Category Archives: Microsoft

So how much is FaceBook ‘worth’?

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From the Sydney Morning Herald…

THERE has been speculation recently about what is being called an internal Facebook valuation – a value the company has assigned to its own common stock that is drastically lower than the $15 billion valuation set so publicly last year by Microsoft’s investment.

According to the transcript of a June 13 case-management conference in the lawsuit settled last week between Facebook and ConnectU – one of the few documents in the case not under seal – that figure is $3.75 billion, or one-quarter of the Microsoft valuation.

ConnectU had claimed that Mark Zuckerberg, a former employee and Facebook’s founder, got his idea from ConnectU.

The relevant passage from the document, under the section titled Defendant ConnectU’s Position, said: “The term sheet and settlement agreement is also unenforceable because it was procured by Facebook’s fraud. Indeed, based on a formal valuation resolution approved by Facebook’s board of directors but concealed from ConnectU, the stock portion of the purported agreement is worth only one-quarter of its apparent value based on Facebook’s public press releases.”

The piece goes on to point out that Microsoft bought preferred stock — i.e. ones with special voting rights, so the ConnectU figure is probably too low. But it’s still not $15 billion.

Alpha female

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Interesting Economist profile of Diane Greene.

ALPHA male, flamboyant, brash, megalomaniacal. Profiles of leading high-tech bosses tend to be littered with these terms, signs of the traits that they seem to need to make it to the top of the computer industry and stay there. But none of them applies to Diane Greene, the chief executive of VMware. Her company, which sells software that makes data centres run more efficiently, has quietly become the world’s fourth-most-valuable publicly traded software company, with a stockmarket value of nearly $20 billion. Its public listing last August was a bit like the heady dotcom days. Since then, the old guard has started ganging up on the newcomer, which boasts quarterly sales of nearly $440m and expects to grow by 50% this year. Microsoft, in particular, has vowed to take on VMware. On June 26th the software giant released its first competing product—predictably, as a free add-on to its flagship Windows operating system. How will Ms Greene play in the rough and tumble of the big league?

Psst… want to rent some Windows?

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From Good Morning Silicon Valley.

For people who are too wary of commitment to shell out upwards of $375 for Microsoft Office Professional or $100 or more on the Home and Student edition, Microsoft is introducing a subscription version. For $70 a year, you’ll be able to rent Microsoft Equipt, a package that combines Office with Microsoft’s Live OneCare security package, with free upgrades when new versions arrive and access to the already free Live Workspace and other online products. The Equipt package can be installed on up to three PCs at a time. Whether this represents a good deal depends on the nature of your needs for Office and the worth to you of OneCare, but it does lower the entry barrier for holdouts.

The curious part of the move is Microsoft’s choice of a retail channel — initially, at least, Equipt will be available only through the nearly 700 Circuit City stores. Microsoft believes that the concept of Equipt represents a “complicated value proposition,” and that the staff of Circuit City has the ability, according to Office group product manager Bryson Gordon, to engage customers in a “kind of a high-touch scenario. Equipt is better sold than bought.” Circuit City undoubtedly appreciated the kind words, especially as its stock dropped to a 17-year low after Blockbuster came to its senses and dropped its $1.35 billion takeover offer.

What Google does right — and wrong

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Here’s an interesting phenomenon — a guy who has left Google to work for Microsoft. In his blog he explains why. First the good news:

There are many things that Google does really well, and I plan to advocate that some of these things be adopted at Microsoft.

Among them is the peer-based review model where one’s performance is determined largely based on peer comments, and much less so based on the observations of the manager. The idea that a manager is far easier to fool than the co-workers are is sound and largely works. A very important side-effect that this model produces is an increased amount of cooperation between the people, and generally better relationships within the team.

The wide employee participation in corporate governance through a concept called “Intergrouplets” is a good one and merits emulation. Unlike most other companies where internal life is regulated largely by management, a lot of aspects of Google are ruled by committees of employees who are passionate about an issue, and are willing to allocate some of their time to have this issue resolved. Many things, such as quality of code base, testing practices, internal engineering documentation, and even food service are decided by intergrouplets. Of course, this is where 20% time (a practice where any Googler can spend one day a week working on whatever he or she wants) plugs in well, for without available time there would have been nothing to allocate.

