Microsoft suffers from malaise, key defections, Windows Vista struggles, lack of towels

“Once the dream workplace of tech’s highest achievers, it is suffering key defections to Google and elsewhere… These days it’s Google, not Microsoft, that seems to have the most momentum… For most of its three decades, Microsoft has faced intense criticism. But in the past it came from the outside world. Rivals complained about its heavy-handed tactics. PC makers griped that it was hogging the industry’s profits,” Jay Greene reports for BusinessWeek. “Now much of the sharpest criticism comes from within. Dozens of current and former employees are criticizing — in BusinessWeek interviews, court testimony, and personal blogs — the way the company operates internally.”

Greene reports, “More than 100 former Microsofties now work for Google, and dozens of others have scattered elsewhere. It’s not a mass exodus. Microsoft has 60,000 employees, and many of them are undoubtedly happy with their jobs and the company’s culture… Still, there’s no doubt that Microsoft is losing some of its most creative managers, marketers, and software developers… Mark Lucovsky, who had been named one of Microsoft’s 16 Distinguished Engineers, defected to Google last November. He blogged that Microsoft’s size is getting in its way. ‘I am not sure I believe anymore that Microsoft knows how to ship software,’ he wrote.

“Employees’ complaints are rooted in a number of factors. They resent cuts in compensation and benefits as profits soar. They’re disappointed with the stock price, which has barely budged for three years, rendering many of their stock options out of the money. They’re frustrated with what they see as swelling bureaucracy, including the many procedures and meetings Chief Executive Steven A. Ballmer has put in place to motivate them. And they’re feeling trapped in an organization whose past successes seem to stifle current creativity. ‘There’s a distinct lack of passion,’ says one engineer, who would talk only on condition of anonymity,” Greene reports.

Greene reports, “To many employees, Vista, the Windows update, exemplifies the company’s struggles. When the project was conceived half a decade ago, it was envisioned as a breakthrough: an operating system that would transform the way users store and retrieve information. But the more revolutionary features have been dropped, and Vista will arrive three years after researcher Gartner Inc. originally predicted that it would ship. Worse yet, they say, nobody has been held accountable. ‘People look around and say: ‘What are those clowns doing?” says Adam Barr, a program manager in the Windows group.”

“To succeed, Microsoft needs motivated workers camping out in their offices at all hours to compete with tenacious rivals such as Google, Yahoo!, Salesforce.com, and a reborn Apple Computer. Yet current and former employees say there are many demoralized workers who are content to punch the clock and zoom out of the parking lot,” Greene reports. “Some employees say Microsoft isn’t innovating enough: It’s too busy upgrading Windows. With some of its key breakthrough features gone, Vista’s improvements include better handling of peripheral devices, such as printers and scanners, and cutting in half the time it takes to start up. Those are needed improvements, and there’s no doubt that hundreds of millions of copies will be sold as people upgrade to new PCs. But the changes are hardly the stuff of cutting-edge software engineering.”

“With revenue growth slowing, Ballmer has tried to squeeze more down to the bottom line to make the company more appealing to investors,” Greene reports. “Even the cuts that seem trivial have dampened morale. Just whisper the word ‘towels’ to any Microsoft employee, and eyes roll. Last year, Microsoft stopped providing a towel service for workers who used company locker rooms after bike rides or workouts. Employees who helped the company build its huge cash stockpile were furious. And don’t even mention stock options. Employees long counted on them to bolster their salaries. Microsoft minted thousands of employee millionaires as the stock climbed 61,000% from its 1986 public offering to its peak in 2001. Now shares are trading exactly were they were seven years ago. Microsoft has doubled its payroll in that time, adding more than 30,000 new employees, not including attrition. That means more than half of Microsoft’s employees have received virtually no benefit from their stock holdings.”

Full article, with Ballmer f bombs, and much, much more here.

BusinessWeek also has a podcast (that’s “podcast,” not “blogcast,” Microsofties) about Microsoft’s problems. More info here.

