It shows the quarterly operating expenses for Microsoft’s Online division. This last quarter, Microsoft lost $466 million. That’s 3 months.
Over the last year (4 quarters) Microsoft has lost nearly $2 billion.
And from what I remember, you’d see losses for the period before what’s shown on the chart, as the division has always struggled with profitability.
It’s an unbelievable chart. I’ve had to stop writing several times just to look at it again.
I’m not arrogant enough to claim I can fix an entire division. But I can ask some questions:
- Who in senior leadership has earned promotions or raises during this time? I’m not saying this is impossible, but it does deserve some serious explaining.
- What fundamental assumptions are at work here that someone is still protecting?
- How would things be different if this division were operating as it’s own company? Clearly whatever leverage and resources it’s getting from the rest of Microsoft hasn’t been of use to the bottom line. If it were it’s own company one of two things would have happened by now: 1) It’d be out of business or 2) It’d be doing things very differently.
- What are the counter examples in this division that are profitable? And are their other groups rallying around their success and trying to learn/leverage/borrow from them?
- In the last 50 years how many corporations have run entire divisions with this level of operating loss over four years or more? And what was the outcome?
If history is a judge, Steve Sinofsky, the VP from Office who took charge of Windows 7, might be the only weapon Microsoft can use to tackle Online. Other VPs have been in charge, including David Cole who was my VP for a time in the IE days. But they’ve been ineffective at things other than spending lots of money.
In spirit of my last post (Microsoft and Creative Destruction), the better question is what did Sinofsky do to the Windows team to turn Vista into Windows 7? Why isn’t there a case study on this, that’s stapled onto the forehead of every manager until it’s read? And how can that be emulated in the Online division? My suspicion is this case study has not been done, and if it has, it’s either not being shared widely or it’s being ignored.