Doing many things by committee. Hiring, resource allocations at Google are done by consensus of many players. If you are to achieve anything at Google, you must learn how to build this consensus, or at least how to not obstruct it. This skill comes in very handy for every other aspect of work.

Free food. More than just a benefit, it is a tool for increasing communications within the team, because it’s so much easier to have team lunches. I don’t think making Redmond cafeterias suddenly free would work (maybe I am wrong), but giving out free lunch coupons for teams of more than 3 people from more than one discipline to have lunch together – and at the same time have an opportunity to communicate – I think, has a fair chance of success.

There are other things that I would want at Microsoft, but which will probably not happen simply because there is far too much legacy. I will miss the things like one code base with uniform style guides and coding standards – there’s too much existing code at Microsoft to try and turn this ship around.

So why did he leave?

Several reasons. Firstly it seems that he prefers writing software for users who are willing to pay real money for it.

Secondly, he doesn’t like the way Google approaches software engineering. Its orientation towards cool, but not necessarily useful or essential software, he writes,

really affects the way the software engineering is done. Everything is pretty much run by the engineering – PMs and testers are conspicuously absent from the process. While they do exist in theory, there are too few of them to matter.

[…]

On the other hand, I was using Google software – a lot of it – in the last year, and slick as it is, there’s just too much of it that is regularly broken. It seems like every week 10% of all the features are broken in one or the other browser. And it’s a different 10% every week – the old bugs are getting fixed, the new ones introduced. This across Blogger, Gmail, Google Docs, Maps, and more.

This is probably fine for free software, but I always laugh when people tell me that Google Docs is viable competition to Microsoft Office. If it is, that is only true for the occasional users who would not buy Office anyway. Google as an organization is not geared – culturally – to delivering enterprise class reliability to its user applications.

As I say, it’s an interesting perspective. And he’s probably done himself no harm with his new bosses at Redmond by writing about it. Or is that too cynical a view?

Microsoft’s other problem

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Google is Problem #1, obviously. But the other one is the baroque — and unsustainable — architectural complexity of Windows 12 (which is what Vista really is). Randall Stross has an interesting piece about this in the NYT. The next version of Windows is — bizarrely — called Windows 7 by the Microsoft High Command.

Will it be a top-to-bottom rewrite? Last week, Bill Veghte, a Microsoft senior vice president, sent a letter to customers reassuring them there would be minimal changes to Windows’ essential code. “Our approach with Windows 7,” he wrote, “is to build off the same core architecture as Windows Vista so the investments you and our partners have made in Windows Vista will continue to pay off with Windows 7.”

But sticking with that same core architecture is the problem, not the solution. In April, Michael A. Silver and Neil MacDonald, analysts at Gartner, the research firm, presented a talk titled “Windows Is Collapsing.” Their argument isn’t that Windows will cease to function but that the accumulated complexity, as Microsoft tries to support 20 years of legacies, prevents timely delivery of advances. “The situation is untenable,” their joint presentation says. “Windows must change radically.”

Randall points out that the problem facing Microsoft now is analogous to that which faced Apple with its ageing OS9 system in the late 1990s. The solution was a radical break and the adoption of a completely different OS architecture — OS X. This meant a lot of pain for some die-hard Apple users, though it was partially eased by providing an OS9 emulator.

The complexity of Vista is largely a consequence of having to ensure backwards compatibility with earlier versions — which is why Bill Veghte wrote as he did. But with the power of modern Intel processors, where’s absolutely nothing to prevent Microsoft harnessing virtualisation technology to enable users to run earlier versions of Windows in virtual machines, leaving Redmond’s software designers free to design a completely new OS.

