Breakingviews-Rebooting Microsoft keeps getting harder

Fri Oct 4, 2013 10:52pm IST

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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)

By Jeffrey Goldfarb

NEW YORK, Oct 4 (Reuters Breakingviews) - It is getting near impossible to reboot Microsoft (MSFT.O). Both Chairman Bill Gates and retiring Chief Executive Steve Ballmer indicated on Thursday they will seek re-election to the board of directors. Whoever becomes the new boss already will be saddled with the Nokia (NOK1V.HE) acquisition. Now, there's a pretty good chance of having to answer to not one, but two, former chiefs of the $280 billion software company. The job is looking less appealing by the day.

Though still immensely profitable, Microsoft could nevertheless do with some refreshing. The sprawl has proven costly, with online services losing some $12 billion over the past three years. Microsoft is an also-ran in mobile and the market for consumer gadgets, including music players and tablets. Some of its largest acquisitions have failed to create value. Devoting more resources and attention to business software would be a better direction in which to head.

Forging a new strategy, though, will be difficult under the circumstances. Even after Ballmer announced his plans to depart, he plowed ahead with a $7.2 billion deal to buy Nokia, essentially ensuring that Microsoft stays mired in the hardware business that has proven to be its weakness.

With Gates and Ballmer peering over the shoulder of the new CEO, it also will be hard for that individual to implement other fresh approaches. For example, Microsoft has clung to the idea of a one-size-fits-all interface, and the result is an apparent growing dissatisfaction among its desktop and mobile customers. The philosophy of the incumbents, though, is bound to rule the day.

With the only two men ever to run the 38-year-old company still around, Microsoft will continue to operate as something of a family business. Gates and Ballmer also combine to own 8.5 percent of the company's shares, giving them a good head start on securing their board seats. That probably reduces the chance that any of its successful alums will come back for the top spot, other than possibly Nokia boss Stephen Elop, who is already returning to the fold.

Gates last month expressed regret that the Control-Alt-Delete function that can reset Microsoft's operating system wasn't made easier. Too bad he has not taken the opportunity to correct the error at the corporate level.

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CONTEXT NEWS

- Microsoft Chairman Bill Gates and retiring Chief Executive Steve Ballmer are standing for re-election to the software maker's board of directors, according to a company submission to securities regulators on Oct. 3. Gates owns a 4.5 percent stake in the company and Ballmer 4 percent.

- Microsoft filing: link.reuters.com/cug63v

- Reuters: Gates, Ballmer seek re-election to Microsoft board [ID:nL1N0HT2CX]

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- For previous columns by the author, Reuters customers can click on [GOLDFARB/]

(Editing by Antony Currie and Martin Langfield)

((jeffrey.goldfarb@thomsonreuters.com)(Reuters messaging jeffrey.goldfarb.thomsonreuters.com@reuters.net)) Keywords: BREAKINGVIEWS MICROSOFT/

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