win last year.

Is the PC Dead Or Is It Marketing Hype and Spin?

September 23, 2011

John Simonds apple, ibm, iphone, iPod, microsoft, technology, Uncategorized , , , , Leave a comment

Update: Apple is more nails in the PC coffin with the new announcement of Post PC devices.

  • 362 Apple stores
  • 315 million iOS devices sold through last year, including 62 million in the last quarter
  • 585,000 apps created
  • 25 billion app downloads
  • 1080p movies and TV shows for iCloud and the new Apple TV
  • 15.4 million iPads sold in the fourth quarter of 2011
  • 200,000+ iPad apps
  • 2048 by 1536 pixels displayed on the new iPad, with 264 pixels per inch
  • 44 percent greater color saturation than the old iPad
  • 5 megapixel sensor on the new iPad camera
  • A maximum of 73 mbps downlink with 4G LTE on new iPad
  • New iPad specs: 10 hours of battery life, nine hours with 4G; 9.4 millimeters thick, 1.4 pounds
  • Same pricing as last iPad: Wi-Fi models are $499 for 16 gigabytes, $599 for 32GB, $699 for 64GB; $629, $729 and $829, if you want 4G
  • Old iPad now starts at $399 and $529

The Real Meaning in Marketing Speak

In the mid 2000′s, Sam Palmisano of IBM declared the era of the PC is over.  This was somewhat of a marketing move since IBM had just sold the PC Division to Lenovo.  What he really meant was that IBM is getting out of consumer products.  IBM also sold other consumer divisions that were not the margin kings that Software and Services were.  Disclaimer, after working either for/with/against/partnering with IBM for 31 years, I can say that a lot of what they do is incredible spin on pretty good technology.  I had better knowledge of what was going on than what was told to the outside.

PC’s are Toasters Now

This is a bit of a history lesson.  There was a time that PC’s were special and had value.  They still can be found on almost every desk or backpack at an airport, but in reality they are now (and have been for a while) a consumer product.  There gets to a point in time in every product’s life cycle that economies of scale and parts availability drive this value (and therefore the price) down when you can’t differntiate.  It is compounded by newer technologies (tablet computers and mobile devices) to where you can get them at any consumer store that sells toasters, video games and TV’s.  Any improvement is just a little bit better (except Windows which usually is worse), not an era better which was the case when they were new.

PC’s have done this to themselves over the years.  Remember when all you could get was a bulky desktop?  Technology moved on to the luggable computer to the laptop. Now you can get a wafer thin Macbook Air (for a premium price), but the technology curve will drive cost down here when every manufacturer offers it.  Margins are razor thin and there is minimal hardware differentiation on the Wintel platform.

The Effect of iPad and Mobile Phones

Ultimately, the world is driving your communications and computing device to be in your hand.  The end game of input is not a keyboard, but voice.  This addresses the need for instantaneous that we have required as we’ve shifted from email to IM and texting, and from blogging to tweeting. I envision a vision screen that is projected by your small handheld that lets you see what a huge monitor is required for now in the near future.  For more on this, see Project Blade Runner as an example of what the future could look like.

PC’s are already under fire from Tablet computing and smartphones.  While at some point you still need a PC for complicated input/output such as the dreaded Powerpoint and the more mundane payroll/HR applications, they soon will be adapted to tablets as we easily morphed from immobile desktops to laptops.

Many analysts have shown that more phones and tablets are sold than PC’s.  More texts are sent than emails and we certainly have more tweets than blogs.

The Cloud

Powering a lot of this of course is the overhyped Cloud model.  While conceptually it has been around for a long time (we have called it client/server and other names), it is a software delivery model that will make the end device irrelevant.  Perhaps you could get your email on your toaster or refrigerator.  You could make phone calls by dialing in the air at some point.  The issue is that we are driving the connecting device smaller, cheaper and more powerful (and less relevant) so that we can get what we want, when we want it and wherever we want it.

Lenovo and HP

Companies are jumping out of this market as evidenced by IBM and HP willing to sell their PC businesses worth billions in revenue, mostly because of low single digit profit margin.  They realize that there isn’t much money to be made anymore, again putting them in the toaster category. Similar components by most, similar operating systems, market driving memory and storage costs and overhead to sell.  HP is now particularly vulnerable as companies negotiating long term contracts will throw HP out  as a viable vendor not knowing what their future will be either in terms of ownership or viability.  HP has completely lost their way starting with the purchase of Compaq years ago, then dumping their tablet, announcing the sale of their PC division and switching CEO’s like underwear.

