Hans Hoffmann's Blog

Recently Vanity Fair writer Ken Eichenwald, wrote a fairly scathing article about the Microsoft bureaucracy and the current review system.  It discussed the Microsoft failures through the course of the Steve Ballmer led regime.  It’s a fairly decent article however I think somethings simplify the reasons for the problems Microsoft has had post – Bill Gates.  The article makes some good observations but is fairly short in retrospect and I think misses some key points.  I wrote a little about this last October in my blog post “The Walking Dead” . It’s been nearly three years since my departure from Microsoft, but since I live near Redmond and still have friends there I hear plenty about the mood and spirits of people come review time.  I will agree with Vanity Fair that the system is pretty hurtful to the company.  It was a long time coming so let’s get my take on this controversial system.

Mr Eichenwald was also on CBS Morning with Charlie Rose and company discussing his column.  One thing he got right and definitely had done his homework was where did this all begin?  It really began following the DOJ trial when Steve Balmer took over the reigns as CEO of the company.  AT the time Microsoft was struggling with growth as it had exceeded 20,000 employees and was seeing the first signs of bureaucracy creep into the corporate culture.  Steve had met and gotten to know GE CEO Jack Welch and got enamored with how Jack managed GE, a very large company.  The GE mindset was the bottom ten percent of employee performers would be better served by being let go than hanging on and collecting a paycheck at GE.  Even then though I thought a lot of the GE principles though nice would not seem relevant to a technology company.  The GE model was basically manage a portfolio of separate companies.  Bill Gates vision of integrated innovation went against that model as that requires cross organizational collaboration.  In my honest opinion it is very difficult to take models that were successful in one industry and try to apply them in another.  In technology where things move at an electric pace the result has been to make Microsoft into a very slow-moving company, which has been partly responsible for it being late to market time and time again.

The second thing is though Steve was looking at GE’s model over a decade ago the idea of stack ranking actually is fairly new.  Though it was there when I was let go, the hard lined 1-5 system of ranking employees was not implemented until after I was gone in early 2010. Prior to that there was a system of “exceeded expectations”, “met expectations” and “under performed”. However I never heard of any type of mandate where you must give x percent a high mark and x percent a low mark.  The current system essentially tells every group that there will be winner and losers.  In talking with many people at Microsoft, you almost do not want to work for a high performing group.  For example a group like XBox may seem cool, but since they are on a role, you could do outstanding work and exceed all your metrics, but if you are still less than your co-workers  (or at least perceived to be by your manager), you could get a review score of 5.  This means as HR begins to analyze who needs to be let go on the next round of layoffs (150 were laid off this past week at Microsoft), you already have one foot out the door.  No severance package either, why should you get one?  You area poor performer, your review says so.

This led to my next point which is Microsoft moral.  Given all the recent Windows 8, tablet, smartphone, etc..moral should be sky-high.  However it is not.  Part is unrelated to the review system.  The fact is Microsoft is no longer a young company and with age comes the trial and responsibilities of life.  Marriages, children, divorce, death, financial ups and downs, in short a lot of pressure.  That being said the work environment is no safe haven from those outside responsibilities.  You could probably argue it is only making things worse.  My wife is angry at me,my boss is putting pressure on me to out perform, and my co-worker who I like is also my competitor to keep my job.    No wonder people are not happy.

Finally the question is why? As stated earlier the GE (Jack Welch) mindset was the bottom 10% need to go.  For the companies benefit and for the benefit for the employee. An understandable concept, but I think a bit flawed.   A lot of people who I witnessed get let go were loyal and fanatical supporters of Microsoft products and Microsoft the company.  However that loyalty was not of value to the company.  No longer could you come to work and do the best you can and be happy.  You needed to aspire to go higher otherwise your worth was just not that great.  Plus every manager needs to give a 4 or 5 so after a while if you are in the same role your turn comes up.   I view some of these people as the core of what made Microsoft a great place to work. Their enthusiasm put a smile on people’s face.  Maybe I am a simpleton in my views, but smiles are better than placing fear in people’s hearts.

