America's No. 1 financial conglomerate

Chapter 326 Microsoft Business Adjustment

"What about the strategic planning for other business segments?" Bill Gates' gaze slowly swept over each executive at the conference table. "How exactly should Microsoft's overall strategic focus be adjusted?"

This was the core issue of the Microsoft executive meeting: whether Microsoft needed to make fundamental adjustments to its core strategy.

This decision will not only determine the company's development direction for the next few years, but will also directly affect the resource allocation, team structure, and even market competition of each business segment.

In fact, everyone knows the answer to the core question: what path Microsoft will choose for its future development—whether to continue focusing on its operating system, which it has cultivated for many years, as its absolute strategic center and consolidate its existing market advantages.

Following Bill Gates's earlier vision, the company will completely transform into the internet sector, making internet services its new strategic core value.

However, judging from the current market feedback, there seems to be a clear trend that Bill Gates is simply trying to save face.

Microsoft's foray into the internet field, despite investing significant funds, manpower, and time, and exploring various avenues including search engines, portals, and instant messaging, has not yielded ideal results overall.

It cannot be called a failure, but it is certainly not a success. These businesses have neither achieved the expected market share nor formed a stable profit model.

Continuing to focus on operating systems as the core of our strategy and consolidating our leading position in this business has become an undeniable consensus.

Operating systems are Microsoft's core business, contributing stable revenue and profits to the company and serving as the foundation for the development of many other business segments. If there is any loosening in this area, the entire Microsoft business system may face risks.

However, Microsoft cannot cling to this one business. Defending its existing advantages can only bring short-term security. To achieve long-term sustainable development, it must constantly seek new business growth points.

The key issue that this high-level meeting urgently needs to address is how to expand into new business areas and explore new profit growth points while consolidating core businesses.

"Steve, do you have any specific suggestions?" Bill Gates' gaze fell on Steve Ballmer sitting next to him, his tone filled with trust and expectation.

Steve Ball is Bill Gates' most trusted partner in the company and one of the core partners who are crucial to Microsoft's development in Bill Gates' eyes.

As Microsoft's first official business manager, Ballmer made indelible contributions to Microsoft's development thanks to his outstanding business acumen and sales skills.

Under his leadership, Microsoft successfully transformed from a pure software manufacturer into a comprehensive product and service provider, building a complete product ecosystem and sales network.

It is no exaggeration to say that Steve Ballmer's contribution to building Microsoft's vast software empire is in no way inferior to that of Bill Gates himself.

Upon hearing Bill Gates call his name, Ballmer did not immediately answer. Instead, he first slightly adjusted his posture, leaned forward, and placed his hands firmly on the smooth conference table. His gaze quickly swept over the executives in charge of Microsoft's Internet services division, seemingly observing their reactions.

He then slowly began to speak, "My opinion is that Microsoft must continue to insist on making the Windows operating system the absolute core."

""

This is something everyone agrees on; it's practically nonsense.

However, Ballmer's next words provoked a lot of opposition and caused an uproar.

"As for the Internet business segment, my suggestion is to cut it off as much as possible, and only retain a few projects with clear development potential that can create real value for the company in the future."

Ballmer’s tone remained calm, but every word he uttered was like a bombshell, causing an uproar among the attendees.

"What exactly constitutes a project that can create value?" Almost the instant Ballmer finished speaking, an executive in charge of internet business couldn't help but voice his objection, his tone clearly agitated and dissatisfied.

"Currently, Microsoft's entire internet business is operating at a loss. Does this mean we're going to abandon it entirely?"

Ballmer's proposal clearly threatened their interests, directly impacting the core interests of many executives in the Internet business segment.

If the relevant business is cut, the team they are in charge of will face disbandment or reorganization, and their power will vanish instantly. Naturally, they cannot easily allow such a thing to happen.

Ballmer, however, appeared unusually calm, showing no sign of impatience or displeasure at being questioned.

He first tapped the table lightly to signal everyone to quiet down. "I'm not talking about loss-making businesses, but rather about eliminating projects that lack a clear value proposition and are unlikely to generate sustainable revenue in the future."

"Take the browser business as an example. Although our browser does not currently have a larger market share than Google Chrome, as an important gateway in the Internet era, the strategic value of the browser cannot be ignored, and it certainly has broad prospects for future development."

He paused, his gaze sweeping over everyone present, and continued, "More importantly, with Google AdWords..."

The success of the GG system clearly foresees that the future internet GG market will expand significantly, and GG fees will increase substantially accordingly.

"As a traffic portal, the browser is fully capable of bringing considerable revenue to Microsoft in the long term."

"There's also the email business. It's undeniable that with the widespread use of Google Office, our email business has indeed been greatly impacted, with significant user churn and a decline in market share. However, I don't believe that this business has no potential for development."

"So how can we change our current predicament?" Bill Gates keenly grasped the key information in Ballmer's words and immediately asked, his eyes full of anticipation. He was eager to know Ballmer's specific ideas about the email business.

"We will focus specifically on the enterprise email market and abandon blind competition in the personal email field," Ballmer said, offering his answer.