The Apple Factor

Everyone eventually builds a better mousetrap.  The Mac has been around for a long time, but the entry way to the door to Apple changed with the iPad/iPhone.  A new processor, operating system visibility, technology paradigm, profit potential and the coolness factor make Apple a different model than the PC.  Prior to that, Mac’s were a niche player in the creative, advertising and education world.  This has changed partly because the OS is better, Windows is not a great platform and Mac’s are headed in the direction of iPads.

So Is the PC Dead?

Ultimately yes, but not this year or in the near future.  I’ve seen models of computers called bricks the size of your phone that you can drop in a kiosk and work anywhere.  You can even use them like an iPhone if needed, but until the voice input issue is resolved, keyboard input is an inhibitor.

No one thought we’d ever see the end of typewriters, faxing or even the 360, but technology advances at an increasing rate economically speaking.  What will be interesting is which social mores we’ll break like talking to ourselves (on a cellphone) in public (or worse in a bathroom or driving).

Is the iPad the next endgame?  Likely also not.  Companies are trying to out do themselves and we’ll wind up like the Jetson’s one day.

Retiring From IBM

July 14, 2011

John Simonds family, ibm, obvious , , , Leave a comment

This is my last official day at IBM.  I chose to leave so it is on amicable terms.  My life has been dominated by IBM, even though I didn’t work for them but less than half of my career.

I was a customer in a DP shop, Authorized Dealer for Personal Computers, Competitor, Business Partner and then employee. So I’ve always been associated, just from more angles than most.

I knew decades ago that being bound by the corporate handcuffs was never my fate, so along with my wife, we chose to live by the debt free rules of Dave Ramsey, then championed by Larry Burkett.  This puts you in control of your life rather than serving the master of debt and requiring you to work past your time.

Examples In My Life

My father was the first work example I ever had.  I think he worked until he was 70, fifteen years longer than my work life.  He did show me the value of doing the job right, but his life was only work and it went downhill after he retired.  I knew then that there had to be more than that.

Other examples were those I see in corporate life who give/gave up their family for work.  As we’ve all heard, there is no one on his deathbed who wishes he could have worked more instead of having quality time with their family.  I see this over and over.  An analyst said to me that cemeteries are filled with good workers.

As for me, I knew that this day would come.  I neither lament over it or rejoice, it just is.  Preparation in mind, financial ability and belief in G-d made me ready for this a long time ago.

Life Moves On

Consider what you were doing 20 years ago if you’ve worked that long (if not, just go back to your 4th or 5th year of employment).  What was the most important thing you were doing?  What was the life or death decisions you were making.  If you are normal, you don’t really remember and what was crucial then is meaningless now.  The one thing I was thinking about was being prepared for retirement as I always believed in the concept of short term sacrifice for long term gain. Life moves on and it changes.  This step is just the next change.

What Is Our Purpose?

My mother told me that our destiny in life is to overcome obstacles.  There will be hurdles, then there will be more.  I’ve just overcome the separation hurdle and decision, but life will give me more.  By doing this, it gives us our sense of accomplishment, but we must be well rounded in terms of life, family and our belief system.

We all have the same questions.  Who am I, where did I come from and what happens after I die?  For me these are easy questions as if you can believe this, then the rest is easy.  Many struggle with this, but I don’t.

What Next

For now, I’m going to clear my head and fix many things around the house that have been put off because of work.  Next, I’ll likely do something to generate income, as being idle is not a good thing.  I’ll worry about that later.

Thank You’s

I’ve learned lessons from everyone I’ve worked with.  I’m grateful for all of them.  There were great mentor’s and teachers, and those who made my life miserable.  Both taught me the political and corporate machinations necessary to survive.  I wish that weren’t the case, but it is.  I actually enjoyed overcoming those who opposed me, so I consider everything I did a win, as they didn’t get to me.

So I say thank you to all who shared in the successes that I’ve enjoyed so far.  The others were just hurdles that helped me overcome.

I could add to this, but it’s enough for now.  I’ll leave it at that so that the doors are always open.

Microsoft Facing A Critical Time In Their Business Direction, (or I wouldn’t want to be in Microsoft Communicaitons right now)

July 16, 2010

John Simonds competitors, ibm, microsoft , , Leave a comment

There are times in any business that you need to re-invent yourself.  Even if you are selling nuts and bolts, a bigger fish like Lowes or Home Depot can wreck your sales and pricing.  Nothing changes faster these days than the IT industry.

Microsoft is facing the situation that IBM has faced at least 3 times now.  The last one was a do or die decision to not break up the company and I credit one Lou Gerstner for such a great move.  Nevertheless, he reformed and reshaped the company from a hardware (mainframe) company to more of a services and software organization. Microsoft unfortunately didn’t invent everything it sells and is faced with a fork in the road on success or pack mediocrity.  I for one would not want to have to face the upcoming issues as a communications professional that Microsoft will face.