In the long run I don’t think the kind of culture being created at Microsoft is healthy nor can it succeed.  It will reduce the talent pool to a very specific type of individual who has the political chops to survive.  To those who are driven more by the process of success as an individual rather than as a company (former Sr Exec Bob Muglia mentioned this in his farewell email).  In many ways operating more like a military organization (which in many industries can be a successful model). But the technology world is driven by dedication and inspiration.  To not accept today, but to create tomorrow.  To look not towards the next year but to envision life in the next decade.  In many ways what is done in technology originates in man kinds dreams for the future and as the future evolves those dreams begin to take shape.  Science than leads us to a new frontier.  As George Bernard Shaw once said, “Some people see things as they are and ask why?  I dream of things that never were and ask, why not?”.  Microsoft needs to loosen up a bit and begin to envision the dream of the future, otherwise it will be a relic of the past.  In order to do that  people need to feel valued and liked. Today when I visit campus everyone seems to be looking over their shoulder, in some sort of paranoid state of mind. People are your most valued asset.  Treat them well.  You cannot innovate and lead without them.

Good Night and Good Luck

Hans Henrik Hoffmann July 14, 2012

Good old-fashioned developer conferences used to be lots of fun. It was a week to learn about the next wave of cool stuff and party. With the recent economic downturn and many companies trying to reduce carbon emissions, traveling to fun destinations has almost become a thing of yesteryear.    At the recent Google I/O conference, the premier event for Google developers it seemed it was like turn back the clock to the old days. One of the keys to a great developer conference was (and still is) coming away with a lot of cool gifts.  Not just any gift but “be the first kid on the block  to have gift”.  We all remember those rare moments when we were really cool for a week until everyone else got the cool new toy or sneakers.  Now did Google I/O provide the same cool stuff that the gift bag at the Academy Awards does? Not quite, but underneath the covers I have to admit the loot these developers got was not bad.

Here is a list of what developers who attended Google I/O received.  It is not a bad list of things.  As I mentioned in my Apple article from a couple of weeks ago, a key is providing cool new hardware..  That is exactly what developers who attended Google I/O  received.

The goods Retail price
Nexus 7 tablet $199
Nexus Q $299
Galaxy Nexus phone $349
Chromebox $329
Total $1,176

Is the cost significant?  It was estimated that Google spend $5.5 million on gadgets.  In my view it is simply the cost of doing business.  At a time when every company seems intent on cutting costs, Google invested.  And I think this is a small sum for a company with $50 billion in the bank.  Not to mention the mobile market (smartphones and tablets) is about as intense as it gets in the industry right now.  You need developers for your platform to be successful.  Giving developers toys to thrash is just smart business, though it seems more and more tech companies are becoming reluctant to do it.  This will provide Google valuable feedback regarding both its hardware and software.  Because this is a very technical community some feedback may offer technical solutions.  It will give Google some of that “outside the box” thinking from a group of people nit at Google HQ, but literally people “outside of the box”.  More importantly it makes developers loyal to your platform and at the end of the day, these are the people who will create cool applications that make your platform viable moving into the future.

I know cutting costs is big to most companies these days but I will be the first to say sometimes I think it goes too far and misses key business points.  I am specifically targeting companies using “virtual” conferences in place of in person conferences.  My old company Microsoft has gone down this path with their Professional Developers Conference (PDC).  The actual event is at the Redmond campus, but most can log in and view from their home or work desk.  The spin to shareholders is they are saving the company money.  In my view this has gone far enough.  You can continue to increase margins, but when you are talking about $40 billion or $50 billion in the bank and growing with a small return in dividends, I am lost as to what is the gain.  Not the stock price.  I pick on Microsoft but it seems an industry wide trend.  Conferences are just not as big as they used to be.

Another problem with virtual environments is it may say you have 100,000 people viewing but in reality you actually don’t know.  They may be taking a lunch break.  A co-worker may have stopped by to discuss a customer issue or the vacation they just got back from.  I may not be keeping pace with the new world of Facebook (though I am active on FB) and the creation of virtual friendships.  But in my view there is still something to be said for getting together and meeting face to face.  Being in a crowd and feeling  the energy grow and fill you up inside.  As that enthusiasm wells up inside it causes people to act.  At the end of the day technology developers are about getting developer to act.  To create the next wave of great innovation.  My desk is my desk, the energy does not change a lot day-to-day, nor do the people I hear and see.

