Maybe Microsoft is Still Too Successful for Its Own Good

Has anyone ever considered that the problem with Microsoft is that the company is still too successful?  Before you call me crazy, look at the company’s recent Q1 FY2014 earnings report.  The top line numbers all look very good and at the time the report was released, the stock popped 6 percent.  According to the earnings report, revenue beat estimates: $18.53 billion versus expectations of $17.79 billion, as did earnings per share (EPS), which came in at $0.62 versus expectations of $0.54.

Even the bad numbers in the report weren’t as bad as expected.  Windows OEM revenue fell 7 percent, which was better than Microsoft expected, as it thought OEM revenue would fall 15 percent.  Heck, even the Surface revenue improved.  Surface revenue came in at $400 million, which was up 2X on a quarter over quarter basis.   Yet this is a company in need of serious changes.  Sure, on the outside it looks great, but deep down it’s screaming for help.

Maybe Microsoft hasn’t fallen far enough to feel the need to truly try and turn itself around.  It has continued to chug along, releasing new versions of Windows, getting involved in smartphones and tablets, etc all with very limited success, yet it continues to produce massive revenue and profit.  It’s in a false reality, one that cannot be sustained but is really nice while it lasts.  Unfortunately, in order for most people and companies to realize something needs to change in their life the shit needs to hit the fan (excuse my language).

Now, I need to applaud Microsoft for something — it’s currently searching for a new CEO. The Microsoft Board is clearly trying to avoid turning into BlackBerry.  Speaking of BlackBerry, they are probably the most recent poster boy for what I’m describing here. Maybe a new CEO with a fresh perspective will be helpful, maybe it won’t.  It’s not easy to do what Steve Jobs did at Apple and turn an almost bankrupt company into one of the world’s most valuable companies.

So what’s the company to do?

Well, that’s a loaded question, but the first thing I’d say is: stop being comfortable and stop thinking you’re the best.  Everyone (from the new CEO to every single employee) should feel uncomfortable about where the company is and how it’s doing.  Everyone should embrace that feeling and use it to their advantage.  A little anxiousness can be a good thing.