History lesson: Apple vs. Microsoft reorganizations

Summary:Back in 1997, Apple started a series of drastic reorganizations that pared down the organization and its product strategy. There's some comparison with Steve Ballmer's latest brainchild, the "One Microsoft" plan, but a "realignment" may not cut it when a real reorganization is needed.

Microsoft's latest company-wide reorganization was revealed Thursday with a memo released to the employees. The plan is called "One Microsoft."

In a posting on the Monday Note blog, Jean-Louis Gassée discussed Microsoft's moves from a divisional to a functional organization and the creation of functional groups that will hopefully work together to execute on a new "devices and services" strategy.

He compares Microsoft's reorganization with Apple's massive Black Friday layoffs that started in mid-March 1997 and runs down the differences between Apple back then and Microsoft today. And then there's the run of successes from Apple over the past decade. But Apple's problems back then were nothing compared with Microsoft today.



Of course, execution is and has been a critical problem at every level of Microsoft, from Ballmer down to the lowest-level manager. Even Ballmer had to address it in his memo — somewhat.


The vision appears to be clear to Ballmer at least. Still, it took him some 2,700 words to communicate it, which must stand as another example of Microsoft's problems. He and his minions have been hard pressed to execute on any strategy in the past decade or so. Dare I remind readers of Longhorn and the first, problematic release of Vista? With a track record as spotty as theirs, can this new excellence push really be trusted?

At Monday Note, Gassée also wondered what will happen if Microsoft can't get back the market back on the traditional, cyclical upgrades.


He warned that the traditional Microsoft business model is weakened by Apple and Android tablets. It's caught in a cascading failure of its revenues, particularly, in the higher-margin server products in the enterprise. "The once powerful tie-in between Windows and Office now turns against Redmond," he wrote.

I take issue with Gassée and other's shorthand Apple history. For them, there's the return of Steve Jobs to the company in 19997 and then iPod/iTunes, Apple Stores, iPhone, App Store, iPad, etc. There are historical gaps here and there, many spanning years.

Gassée boils down the differences between then and now, Apple and Microsoft, into three bullet points:

1) That "Apple was on the ropes" and this cleared executive minds for serious cuts and strategy revisions.

2) That Apple's business was "simple," comprised of Macintosh computers.

3) Steve Jobs returned and brought order and reason to the company.

I agree that Apple was on the ropes, with its developers and installed base. However, Apple's business was not so simple, it sold all sorts of branded hardware and software packages, from cameras to printers, hard drives and servers, peripherals of all sorts.

Check Out: Recalling a summer when Steve Jobs saved Apple and the Mac

My MacWEEK colleague, the late Don Crabb, wrote a special opinion piece on Black Friday, March 14, 1997. He said it was the dreaded corporate reorganization "that must define a corporation that can sell computers, service customers and make money." He said indeed, Apple had executed a reorg worthy of the name.

All the rest of the hardware it can either (a) outsource to an OEM (like printers, scanners and digital cameras), (b) dump entirely because it should never had gotten into the silly business in the first place (like Apple-manufactured hard drives, network hubs and routers, external CD-ROM drives, and piles more hardware flotsam that lose money), or (c) measure its strategic value and leave it alone (like Newton and eMate - where it continues the effort but considers spinning off the division as development continues).

This came to pass as Crabb predicted.

On that day, I wrote a story detailing some of the major projects that were cut and spared. Many units, such as Apple Imaging, weren't cut completely on the day, but were jettisoned over the course of a year or two. Longtime Mac fans will remember the OpenDoc and Cyberdog component-software architecture; HyperCard; Copland and QuickTime Conferencing. What nostalgia.

Apple didn't turn on a dime. It all took years. Apple refined its hardware operations and carried on development of Mac OS software while refining the NeXT OpenStep-based Rhapsody into an operating system that would be acceptable for actual work and to the installed base of Classic Mac users. And all that effort set the table for the consumer devices that now dominate the market.

Topics: Apple, iOS, Microsoft, Operating Systems, Windows



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