It’s human nature to like to be wined and dined.  The old-fashioned developers conference was like that.  It was there to make developers feel special, to feel important.  When I see an event like Google I/O where developers were treated like royalty it makes me think that there is something to be said for the old ways.  Sam Walton the founder of Wal-Mart used to sat about economic downturns “There are those who react to market climates and there are those who do nothing, the latter always gain market share”.  There is frankly no reason for companies with billions in the bank to react and cut like they do when a gigantic piece of the market is open to conquest and lays before them.  It’s simple advice but no one seemed to follow it.  Google seems to be “gambling”..not really.  They, probably not intentionally, are not being shy and investing in the market so they can grab market share.  They are seeing what is before them and realizing the best way to get there is to try to get as many developers on board as possible.  I for one would have loved to be invited (not that I can code a single line of C#, Jave or SmallTalk) and get my hands on a Nexus Tablet.

Good Night and Good Luck

Hans Henrik Hoffmann July 3, 2012

I have been down on my former employer for some time. A large part being that it was growing very tiring to see them operating from behind, time and time and time again. The list seemed long Google in Search, VMWare in virtualization. Apple in mobility (think iPhone and iPad), Amazon in the cloud and the list goes on.  But with the drum beat starting to ring louder and louder to the tune of Windows 8, Microsoft made a few announcements that made a lot of people’s heads turn and generated a fair amount of buzz in the industry.  Of course not without some questions and issues, but that is to be expected.  Starting Monday June 18th, with the Microsoft built Surface tablet in Los Angeles, at what looked like some very swanky digs.  The second occurred at the Windows Mobile Developers conference a few days later in San Francisco, where Windows Phone 8 software was unveiled. Let stake a look at what was announced.

There is no question that Microsoft blew it in the tablet space.  Starting with Steve Ballmer’s comments leading up to the release of Apple’s iPad, “They’ll never sell those things”. Since that time we have been waiting for Microsoft to do something, and it has taken a while, but they finally did this past Monday.  With the release of the Microsoft Surface Tablet, Microsoft is in.  What are the big features and changes? First it is a slick-looking device with color (Microsoft does have a history of being color blind).  It is very thin and slick-looking, with a cool flip stand attached to the device, so no accessory needed.  You will be able to stream video in a very comfortable manner.  Should be great for those with NetFlix accounts.  It also has a keyboard that acts as a cover and can be flipped over and connects with a magnet.  I will be honest on this point, I am not a fan of the keyboard.  It seems to be like Microsoft wants to make the tablet act more like a laptop, since that is a market they understand.  The market may prove me wrong on this one.  At the same time when my thirteen year old saw a picture of it he said, “What’s with the keyboard?”.  All this skepticism being said I will just add, the keyboard is there and there is no need to use it, but of you have to it is available.

A big question is what will the price point be for the Surface Tablet (some people do not like the name, but I actually do like it)?  This is a big one.  Can it be in the range of the Kindle Fire?  That would be cheap $199.  It’s a big “if” to me.  When I look at Kindle Fire I see a device that is a loss leader in order to get you to buy from Amazon.  Would Microsoft want to price something so low that they were not making any money on the Windows 8 OS?  Another area i t he first release appears to be on the ARM processor.  It has to be priced lower and I would argue much lower tan a iPad.  The WindowsRT that runs on arm needs to build early momentum, due to lack of backward compatibility and applications.  It will have to be a loss leader.  Otherwise interest could lesson before it even has had a chance to succeed. In the end I don’t expect a Kindle Fire price, but $299 or $399 would be competitive visa vi the iPad.

Finally a big change is that Microsoft will bypass its OEM channel to manufacture the device itself (actually someone like Flextronic’s will do this).  It’s a big decision, but it was something that I think had to be done.   Dating all the way back to the MP3 players versus iPod’s and actually earlier the Microsoft model was to make great software and have hardware partners create innovative devices.  Partners like Dell and HP have not delivered time and time again.  It’s not that they are bad but in terms of coming up with exciting and new form factors built with the Microsoft platform, they are batting below the Mendoza line (the Mendoza line is a batting average of .200, named after former Mariner Shortstop Mario Mendoza).  I pick on the two big guys Dell and HP, but the list is long and not limited to those two publicly traded companies.  I guess one last ask on this is to SteveB.  When you do an announcement like this could you act a little more excited?  It is kind of weird for me to ask that since you always used to seem so highly caffeinated back in the day, now you are looking, well I guess like the rest of us…old.

