Gotta respect the opinion of anyone savvy enough to choose "Reddy Kilowatt" as his blog picture. It was the promo symbol of a power company that I patronized many decades ago, long before we were politically bludgeoned into believing that our electrically spendthrift behavior would doom the entire planet, just so Al Gore could build up his media resources and sell them to a petroleum-funded Islamic news service. Reddy for President!
On April 3, 2000, [Judge Thomas Penfield Jackson] issued his conclusions of law, according to which Microsoft had committed monopolization, attempted monopolization, and tying in violation of Sections 1 and 2 of the Sherman Antitrust Act. Microsoft immediately appealed the decision.
On June 7, 2000, the court ordered a breakup of Microsoft as its "remedy". According to that judgment, Microsoft would have to be broken into two separate units, one to produce the operating system, and one to produce other software components [application programs like Office].
The remedies were overturned on appeal. However, they were only delayed since Microsoft is slowly turning over its operating systems business to linux.org and gnu.org, and its application business to libreoffice.org :-)
Remember Microsoft was created on a PC-centric model where the hardware was "commoditized" and the money was supposed to be made on the software. In the market for "PEDs" (personal electronic devices, like smart phones and tablets) Apple and others have successfully turned the market on its head, making the money on hardware and leaving it up to a faithful developer community to write apps. In the game console market Microsoft has had moderate success in hardware with Xbox and especially Kinect but they're STILL on the wrong end because the big money here is in media (the games themselves, you need to be able to write one "blockbuster" after another to gain market share), and (outside of the "Halo" franchise) they haven't made much of a dent there either, they're certainly in no shape to go mano-a-mano against the likes of a TakeTwo Interactive. Add the acquisition of Nokia and this is a lot worse than just a case of "lost focus". It's going to take a LOT more than reshuffling the name signs on the doors on mahogany row to fix this, if it were a smaller company you'd probably take the company private and put it in the hands of a turnaround specialist THEN figure out how to reshape the remaining parts but this is WAY too big for that, I admit I don't really know how it could be done without causing major pain to the existing shareholders.
Two movies here: break it up like Moto or Nokia, or double down like IBM under Gerstner. I wouldn't point to Nokia as the way to go, and I think the jury is still out on Moto, too.
The converse with IBM worked out, not because it was a double-down per se, but because Gerstner, with all his time at McKinsey, took the time to analyze what he really had, had the support of the board and was effective in leading IBM out of the morass it had created for itself. I can't imagine that being possible, however, if Thomas Watson were still hanging around on the board. That should give one pause for thought at Microsoft.
I expect in the end, MSFT will continue to muddle along innovating by acquisition until it all blows up or the board moves beyond its founders.
I admit that there are no clear lines. You could divide the company in many different ways. I would consider separating all the applications and cloud services into one unit, including Office. The OSs are best paired with the hardware systems, but this could be split further. While I think the handsets, Surface, and PC efforts probably belong together, the Xbox belongs more with the cloud services because of the long-term direction of the market. Separating MSN and bing may also be a good division to allow for an acquisition or merger to better position these internet offerings.