1. Released Beta software dressed up as a modern operating system.

2. Shamelessly copied Apple’s OSX and the version they copied is about four years old.

With all of Microsoft’s monetary reserves I would have expected better. In fact Microsoft is reminding me more and more of IBM in the early 1990s defending their OS/2 operating system.

Sad but true!

However, anyone familiar with MSFT (e.g., anyone who looks at their 10-Ks) knows that MSFT has spent tens of billions of dollars over the last decade trying to gain dominance in countless markets (e.g, web portals, search, music, TV/video, mobile phones, gaming, voice recognition, tablets, networking, business services, automotive computing, etc. etc. etc.), and to a first order approximation they have nothing to show for it (beyond billions of dollars of losses). So clearly they are not going to be able to carve out the “next Windows or Office” simply by building a product that is so superior to anything else on the market. Nor is this going to change just because they plunk down a campus in SF or buy a bunch of start-up companies. All that’s going to do is result in even more shareholder cash being frittered away.

Any CEO of MSFT therefore faces two alternatives. One is to say screw DOJ and start leveraging the Windows monopoly for all its worth. E.g., if you want MSN Search (oh sorry, “Live Search”) to get anywhere, then make it really difficult to set Google as the default search engine or home page in IE and make sure that Firefox cannot run very well on Windows. Of course, the risk here is that the government will really come after you once Bush is gone in 2008, plus you might annoy Windows users enough that some switch to Mac or Linux. But you gotta take risks if you want to win!

The other alternative is to recognize that Windows/Office are where all the money is at, they are in the prime of their lives, and just milk them for all that they’re worth. Cut all the spending on money-losing products, raise the price of an OEM Windows license by $100, tighten up WGA a couple more notches, and run the company like a real business. I guarantee profits will double in less than a year (you’ll lose a few customers to higher prices and annoying anti-piracy measures, but that will be more than balanced out by the fact that you’ve doubled or tripled the revenue from each Windows license). Yes, you’ll never grow beyond Windows/Office, and you might even lose those monopolies over the very long term, but honestly that is going to happen sooner or later anyway. You might as well make all the money you can while you still have the opportunity.

The problem with Ballmer is that he is unwilling to do either of these…all he does is take wimpy half-steps that don’t amount to anything. He raised the price of Windows a little, he’s trying to leverage their OS dominance a little (but he’s clearly afraid of DOJ, or maybe just the EU now), and he’s throwing billions of dollars into other markets in a desperate hope that something will stick and he’ll find the next Windows/Office. But of course he won’t, and in the meantime he’s just a big drag on shareholder value.

The glory days are over and they’re not coming back no matter who is at the helm. But that doesn’t mean that there aren’t a whole lot of more qualified people out there who could run the company significantly better.

Microsoft needs to go back to the basics and develop a great OS that “just works” and does not get in the users’ way. Doing that, they would not have to worry about keeping their marketshare – people will flock to a great (not just OK) OS.

I also think that Microsoft’s other problem is management. They are running Microsoft like a government entity that is slow and uncaring about the customers.

Whats broken is the corporate politics — nothing gets done, they have become a monolith of bureacracy. Until that changes, tits all shite