A Microsoft break up at this time is a much more attractive option than scaling down and retrenching into traditional segments at a later date.
Although there is a considerable amount of speculation, and even betting, on who will be the next Microsoft CEO, the job may be an unenviable one for anyone considering the position.
Microsoft is a behemoth that continues to acquire staff and resources as it chases the market transitions that it missed. And in the midst of the company, there are groups constantly at odds over the company's strategy. So, should the board be looking for a turnaround expert or should they be asking a much broader question: What is the best way to structure Microsoft?
After approving the current Microsoft strategy and all the acquisitions the company has engaged in, it is difficult to imagine that the Microsoft board, which includes the two previous CEOs, would consider breaking up the company, but maybe they should. Leading a giant that continues to be outflanked by smaller or more innovative competitors, may be a case in futility.
Microsoft, its partners, and stakeholders may be better suited by a new strategy that considers breaking the company up into pieces that have aligning strategies and expertise. It is much better to consider this now than when market conditions or investor frustration force the scenario. Recent break ups of companies like Motorola and Nokia come to mind. A break up at this time is also a much more attractive option than having to scale down and retrench into tradition segments at a later date.
This would alter the search criteria for the next CEO, or CEOs. Rather than debating between the benefits of a business vs. technical leader or an industry visionary vs. turn-around expert, the board could narrow the criteria for each of the individual pieces of the pie. These leaders may already exist within the company but may be encumbered by the existing politics of the current entity. This strategy could also lead to the divestiture of certain assets altogether.
In the end, whatever remains should be a better competitive position than Microsoft is in today. Adopting such a strategy would still require someone to oversee its execution, but maybe not a high-priced hired gun that may have his or her own objectives and opinions.
Breaking up Microsoft would undoubtedly change the landscape of the electronics industry. But then again, it is already changing and in many ways that are not favorable to Microsoft as it is today.
— Jim McGregor is the founder and principal analyst at TIRIAS Research.