I have been writing about Microsoft (MSFT) for years now and a few years ago, I was excited about the strategic direction the company seemed to be silently indicating it was moving in.
Over the past couple of years though, I have become convinced that the company, which seems incredibly profitable at first glance, is going in the wrong direction.
The tone of my articles regarding Microsoft has been very negative recently and I took some time to reflect on exactly why.
Was it the CEO Steve Ballmer who was prone to making inartful comments? Was it the strategy of the company in general? What was the underlying problem that was bugging me and affecting my overall outlook about this company?
I figured it out and want to share it with you.
Microsoft is a company that is too slow and silent. The worst combination of attributes for a company in the modern age.
When was the last time you actually saw a strategic vision announced by Microsoft? Not a product announcement but a wide ranging strategic vision statement stating the direction where the company was going?
To be honest, as someone who has covered the company very closely, I don't remember one. Microsoft strategy is dripped out slowly business unit by business unit, clue by clue. Bloggers and news outlets then take those clues, brush them off and interpret them for the general public.
Here's a great example - when discussing this with a friend, he pointed out that Microsoft had boldly stated that it was now a device company. I responded that we should take a deeper look to see how that evolved.
We both sat down and reviewed the way that piece of information came out.
It was in the 2012 Annual Report and the relevant paragraph stated:
Our Business: Devices and Services
Last year in this letter I said that over time, the full value of our software will be seen and felt in how people use devices and services at work and in their personal lives. This is a significant shift, both in what we do and how we see ourselves - as a devices and services company. It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses. The work we have accomplished in the past year and the roadmap in front of us brings this to life.
Devices With End-User Services
We will continue to work with a vast ecosystem of partners to deliver a broad spectrum of Windows PCs, tablets and phones. We do this because our customers want great choices and we believe there is no way one size suits over 1.3 billion Windows users around the world. There will be times when we build specific devices for specific purposes, as we have chosen to do with Xbox and the recently announced Microsoft Surface. ...
I pointed out to my friend that this was a shareholder disclosure and not a bold strategic statement.
If you read closely, it's filled with all kinds of ambiguity about what devices, with whom and when. As it should be - in a letter to investors.
I can't remember the last time (recently) when Microsoft successfully told the world what it planned to achieve and started publicly moving toward that goal. This is in stark contrast to its research department which is making bets on cool stuff all the time.
An example of a bold strategic vision is Google Glass (which I disagree with but the company is publicly taking a chance) or the iPad or a Kindle.
Take a look at something I was able to write in less than an hour that seems like a reasonable vision for a company to articulate.
It seems to me that Microsoft has become timid, cautious and beaten down and almost seems scared to tell the world what it wants to do.
Windows 8 is in danger. This product seems like it's about to jump the shark in terms of public opinion and what are we hearing from Microsoft?
Consider this - Windows 8 is the first software product I have ever seen from a major vendor that is getting third party patches to fix core functionality (Start8, Pokki, ModernMix etc). These third party companies are gloating that they are "fixing" Windows 8 and what do we hear from Microsoft?
What about Windows Blue - the rumored attempt to unify and enhance Windows allegedly coming this year? What have we heard from Microsoft?
In the past 3 years, I can't remember a period in time when a Microsoft executive issued an interview or statement explicitly just to push back on negative press about a product. The company seems content to let public opinion go where it will. This leaves its products vulnerable to bloggers, competitors and third party opinions.
Typically this ends up with a product like Windows 8 being remembered as a disaster even though sales numbers may be decent. My reporting indicates that a lot of users actually like Windows 8 but the loudest voices are drowning that all out. Windows Vista sold approximately 300 million licenses but no one cares.
Anyway, I could go on but I won't. The company needs bold leadership, vision, clarity and boldness. It has all the elements that typically should put it in the stock price company of Google (Goog) and Apple (AAPL).
Until those two attributes (slow and quiet) change, it's going to remain an average stock, not losing money but not really ever exploding. That's my take.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: While I have no business relationship with Microsoft of any sort, I am the owner and editor of several Windows websites (Windows8update.com, Windows8enterprise.com, among others), and I write primarily about Microsoft for a living.