Windows Phone 8 provided additional excitement as Microsoft seemingly found parity from a look and feel, plus a technically great product.  No product to me has symbolized Microsoft ineptitude more than Windows Phone.  I sat in the same building with the Windows Phone product group for years listening to their great “wisdom” regarding mobile lifestyles and how pocket Office would help me work while watching my kids play soccer.  Of course then the goal was to kill RIM Blackberry.  With the move to a unified OS Microsoft is aiming to create a seamless user experience between devices.  The competitive landscape is harder, you have great iPhone’s and a lot of cool Android devices, though it seems like Samsung is starting to own the Android space (how the Samsung-Google relationship progresses should be interesting to follow, could be a blog post).

There are challenges for developers as there is no backward compatibility between applications on Windows Phone 7.5 and Windows 8.  This is problematic for developers and hardware manufacturers. Specifically Nokia, who almost seemed out of the loop and on the defensive with this announcement.  Windows Phone 8 will lay the foundation for the future.  And luckily (or unluckily) the current market share for Windows Phone is around 2%, so not many people and developers will be affected. The hope for developers is there will be a development environment will be similar across PC’s, tablet and phones.  Microsoft still has a very large development community it can leverage, though most developers these days develop to the web.

The final key will be release date , which we still do not know.  Part of the Microsoft strategy is to generate excitement in the market place and cause consumers to withhold or delay purchasing other devices until the release of Windows Phone 8.  It’s a very competitive market with companies like Apple and Samsung also releasing products now or in the very near future. The sooner the product is released and can be sold the better.  The loser here could be Nokia as they have spent a lot marketing the Nokia Lumia 900 and now it appears to be dead in the water until they can ship a Windows Phone8 device.

When you read this I think we can agree from the technology standpoint that Microsoft really has done a great job.  Windows 8 is a major release for the company because it really is Microsoft’s first true mobile OS.  The big question will be can Microsoft do the right sales and marketing job to position the Windows tablet for success.  Recent history does not bode well for Microsoft on this  front.  However this is a company that has backed itself into a corner and I would be surprised if it does not come out swing like Jake LaMotta (Raging Bull for you Robert Deniro fans).  In technology there is nothing better than a good fight, especially when it gets into the later rounds.  The bell has rung and the clock is ticking.  Microsoft is behind on points so a knockout round is needed.  It lacks the grace of Sugar Ray Robinson, so onward and lead with the chin and if you remain standing rage forward, because Jake never backed down from no one.

Good Night and Good Luck

Hans Hoffmann June 29, 2012

It is becoming one of the big industry events from the industries biggest company, Apple.  The Apple Worldwide Developers Conference. A lot of rumours about what is coming out and as usual a lot of excitement. This one on the heels of E3. One thing I have noticed all be it rather slowly at my age is what is perceived as cool. Hardware. As much as my former software guru Bill Gates loved to say about software, “it’s where the magic happens”, these days make no mistake about it, people want cool hardware. That is why many reporters are calling this years big game conference, E3, underwhelming.  A lot of new software but no new cool hardware.  With WWDC 2012 it will be all about what new hardware is being released.  At conferences where many are being streamed to people’s office desk, not so at WWDC.  You need to be there.

From what we heard this week there were some announcements about new hardware from Apple.  Starting with the Mac Book Pro.  From what was announced there is not anything earth shattering about the new product.  Sure it has an improved processor.  It is thinner.  It has a new Retina display.  I will add that Mac displays are very nice compared to their PC counterparts. From what I have read it’s a nice to have but it still has an Apple price tag.   It costs a lot (over $2199).  But it is not a game changer, which is what we expect from Apple.  This is more like a traditional PC upgrade.  Takes advantage of the latest internal system upgrades, from Intel and others, however there is no “wow” factor.  I think the biggest game changer that could have been made is dropping the price.  It would be interesting to see how Apple would fair if they chose to move down into Microsoft’s playing field.  Would Microsoft’s dominance be challenged?  I would love to have a Mac Book Pro, but the current price keeps me away as I am a notorious cheap skate. It would be fun to see a Macbook compete on price and a good browser-based device undercut them both, just to see what would happen in the market.