Apré Billg

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This morning’s Observer column…

There’s been a lot of ‘end-of-an-era’ talk about the departure of Gates from the company he founded with Paul Allen in 1975. There have also been acres of speculation about ‘whither Microsoft after Gates?’ Both topics are, well, a bit passé. The eclipse of the Gates ‘era’ began with the arrival of Google 10 years ago. And the succession plan that he and Ballmer engineered nearly two years ago effectively handed direction of Microsoft to a triumvirate of Ballmer, Ray Ozzie and Craig Mundie. So let us dispense with the Kleenex and take a detached view of Mr Gates’s contribution to civilisation.

The headline is that he is the John D Rockefeller de nos jours in the sense that he shaped an emerging industry and revolutionised philanthropy. The big difference is that, unlike Rockefeller, Gates did not wait until the closing years of his career to engage in good works, and the $100bn endowment of the Bill and Melinda Gates Foundation will ensure that his name lives on…

The point I was trying to make about Microsoft is also taken up by the Economist in its piece about the end of the Gates era. The article includes this chart:

Microsoft’s farewell to Gates

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From a a report of yesterday’s farewell event…

Gates waited behind a black curtain, arms crossed and pacing, as Ballmer introduced him. He walked in to a standing ovation, grinning, and introduced his wife, Melinda, and his children in the audience. He talked about the company’s history, including the “David and Goliath” battle against IBM, saying with a smile that he thinks that story came out the right way. He talked about the competitive landscape, saying that he thinks it’s still right for the company to focus on software.

“We have so many opportunities to surprise people,” he said.

He acknowledged that it won’t be easy to move on, given how natural it has become for him to work at the company over the past three decades. Sometimes, when he’s driving his children, Gates said, “If I forget and start thinking about work a little, I start driving to Microsoft. They say, ‘Dad, dad, what are we going to do at Microsoft?’ ”

[…]

Asked about his biggest mistake, Gates said the key thing in software is to accurately anticipate new bends in the road. He said Microsoft was ahead of the curve in areas like the graphical user interface, but he also acknowledged that it has been behind in other areas, such as Internet search and advertising: “When we miss a big change and we don’t get great people on it, that is the most dangerous thing for us,” Gates said. “It’s happened many times. It’s OK, but the less the better.”

The real Bill Gates

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Lest we get overcome by the warm bath of nostalgia engulfing Microsoft’s departing co-founder, here’s a a useful reminder of what it was like dealing with him. It’s an extended recollection by a Zilog executive for whom Gates wrote some buggy Z80 compiler code in 1979/80.

“After a couple of weeks of calling and getting the same message from Gates, I finally pulled out the listing and went through it. It was terrible code. Sloppy, poorly documented and generally not something that I would have allowed my developers to send out the door. But that was all I had, so I spent a few days going through it and finding the errors that appeared to be causing the troubles with the tests. I then called Bill again and explained what I had done and where would he like me to send a copy of the corrections.

“He didn’t want them, as he could fix it himself! I went ahead and told him the areas that needed to be modified, but he became more and more belligerent as I went through the changes. He said, again, that he’d look into it. I seem to have hit a nerve there as I believe that I mentioned, more than once, what a crappy piece of code this was.

“After that whenever I would call, Bill and I ended up shouting at one another over these modifications. After a total of about 3 months of calling at least once a week I finally gave up and went to our company lawyer. His solution was quite simple — Call Mr. Gates one last time and present him with the name and phone number of our lawyer and tell Gates that the lawyer would be calling him the next week. I did this (quite calmly as Bill began our conversation shouting at me) and told him that I wouldn’t be calling him again.

“We had the patched and working code before the lawyer ever got around to calling him the next week. Seems I was an early recipient of the Microsoft Business Model.”

End of an era

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From CNN

Steve Ballmer was sobbing. He repeatedly tried to speak and couldn’t get the words out. Minutes passed as he tried to regain his composure. But the audience of 130 of Microsoft’s senior leaders waited patiently, many of them crying too. They knew that the CEO was choked up because this executive retreat, held in late March at a resort north of Seattle, was the last ever for company co-founder Bill Gates, as well as for Jeff Raikes, one of the company’s longest-tenured executives. “I’ve spent more time with these two human beings than with anyone else in my life,” Ballmer finally said. “Bill and Jeff have been my North Star and kept me going. Now I’m going to count on all of you to be there for me.”

Aw, shucks.