"Everyone knows that it is extremely difficult to make a profit in the personal email business. Although we have invested a lot of resources, we have been unable to achieve profitability for a long time, and instead, we have tied up a lot of funds and manpower."

"In that case, we should adjust our strategy promptly and concentrate our limited funds and resources on the enterprise email business. This will not only significantly enhance our competitiveness in the enterprise email market, but also effectively reduce unnecessary investments and improve resource utilization efficiency."

However, Ballmer's proposal was quickly met with new criticism: "But you can't ignore the traffic-driving effect of personal email services. Although personal email itself doesn't make money, its driving effect on enterprise email services is irreplaceable."

Free personal email has always been a money-losing business, so why did Google, Microsoft, and Yahoo all choose to join in?

The core reason lies in its powerful traffic-driving properties.

Once users become accustomed to using a particular personal email service in their daily lives, they will often prioritize products from the same company when choosing a corporate email service for work. This is crucial for the expansion of corporate email business.

By abandoning the personal email service, we are likely to lose this potential group of corporate customers.

"But did Hotmail really bring effective traffic conversion to Microsoft's enterprise email business?" Ballmer retorted sarcastically.

"Google Mail has amply demonstrated that when choosing an email service, businesses don't give much consideration to employees' personal usage habits. Their primary concern is whether the service aligns with the company's actual interests, such as security and stability."

Whether the collaboration features are complete, etc.

"Google's Shield system is the best example. Because of its outstanding performance in data security and privacy protection, many financial institutions on Wall Street have abandoned our email and switched to Google's enterprise email service. This fully demonstrates that the referral effect of personal email is not as important as we imagine in the decision-making process of enterprise clients."

"In that case, we should decisively abandon the free personal email service and invest all the saved funds into the research and development and marketing of corporate email, focusing our efforts on creating a corporate email product with core competitiveness."

Seeing that everyone was deep in thought, seemingly weighing the pros and cons of abandoning the personal email service, Ballmer did not give them much time to hesitate, but immediately turned the topic to another, more controversial business.

"As for instant messaging services like ICQ, I think we can cut them out completely without investing any more resources."

"What percentage of users in the market still use ICQ? Can it reach 10%? I doubt it can even reach that number."

Ballmer's words carried a hint of sharpness: "Instead of spending a lot of money and manpower to develop various features to copy Google Connect, we might as well just stop this business."

"Internet products are updated and iterated at an extremely rapid pace. By the time we finally finish copying the existing functions of Google Messenger, they may have already developed more advanced features. At that point, ICQ will only be able to follow Google Messenger indefinitely, passively catching up. What's the point of such an investment then?"

This coincides with Bill Gates's thinking, who believes that there is no need to continue developing ICQ.

Google Talk is far superior to ICQ in both technology and functionality.

The key is that instant messaging software has a strong siphon effect. Users tend to choose platforms with more users and denser social relationships because only in this way can they achieve more efficient communication.

This market principle of the strong getting stronger makes it extremely difficult for IcQ to achieve a comeback.

Email and browser services are different. Users make their choices based more on their personal usage habits and product features. Even if a product has a low market share, it can still have a certain user base as long as it meets the specific needs of users.

However, as an instant messaging tool, ICQ will fall into the awkward situation of having no one to chat with if the number of users is too small, and the value of users using this software will no longer exist.

"Then we need to find new strategic goals and new growth engines for the company's long-term development, right?" Bill Gates's words not only acknowledged Ballmer's previous suggestions for adjusting the internet business, but also shifted the focus to the more crucial selection of new strategic goals.

"The gaming business—I believe the gaming business will become one of Microsoft's most important new strategic goals in the future," Ballmer said with almost no hesitation and with an unusually firm tone.

"Whether it's the PC gaming market or the traditional home console gaming market, I firmly believe that the future market size will be very large and has huge development potential."

Ballmer was clearly well-prepared; he had been considering this matter for quite some time. "Sony's new game console has sold nearly three million units in just one month, which fully demonstrates the strong demand in the home game console market."

"Moreover, it's not just Sony; other major game companies are also experiencing rapid growth, and the entire game industry is in a period of vigorous development and growth."

"Besides home gaming, the potential of the PC gaming market should not be underestimated. The development of YueDong Games is the best proof of this. With just a few hit games, it has not only achieved strong revenue capabilities, but also continuously improved its profit margin, proving that the PC gaming market has huge profit potential."

"However, there is one key difference between the gaming market and the internet business: in the gaming market, users no longer have a single choice. When users use instant messaging software, email, or browsers, they often only need to choose one product to meet their needs. But the gaming business is completely different. A gaming enthusiast will never stick to just one game for their entire life. They will constantly try new gaming products based on their interests and gaming experiences."

"This means that there is no absolute monopoly in the game market. Even new entrants have the opportunity to gain user recognition and occupy a certain market share as long as they can launch high-quality game products."

Seeing the hint of interest on Bill Gates's lips, Ballmer knew he had hit a nerve.

Because there is another crucial point: the gaming industry can help Microsoft shed its reputation for plagiarism, which is what Bill Gates values ​​and cares about most.