Probably some of the more exciting stuff happening is in Apple’s competition with Google.  Specifically in mapping software.  Based on some of the last comments from Steve Jobs prior to his death, Google is Apple’s number one target.  To date Google has also been a major player in providing search and mapping capabilities to the iPhone and iPad platforms (not to mention Google owns YouTube).  Apple announced its own 3D maps software for the iPhone.  This is going to be a challenge to Apple’s high standards.  Anyone who has an  iPhone (I own a one), has found the usefulness of the Google maps software in the iPhone.  It basically killed the need for a Garmin GPS device in most vehicles on the road.  You will still be able to get Google’s app on the app store, but in the future more and more of the key software will be Apple software.  What will be interesting is what will Apple do about search?  Right now Google is still kind and I know Microsoft has been trying to get Apple to use Bing as its default search, but as a user I have to admit Bing is still not as good as Google’s search.  However should it get close enough I can see this as  a deal that will happen.  Microsoft has a lot of cash and I bet it is willing to spend it if it makes Bing relevant.  It used to be the most valuable real estate in the world was being on the Windows start page, now make no mistake the most valuable real state is on the iPhone and iPad.

The final big release in my view is iOS6, which by itself may not sound like a big deal.  However when you think about the upcoming release of the iPhone 5 possibly gives us a glimpse into what we can expect.  Though not a lot was shared at the conference, one thing is certain based on the rumors is tighter integration with Facebook is on the way.  Not just on the phone but the desktop as well.  For the ultimate consumer driven tech company I think this was just a matter of time.  Facebook is a behemoth and despite its flailing IPO I believe is set to be a major force in technology for the next decade.  This could be one of those features that drive more sales of iPhones, iPads, and Mac Books.

When I look at other things that came out of the conference I am interested in the LiquidMetal planned to be used in the next release of the iPhone.  I am also interested to see what progress is made in Siri.  Voice recognition technology has been around a long time, but usually it has been so bad it has not been worth the effort.  Though Siri has had its share of hiccups, it does seem to be popular in a way that voice recognition has not been before.  Maybe it is getting close to time where it can finally be useful to the masses.  Another are I am interested in is Apple’s cloud services.  In the industry we all know the cloud is here and set to grow exponentially.  If Apple is successful with the iCloud and things like cloud based music services the impact would be to further set Apple apart from its competition.

Was this a huge WWDC for Apple?  No.  It was really more of an event that seemed to promise better things in the future, specifically WWDC 2013.  But Apple is still in the zone where we all pay attention to what they say.  That is not a bad place to be because when you have that position the public waits and it keeps your competition at arm’s length.  Do it too often and people will g elsewhere as the competition never sleeps

Good Night and Good Luck

Hans Henrik Hoffmann June 14, 2012

This was the question Apple CEO Tim Cook was addressing in his comments recently in that needs to be taken CNet.  It is a fair question and given he is targeting his comments at Microsoft and their pending release of Windows 8, one which should be taken seriously and one that also needs to be taken with a grain of salt.   The next year will determine a lot about the forthcoming landscape of the tech industry.  Apple seemingly is on a current path of they can do no wrong.  Users are like lemmings running to sea every time Apple releases a new product.  Yet all great runs come to an end sometime.  Microsoft is still the 800lb gorilla in the room and can simply release a new OS every couple of years and make over $10 billion in revenue at the drop of the hat.  Recent times have seen Microsoft always late to market, seemingly staring into the sun with extremely squinted eyes trying to make out what will be the future.  sandwiched in between is Google with an army of Android based devices.  These devices are not there to make Google money on software but to be in the indirect path to more ad-based revenues.  Different companies with different ideas about the future of technology and each with billions in cash sitting in the bank.

