[Solar-general] Closing Microsoft by John C Dvorak

[Gerardo Díaz]

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Closing Microsoft

- -By John C. Dvorak

July 12th 2004

www.pcmag.com

Bill Gates is reported to have told more than a few people, when asked
how long he intends to run Microsoft, "Until it stops being fun." This
remark has always baffled me, since it's never been clear what fun is
for Bill Gatesor for Steve Ballmer, for that matter. Is it fun to be
publicly scrutinized, ridiculed, have pies thrown in your face, and be
sued left and right? Maybe not, but it's probably fun to have private
jets, red-carpet treatment, and billions of dollars in your personal
bank account. But once you have the latter, why bother with the former?
How about simply shuttering the company?

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You have to wonder exactly where Microsoft can go from here. Is it fun
to run what is now a stodgy old company? I wouldn't think so.

The concept of Microsoft possibly shutting down can be associated with
the recent announcement that the company is cutting costs to save a
billion dollars. With upwards of $70 billion in the corporate coffers
and many billions in the personal bank accounts of the CEO and founders,
you have to wonder what people at Microsoft are thinking. Do they know
something we do not know? The reason behind the announcement has to be
one of three things: Someone sees a rocky road ahead, they are even
greedier than ever, or they are planning a shutdown.

The company is already saving a tremendous amount of money by offshoring
jobs and using cheap H1-B visa holders for U.S. jobs. This is well
documented. So what does Microsoft do with the profits besides bank
them? It talks a big game about R&D but its most mundane product, the
Internet Explorer browser, is full of holes and is essentially a bunch
of cobbled-together old code. Here's an interesting exercise for you:
Open Internet Explorer. Go to Help, then About, and you'll see that
Microsoft still acknowledges that Internet Explorer is the old Spyglass
browser based on Mosaic. This was thrown together years ago. Then look
at the copyright notice. It ends in 2001. Unless I'm mistaken, that
means that there has been no real update since then, just patches. To
get a bigger laugh, click on Acknowledgements and see how long you can
endure the laundry list of people who worked on the code. It's as if the
entire state of Washington did some coding. Why?

The fact is this software, which has been mostly stagnant since the
marginalization of Netscape, is just coasting. So where is all the R&D?
I don't see it. In fact, I see the entire company coasting along making
more and more money with possibly one concept ahead: to close down.

Yeah, I know that sounds ridiculous, but it wouldn't be unprecedented
for a high-tech software company to just end its life cycle by closing.
I recall the early days of microcomputing when Processor Technology
closed. Everyone thought they went broke, but it turned out that the
founders were just bored with the business and closed. It has been done.

As this is written, the asset or book value of Microsoft per share,
including the $70-plus billion in the bank, is a fraction of the stock
price. But if Microsoft can knock down the stock price with one or two
dubious reports and collect another $50 billion or so while moving
everything offshore, it might be possible to pay out the money to the
shareholders and close the company. Just walk. If everything is
offshore, the shuttering would have no local impact, since all the
locals would have been laid off long before. Thus the number of lawsuits
filed against the company for shutting down would be minimal. There is
also the possibility of spinning off the Office, MSN, Xbox, and Server
folks into new companies for a pot-load of cash. Make those divisions
take on new names and close down everything else while passing out the
cash to everyone.

Of course, I realize that this whole notion is crazy on the surface,
but, in this scenario, all the principals would have their money,
houses, and cars, and would never have to worry about Microsoft going
into a pathetic decline, as most companies eventually do. The closure
would be one of the most interesting episodes in the history of
business. And who would complain? Gates could get a few cheap shots in
at the Justice Department while he was at it. I think this is exactly
what Microsoft should do. And this scenario falls in line with the
company's announcements on cost-cutting.

With Microsoft shuttered, where would it leave the users? Most users
could coast on XP for three years if they had to. Perhaps Microsoft
could shut its doors after Longhorn comes out. Perhaps the stable Win2K
would emerge as the pass-around operating system of choice, assuming
that Microsoft would send all its OS offerings into the public domain as
one last slap at Linux.

Is this so very far-fetched? You tell me.
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