ORIGINS OF THE CASH COW’S

Microsoft got it’s start by buying an operating system and taking the Software PC business away from IBM.  Next, they “stole” the Windows idea from Apple, here is a bit of history from MG Siegler….

For nearly 25 years now, the story has lingered that Microsoft stole the idea of Windows from Apple (AAPL) while working to develop software for the Lisa and Macintosh operating systems. The stories you hear generally seem to be a mixture of truth, urban legend, and fanboy fabrications at this point — but the fact is that Apple did sue Microsoft in 1988 for copyright infringement on the matter. After four years worth of arguments, Apple lost. They also lost the subsequent appeal (and they even tried to take it to the U.S. Supreme Court, but that was denied). But they didn’t lose because Windows wasn’t thought to be similar to Apple’s operating systems. They lost because the judge ruled that you couldn’t protect the concept of a graphical user interface or the desktop metaphor idea. And more specifically, Apple ran into problems because of a decision that then-CEO John Sculley made in 1985 to sign an agreement licensing certain parts of Apple’s GUI to Bill Gates for use in what would become Windows 1.0 (presumably without realizing exactly what he was doing).

Siegler proves my point of re-inventing themselves here:

But now that idea is waning. Or rather, everyone is starting to recognize that the idea will be waning in the years to come. Make no mistake, Microsoft still makes a lot of money from Windows — and I do mean a lot. But Windows is not the future. By that I mean that the desktop metaphor GUI is slowly but surely being replaced by a rise of mobile and touchable devices. In other words, Microsoft needs a new idea.

The problem is that Microsoft hasn’t proven themselves to be capable of coming up with or executing such an idea on their own. Dozens of failed projects ranging from the original tablet PCs to SPOT watches to the Kin have been left in their wake. The fact that tablet computers are now exploding in popularity thanks to Apple’s iPad suggests that Microsoft, for whatever reason, has a hard time launching new, successful ideas on their own. Windows Mobile is another example of this. They were there early, much earlier than their main rivals. And now they’re getting trounced.

Instead, it may be time to piggyback off an idea again. To create a new inception, as it were. Lure someone in, take their idea — and take it to the next level. Microsoft has nothing if not a huge amount of resources. If they pick the right idea to take, they can once again transform the world — but they need that right idea.

BALLMER IS NO GERSTNER

I’ll go on record to say that Ballmer is no Lou Gerstner.  A company needs a visionary like a Gerstner or maybe in this case, a Steve Jobs.  Sam Diaz speculates his demise and that he might not even make it to CES to make the keynote.

Here is Diaz’s Ballmer scorecard:

  • Mobile: Clearly, the KIN was a flop. And, isn’t it kind of funny that references to the mobile landscape are always centered around iPhone, Android and BlackBerry. When was the last time you heard someone get excited about the forthcoming arrival of Windows Phone 7 and talk about how it will rock the mobile landscape? OK, putting Microsoft shareholders and employees aside, when was the last time you heard anyone else talk highly of Windows Phone 7?
  • Tablet: Well, Ballmer killed the Courier. Or someone at Microsoft did – but surely not without Ballmer’s permission. OK, so they killed a tablet PC project. Big deal. Isn’t that better than launching a loser (like they did with KIN)? But it wasn’t so much that they killed it as much as it was the extra line in the company’s official statement that declared “no plans to build such a device right now.” It seems that tablets are all the buzz right now, sparked largely by Apple’s iPad. And Microsoft has no plans for one?
  • Software/OS: Regardless of what you think about Google, the cloud and even the Mac, you cannot ignore the fact that Geese that lay Golden Eggs at Microsoft – Windows OS and Office – are getting old. There’s fresh competition from all over – and this isn’t just the Mac vs. PC sort of competition. There’s excitement around the launch of tablets running Google’s Chrome or Android OS. Clearly, Apple is gaining some ground from its switch campaign. And companies are being given real options for productivity software from online providers.

The point of all of this is that Ballmer, as the CEO of Microsoft, seems to have spent quite a bit of time riding on the successful coat tails of Bill Gates – but really hasn’t done much to elevate the company further, XBox being the exception.

My .02, he needs to go and they need new leadership to fend off Google, Oracle, Amazon and most of all Apple.  He is not the savior and they need a Gerstner.

