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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Topic: Microsoft

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January 30, 2015 at 10:31 AM

Vote: Is Microsoft failing (again)?

The honeymoon is over for Microsoft Chief Executive Satya Nadella. Quarterly earnings fell as the company’s traditional bread-and-butter cash machines faltered. Growth in cloud services was not enough to soothe investors, who have been driving share prices down amid a storm of doubt. It would be crass to call it karma. The hit pieces have…

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Comments | More in Microsoft | Topics: Microsoft, Satya Nadella

September 10, 2013 at 10:45 AM

Mulally, Microsoft and the savior CEO

Ford Motor CEO Alan Mulally (left) and Ford Chairman Bill Ford (right) at the media preview of the 2013 North American International Auto Show in Detroit. (Photo by Bill Pugliano/Getty Images)

Ford Motor CEO Alan Mulally (left) and Ford Chairman Bill Ford (right) at the media preview of the 2013 North American International Auto Show in Detroit. (Photo by Bill Pugliano/Getty Images)

Some top institutional shareholders are reportedly pressuring Microsoft to put Alan Mulally on the short list of candidates to succeed Steve Ballmer as chief executive officer. This is sure to gladden some hearts in Seattle. Mulally was the one who got away. He was the beloved head of Boeing Commercial Airplanes who was passed over when the CEO position went to outsider Jim McNerney. If Mulally had become the head of Boeing, this narrative goes, “things might have been different.” As in, better for the Puget Sound region. Mulally left to run Ford Motor Co. with great success. Ford was the only one of the Big Three that didn’t require a federal bailout to survive.

This involves some selective history. Boeing moved its headquarters to Chicago in 2001 under then-CEO Phil Condit, who wanted a “neutral location.”  It’s unlikely that Mulally, in 2005, would have reversed that decision. Mulally also saw the early development of the 787 Dreamliner, and it’s impossible to know if the airplane’s delays and troubles would have been avoided had he stayed with Boeing. It’s also impossible to know if he would have resisted pressure to move some Boeing work out of the region. Maybe so. Maybe not. McNerney is said to “dislike Seattle,” especially the unions. Whether that’s really true or not, Mulally likes Seattle and skillfully handled the United Auto Workers at Ford.

The deeper question is whether the skills of a successful, large-company chief executive translate to any company. Cars aren’t airplanes, but both Ford and Boeing are large manufacturing concerns. Yahoo’s Marissa Mayer was previously with Google. On the other hand, Lou Gerstner, famous turnaround artist of IBM, had been chief executive of RJR Nabisco, and had also worked for American Express and McKinsey & Co.

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Comments | More in Boeing, Microsoft | Topics: Alan Mulally, Boeing, Microsoft

August 26, 2013 at 10:34 AM

A few thoughts about Ballmer

My two weeks away were timed for the part of summer “when nothing happens.” So much for that.

• There’s a school of thought in classical economics that in the long run monopolies always commit suicide. Why? They become so dominant and wedded to the enormous revenues of their monopoly that they are insulated from competitive forces, new ideas and market discipline. Thus, for example, they miss the next new thing, price their products at a disadvantage and fail to see, forgive me, the road ahead. If this is so, whatever the merits of the federal case against Microsoft, it behaved as a classic monopolist and paid the price. It failed to snatch the escape clause of this theory, which enables today’s oligopolies: Capture the government to perpetuate your power.

• Of course Steve Ballmer was forced to walk the plank. His statements, and my sources, made it clear he intended to stay as long as he wanted. Yet according to Kara Swisher of All Things D, “Ballmer’s timeline had been moved up drastically — first by him and then the nine-member board, including his longtime partner and Microsoft co-founder and chairman Bill Gates — after all agreed that it was best if he left sooner than later.” A potential proxy fight was one danger. The recent disappointment in earnings, and the broader washout of Windows 8 and the Surface tablet were likely the final straws. He lost the confidence of Gates, the backbone of his power.

• Microsoft is a very big deal to the Seattle area economy. For one thing, it employs 42,000 here in well-paying jobs. That alone is a rare asset in today’s America. Apple employs only 16,000 in Silicon Valley. In addition, it has been a magnet for software developers and spun off much talent which, in turn, started new companies. Why did Jeff Bezos put Amazon in Seattle? Maybe he likes the weather. But he also had his pick of top technology talent.  Microsoft helps explain why Seattle punches so far above its weight class. We lack two world-class universities, one of Silicon Valley’s big advantages (we do have one, badly underfunded). But we have Microsoft. Thus, whatever happens under a new chief executive will have wide consequences for the future of the Puget Sound economy.

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Comments | More in Microsoft | Topics: Microsoft, Steve Ballmer

July 11, 2013 at 10:07 AM

Vote: Now what do you think of Microsoft’s plan?

When I held Friday’s poll anticipating today’s announcement of the big shakeup at Microsoft, most respondents wanted to wait for details before deciding whether it had a strong chance for success or not. Now we know, so I’m going to ask again. As the Seattle Times’ Janet Tu reports, CEO Steve Ballmer will…

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Comments | More in Microsoft | Topics: Microsoft, Microsoft reorganization, Steve Ballmer

July 5, 2013 at 10:16 AM

Vote: Microsoft’s reorganization

The word is that Microsoft CEO Steve Ballmer could announce a major reorganization of the company as early as next week. Don Mattrick, who led the division that produces Xbox is already leaving to become chief executive of Zynga. According to BloombergSkype president Tony Bates might be placed in charge of acquisitions and relationships with software developers, while Windows boss Julie Larson-Green is given oversight of hardware engineering for all of Microsoft.

The speculation is a moving target. In early June, Kara Swisher of All Things D reported that a larger role was being contemplated for several executives, including Mattrick, as Ballmer moves to fulfill his promise to make Microsoft into a devices and services company. Now, not for Mattrick, obviously. Last fall, Ballmer wrote to shareholders, “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.”

Microsoft is trying to catch up in a number of areas and make the shift to leapfrog in tablets and phones, not repeat the mistake it made with search. There’s also an activist shareholder in the background, even though MSFT shares are almost $10 higher than they were three years ago and dominant shareholder Bill Gates would block any activist attempts to control the board. Another issue about the restructuring is how it affects larger employment for one of the biggest employers in the Puget Sound. What do you think?

Read on for some important stories you might have missed plus the haiku…

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Comments | More in Microsoft | Topics: Microsoft, Steve Ballmer