Tin Cook’s comments strike at the heart of the debate which is can you merge the OS to meet the needs of both the tablet user and the PC user.  Fundamentally my observation is how they are used and the form factors are fundamentally different.  To me the Tablet is not really about business productivity as it is about collecting information.  The PC is great for people like me who write a blog and need a fully functional keyboard.  A Tablet is useful to view my blog but not so great for writing and editing my blog.  If I want to create a brochure I would want a PC, but a tablet is better suited to consume the brochure.  I know when I watch movies with my wife she is on the tablet getting a complete history of the movie and its actors via the tablet (and then to my annoyance telling me the ending).  If  I want to track stocks there are a lot of great apps for the Tablet to help me do this.   However if I want to do some financial calculations and create pivot tables, give me Microsoft Excel. Do I want the basic user experience to be the same between a PC and a Tablet?  In the world of the Mac they are not.  Microsoft is betting that consumers will be better served by a similar user experience between the PC and the Tablet.   Not to mention the Windows Phone..

A second notion is the idea of one OS to unify all the different form factors (PC, tablet, phone etc..).  This is one of those technical holy grail’s.   I can make one set of core code and it can support all the different devices I want to support.  I don’t know if this fosters innovation or stifles it.  The different devices all have their own set of unique experiences and unique requirements.  If you have a core set of code (or kernel) that you give developers no access to, it limits what they can do as all that is available is what you the owner make available.  It’s an argument that has been going on for as long as I remember.  Apple is the most restrictive in this sense, but at the same time they own the hardware piece of things.  So any modifications, features etc..they need to add they can do as they own the hardware specifications and can access the Mac OS kernel to make modifications.    Microsoft is a bit hindered here as they rely on partners to create the cool hardware experience.  Yes they provide strict guidance, but in the end they do not own the final product.  They hope partners will compete and come up with an Apple killer.  Android is the most flexible as they provide the source code to device manufactures who can tweak as they wish down into et kernel level.  It creates a whole set of other issues for application developers, but that is another story (maybe another blog post?).

If there is a silver lining here it is that if you make a smartphone to be competitive in the long run you must have a tablet.  Apple has a  smartphone and a tablet.  Google does as well (or should I say Samsung?).  Microsoft just differs a bit as it is really trying to extend its crown jewel the PC into the phone and tablet space.  It would be one thing if Microsoft was trying to be creative in doing this, but in reality it’s a defensive measure.  With all the talk of a post PC world, Microsoft would rather view it as a PC world with a lot of cool Microsoft devices surrounding the PC.  Having been part of the PC revolution I get it.  It’s not easy to let tens of billions of dollars just slip away.  There will be challenges in going with the old approach.  Taking the metro interface (introduced with Windows Phone 7) and putting on the desktop was bold and so far most people I talk with have disabled the metro UI.  It’s designed as a touch screen and a PC so far has had little need for touch screen capabilities.  Given the start button has been around since 1995 it was time for a change, but is Metro the interface for all people in the future,only the consumer can tell us.

There are many other challenges in the “one size fits all” OS.  On the tablet side there will be the ARM based tablets.  One of the beautiful things about the iPad is the instant on capabilities.  Not doable with Intel based chip sets.  Therefore ARM will be important, but will there be any applications?  And Microsoft marketing, for the love of god please do not lead with Microsoft Office as your killer ARM or for that matter tablet application.  You are trying to woo the younger generation so do not, and I repeat, do not, lead with an application associated with school homework.  Google is pushing their Chrome browser only devices . It makes sense as most of us use technology to access the internet, not play around with a file system.  Initial reviews said the first releases had lots of problems however most acknowledged that this was the future of computing.  Windows Phone is still irrelevant despite the launch of Windows 7 and Nokia is spiraling towards bankruptcy.  Windows 8 needs to succeed on three fronts, and maybe most importantly in cementing a relationship between the PC and the tablet .  Not just for Microsoft but the slew of hardware vendors who stuck with Microsoft and now look like they are missing the boat, aka Dell.  The industry is always moving and always keeps us guessing and betting.  That’s what keeps us going.  And by the way a PC is not a tablet.

Good Night and Good Luck

Han sHenrik Hoffmann May 7, 2012