Rob Enderle, one of the analysts I used to work with when I covered Analyst Relations for ThinkPad adds this nugget of perception:

Perception works both inside and outside the company. Recall that in the Apple turnaround, Steve Jobs started out with a company in deep trouble with products he had publicly called crap.  He started changing the perceptions surrounding the company because he knew this would give him the time he needed to rebuild it. At IBM, Louis Gerstner changed out the entire marketing department as one of his first accomplishments. He knew that if he couldn’t deal with the perception that IBM was failing, that perception would drive an unavoidable result.  In  both cases, by aggressively dealing with perceptions of unavoidable failure, both internally and externally, they bought time they needed to get  the real work done.

MINI-MICROSOFT WEIGH’S IN

One of the blogs I follow is Mini Microsoft as do many.  He’s got the biggest set of attachments that I know to write things like this:

And now Kin is killed *after* it has shipped in June 2010. You can bet Andy was involved in the development of Kin, the partnership agreements with the OEM, Verizon and most importantly the “ship it” approvals all along the way. And Microsoft discovers its a bad idea after it blows up in the broad market. Absolutely no thanks to any pro-active decision making on Andy’s part.

Now there is spin that Andy killed kin to put all the wood behind Windows Phone 7. Er, the guy was in charge for two years of Kin development. He could have made this decision far earlier.

Similarly Windows Phone 7 has two years of development under his watch. Based on his past performance, 99% chance this is also going to be a total catastrophe. It further doesn’t help that much of the Windows Phone 7 leadership team was kicked out of Windows when they screwed up Vista.

And finally, one Danger-employee’s point of view of why they became demotivated:

To the person who talked about the unprofessional behavior of the Palo Alto Kin (former Danger team), I need to respond because I was one of them.

You are correct, the remaining Danger team was not professional nor did we show off the amazing stuff we had that made Danger such a great place. But the reason for that was our collective disbelief that we were working in such a screwed up place. Yes, we took long lunches and we sat in conference rooms and went on coffee breaks and the conversations always went something like this…”Can you believe that want us to do this?” Or “Did you hear that IM was cut, YouTube was cut? The App store was cut?” “Can you believe how mismanaged this place is?” “Why is this place to dysfunctional??”

Please understand that we went from being a high functioning, extremely passionate and driven organization to a dysfunctional organization where decisions were made by politics rather than logic.

Consider this, in less than 10 years with 1/10 of the budget Microsoft had for PMX, we created a fully multitasking operating system, a powerful service to support it, 12 different device models, and obsessed and supportive fans of our product. While I will grant that we did not shake up the entire wireless world (ala iPhone) we made a really good product and were rewarded by the incredible support of our userbase and our own feelings of accomplishment. If we had had more time and resources, we would of come out with newer versions, supporting touch screens and revamping our UI. But we ran out of time and were acquired and look at the results. A phone that was a complete and total failure. We all knew (Microsoft employees included) that is was a lackluster device, lacked the features the market wanted and was buggy with performance problems on top of it all.

When we were first acquired, we were not taking long lunches and coffee breaks. We were committed to help this Pink project out and show our stuff. But when our best ideas were knocked down over and over and it began to dawn on us that we were not going to have any real affect on the product, we gave up. We began counting down to the 2 year point so we could get our retention bonuses and get out.

I am sorry you had to witness that amazing group behave so poorly. Trust me, they were (and still are) the best group of people ever assembled to fight the cellular battle. But when the leaders are all incompetent, we just wanted out.

So it is even internal that they know they need a change…..BUT HOW

Most of their products that were successful were others, what they invented except the xbox were largely irrelevant or unsuccessful.  They should have been a dominant phone player and got owned by Apple and Android.

And their big solution is this right now -

Microsoft: ‘If we don’t cannibalize our existing business, others will’

That’s not what companies do to reinvent themselves.  Take Apple, or IBM…that is what Microsoft needs to do.

I’ll give them this, they have a lot of money in the bank, but they are not positioning themselves as a dominant player for the future.

COMMUNICATIONS

In talking to the analysts and even the press from time to time, arrogant seems to be a trend.  They need to be humble and explain the situation.  Most of all, they need a product and a strategy to deal with.  I don’t envy them.

So far, they have emulated IBM in a lot of ways.  Re-Inventing themselves would be a good start.

Fixing moral would be good too….I’ll end with what Rob Enderle says:

The best way the take on these problems is for the management team to engage with employees by both listening to them and providing insight into the company’s strategic plans. Candor is critical; the goal is to get people working as a team again.  Employee surveys are generally ineffective because they aren’t trusted and the results don’t create the needed dialog.

Update: Their tablet strategy is labeled misguided and confusing.  Who would have guessed that?

Let the communications team explain this.

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