Another Microsoft Bob Gone

Last week I got asked about on my view on Bob Muglia leaving Microsoft and even in more general on Microsoft strategy. Let me first tell that I've been privileged to have seen Bob Muglia speak and ask questions during the years I worked with Exact a valued Microsoft Partner. Bob always struck me as a very genuine person with a clear vision and strategy. He was operating in a very difficult situation and basically got stuck between a rock and a hard place, like so many software companies today. I'm sure he understood that too and worked out a successful strategy to deal with the challenge, proven by the growth results he realized in recent years and Bob deserves our respect for that.

The challenge many software companies, especially those with a longer history, are having is the disruptive move towards the cloud. Many of the companies make their money with in general conservative customers that expect continuous improvements and updates to further leverage investments made in the past. At the same time these companies do realize that this revenue stream will slowly start to show a decline and newer generations software and business models are emerging. Investments in these newer generations are necessary to compensate the revenue decline of the traditional software products. Someone once told me: not to throw away your old shoes before you bought new ones. The key question is how to keep your current customers happy while investing into a cloudy future?

Microsoft was doing this by moving their large back end server product portfolio into the cloud and transition from selling software licenses to selling managed services. The difference in business model and related revenue streams makes this difficult, because it will eventually cannibalise existing products and could on the short term result in a dip in revenue as a result of the difference in business model. The large upfront license fees are being replace by recurring monthly/yearly payments. This part of the Microsoft strategy makes good sense to me, although I would like to debate the positioning of the hosted services. The current strategy is based on a one size fits all and that is one of the weak points, because various markets have different needs and cloud adoption time lines. It would be good if Microsoft makes a strong differentiation for different markets and tried to address them one by one. I addressed this same issue with some tips for Mr. Steve Ballmer a few months back. It could be that there has been some discussion on the priorities for various markets and the speed in which to move forward. I agree with Mr. Steve Ballmer that new leadership is required to move Microsoft forward and Bob could have become an unfortunate casualty in this discussion. I hope new leadership will come from outside and gets a chance to make some disruptive and innovative changes.

I'm looking forward to the new direction Microsoft will take.


Rumor mill says a battle blew up not putting Silverlight shoes into the Cloud and its revenue timing.

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