18 October 2006


It was the late 90s and the seats were filling up. Every bus company from Everett to Tacoma had loaned buses to the Richest Company on the planet. Yes it was time for the annual Microsoft Company meeting. The Kingdome was resonating with the sound of a chant and the accompanying stomping of feet, a cacophony of noise that rose from stands and up to the roof… SPLIT SPLIT SPLIT…
For the faithful it was about splitting the stock so it could continue its almost inexorable climb to those same rafters.

Well now those same faithful need to start the same chant, but this time with a different slant. SPLIT SPLIT SPLIT.

I am advocating one or even two totally different meanings – but both with the same end result - rebuilding stockholders equity.

Microsoft has become too big, too fat and just like its software very bloated. For any of you brave enough to evaluate Office 2007 you will understand. I don’t advocate that the Justice department should step in and demand that the company be split up for anti trust, no I believe that the largest block of shareholders – current and former employees – should demand that their stock be given its head and allowed to move upwards again. With Bill retiring now is time for his biggest baby to be free.

The way to do that is not by giving away the cash. No rather let’s see the company reinvest that cash in competition and innovation – Just like Bill and Steve say they are.

So here is my proposition:

Microsoft will be split into 5 separate businesses.

Enterprise software
Operating Systems and Tools
Office Software
Consumer Products
Online Services

Each of these would be given its own mandate to go and conquer. These would be truly Baby Bills. Each of these businesses would be able to generate in excess of $1Bn worth of revenue a year. Better yet they could start competing with each other. The benefits would be enormous. Re-galvanizing the markets – forcing the spotlight onto Larry Elison and his empire. Retaining talent. Giving smaller companies a chance to innovate and compete.

Finally Bill – time to step down. SPLIT SPLIT SPLIT and focus on the challenge of changing the face of philanthropy. No one cares really any more if you are a better architect or chairman. But they and millions of people round the world do care that the Bill and Melinda Gates foundation does stand for something truly unique. Change the way the world works. You have started there.

It is time for a change. Let’s see what that next generation of smart folk can do. In just the same way as Microsoft came into being – so it should exit. Fast and with dramatic effect. The new resulting Microsofts I firmly believe will change the way we do business. Peter Drucker once commented that Automation was probably the biggest loss making business in the commercial history of the world. But the change it has wrought on our lives and social fabric can not be calculated. Time for a change. Change is good. SPLIT SPLIT SPLIT…

Timothy J O'Neil-DunneManaging Partner - T2Impact Ltd

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