Ballmer and Gates stand strong against Microsoft breaking up into separate companies

By Tom Warren, on 16th Nov 10 6:43 pm with 3 Comments

Microsoft held its annual meeting of shareholders in Bellevue today, and everything went according to the book apart from one key question – “Maybe it’s time to consider breaking this company up?”

The question came from a self described frustrated shareholder who asked “Maybe we have the model wrong…is it time to consider breaking this company up?” Todd Bishop over at TechFlash has transcribed Steve Ballmer’s full response to the question and even company Chairman Bill Gates offered up his opinion too.

Steve Ballmer, Microsoft CEO:

“I obviously don’t think it is time. I don’t think it would be useful. I think it creates economic dis-synergies, in fact. It’s not in my natural genetic makeup to think that way but when you get enough people telling you to think that way, you at least go through the proper, disciplined look and in almost all cases, the market goes the other way. All of the people we compete with in devices will be in phone, PC and TV, which in our case means Xbox, windows and Windows Phones. It’s Apple, it’s Google, it’s us. Divesting something only means creating a harder time competing for all relevant parties . The operating systems that are popular on clients also tend to be popular on servers. They’re all based around Linux technology. We happen to build our server business on Windows technology. It creates dis-synergy in fact to split our server and enterprise business from our client business.

Our Office business doesn’t fit neatly, it’s not a consumer business only, or an enterprise business only. Bing is a super-important area for us, not just because of search itself, but a lot of the most interesting stuff that’s going to happen relates to this notion of understanding users and understanding the world, and being able to connect them. Search is the first place you do that. Statistically you type anything you want to, and we take a guess at what you meant. Turns out there are a lot of things you want to be able to do that with. Almost everything in computing, if you stop and think about it, you want to be able to express intent and have the system be smart enough. … That general technology base is essential to the company, absolutely essential, and we build it through search, and we built it by being disciplined, and getting after that as a market. Yes, it’s expensive, but I would never think about not doing that. I think it’s fundamental to who we are, where we’re going, and the rest of our businesses.”

Bill Gates, Microsoft Chairman:

“I agree with what Steve’s saying there, in that the Microsoft brand, the scale of Microsoft Research on a worldwide basis, the intellectual property we build up, the way we hire and train people, there’s a lot of synergy across the company, and it’s been a real strength. You look at the evolution of Office, and how it uses the cloud, you look at the evolution of some of the gaming assets and how those connect to the communications things we’re doing. I don’t think there’s a line where you’ll find net simplicity by trying to create a new company.”

  • GP007

    Now that they’ve started to bring all the parts together and have them working as one people still talk about splitting it? It’d never work, and there’s no point to it anyways. Maybe if this was back in 2000 but not today. Shareholders don’t see the stock price going up and that’s all they think about, the techie people will at least pick up on the big 3 screens and a cloud push which is starting to show itself now.

    Besides, the market seems to be full of idiots or just people who only care about Apple, it makes no sense. MS today gives out news that they’ve sold 1 million kinect devices in 10 days yet the stock is down atm. Even with solid WP7 sales it seems the market doesn’t care enough regardless of how much success MS does, talk about undervalued.

    • Tom W

      Yeah I think the key to Microsoft’s success in the near future is integration and having their services work great across all devices etc. Wouldn’t be wise to split the company right now.

  • Guy C M Roberts

    You could argue that say the office team would be more motivated to be cross platform if that was what their company depended on

    Could leave say the OS company in a hard place though?