Additionally, BusinessWeek has an interview with Microsoft CEO Steve Ballmer here.

MacDailyNews Take: Hey, Microsoft employees, “Towels!” We found a nice one for you guys and gals, but, alas, it’s sold out.

Related MacDailyNews articles:
PC World: Microsoft innovation – an oxymoron – September 15, 2005
Microsoft debuts Dashboard Widgets, er, ‘Microsoft Gadgets’ – September 13, 2005
Chair hurling Microsoft CEO Ballmer: ‘I’m going to f—ing kill Google’ – September 03, 2005
Cringely: Biggest threat to Microsoft might not be Google at all, but Apple – August 26, 2005
AP: Microsoft’s ‘insanely late’ Windows Vista has Apple ‘Mac-like look and feel’ – August 03, 2005
Microsoft’s Windows Vista will attempt to incorporate many features from Apple’s Mac OS X Tiger – August 01, 2005
Microsoft’s Windows ‘Vista’ too little, too late; could be rough times ahead for Redmond – July 28, 2005
Dvorak: Mac OS X is already better than Windows, Vista may be end of line for Microsoft’s dominance – July 26, 2005
Apple CEO Steve Jobs’ ultimate goal: ‘to take back the computer business from Microsoft’ – June 16, 2005
As usual, Apple leads, Microsoft tries to follow – June 02, 2005
Is Microsoft finally about to crumble? – May 26, 2005
Forrester CEO: ‘Microsoft is in its most vulnerable moment in history’ – May 09, 2005
Apple’s Mac OS X ‘Tiger’ wins rave reviews; Microsoft’s Windows ‘Longhorn’ is MIA – April 30, 2005
Microsoft employees leaving due to (and blogging about) malaise smothering company – April 25, 2005
Microsoft’s lack of momentum, malaise won’t end anytime soon – March 16, 2005
Experts: ‘the days of Microsoft’s hegemony may soon be over’ – March 08, 2005
Is Microsoft dying? – February 11, 2005

58 Comments

  1. To say “mass exodus” is redundant (and unfortunately prevalent).

    exodus |ˈeksədəs| noun
    a mass departure of people, esp. emigrants. • ( the Exodus) the departure of the Israelites from Egypt. ORIGIN early 17th cent.: from Greek (see Exodus ).

    (Another favorite is when it states in all seriousness that music contains “explicit lyrics”, i.e. clear lyrics, when they mean “sexually explicit lyrics”).

  2. Loved the article. Hated this line: “Now shares are trading exactly were they were seven years ago.” Misleading partial truth. Considering the splits MSFT has undergone these past seven years, it has to be trading five or six TIMES what you paid for it seven years ago! Why can’t these writers understand that market price is not value?

    No, I’m not a stock broker. Yes, I am securities licensed. Wanna mutual fund? ” width=”19″ height=”19″ alt=”tongue wink” style=”border:0;” />

    Otherwise it’s interesting to get peeks into the belly of a dying beast. I think splitting MS up after the lawsuit would have done it more good than anything Ballmy or Gatesy can do at this point. Motivational tactics. Pffft. What a pointless activity. Members of a company are motivated by the what the company does or produces. Perks are better as rewards than as carrots used in desparation.

  3. You have to cut large companies a few breaks. It’s hard to control such a huge market/monopoly (OS and Office) and still maintain a sense of fire in your employees. So in a way, what MS is experiencing is expected.

    But, don’t count them out. If somehow they were to get someone in there with real fire in their gut (someone like SJ), they could slim down the beast, focus on it’s key markets and be ONE HELL OF A THREAT!

    I keep asking myself, why can’t a company the size of MS, with all its employees and cash write an OS that remotely compares to OS X? The answer is that they can (which is the scary part). Fortunately for us, THEY DONT.

    Don’t take comfort in the malaise that is MS today. Do not rest until the beast is actually DEAD.

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