Outgoing board member Reed Hastings on the hurdles facing Microsoft’s Steve Ballmer

Reed Hastings

Netflix CEO Reed Hastings is stepping down from the Microsoft board later this month at the company’s annual meeting. And while the departure will unlikely be marked by any sort of fanfare, Hastings is providing a bit of analysis about Microsoft as it enters one of the most critical chapters in its history.

A board member for the past five years, Hastings has a unique view into the “great assets and many great challenges” at the company.

In remarks to a group of Dow Jones reporters, Hastings laid out his view on the company, noting that Windows 8 is absolutely critical to maintaining Microsoft’s profit stream, reports All Things D.

CEO Steve Ballmer is “unbelievably self-aware” of that challenge, with Hastings adding that “he’s the last guy to be in a little bit of denial.” He noted fierce competitors like Apple and Google, but suggested that Microsoft is not sitting around for them to continue to grab market share.

Hastings notes:

What’s great is they see the threat. They didn’t wait, like RIM, and sort of say “Oh, touch isn’t very good,” and that sort of stuff. Just like they did in the late 90s about the Internet tidal wave. They’re really good at seeing the threat, and saying, “goddamit, we’ve to nail this”, and putting all hands on deck and doing that.

At the end of the day, however, Hastings said Microsoft’s future is tied to Windows 8. “It kind of doesn’t matter how successful Surface is,” said Hastings. “But it does matter a lot if Windows 8 is successful.”

Peter Kafka at All Things D has the full transcript of the remarks.

Previously on GeekWireIs Windows 8 off to a weaker start than Windows 7?

 

  • SRSLY?

    This proves beyond any doubt that the problems with Microsoft aren’t just Ballmer. It’s Ballmer + Gates + The Board = screaming disaster.

    “They’re really good at seeing the threat, and saying, “goddamit, we’ve to nail this”, and putting all hands on deck and doing that.”

    What planet is this guy living on? It would be more accurate to say:

    They’re really good at seeing the threat, and after about three years of it eating their lunch saying, “goddamit, we’ve to nail this”, and putting all hands on deck and trying to do that but completely cocking it up because they still don’t get the threat.

    Of course, this is from Mr. Quickster, an idea that was so not baked that they picked a name already used by someone on Twitter who was getting baked.

    And to say “[Ballmer's] the last guy to be in a little bit of denial” is a laugh. Who’s the greater fool: the fool who’s in denial or the fool who denies that the fool’s in denial?

    If I ever had any thoughts that Microsoft might be able to turn it around this pretty much kills them. And also convinces me that NetFlix is doomed too.

    Interestingly, they’ll both get killed by the one person who does see things for what they are: Bezos.

  • guest

    I find his assessment rather damning as opposed to confidence boosting. A decade of investments and it’s still all about Office and Windows? Hastings and the rest of the board are all culpable in this. They’ve all been in place half a decade or more as MS has made one mistake after another and its completive moat has been systematically weakened. The fact that it now comes down to one last hope at success with Win8, only shows what a tremendously poor job Ballmer and the board has done.

    This ship is going down. Hastings knows it. OEMs know it. The market knows its. Enterprise customers are starting to make plans for it. And even Ballmer and Gates are starting to figure it out.

  • Guest

    This would all be more convincing if it were 2009.

  • Bob

    His argument about the stock makes little sense. If the main concern had been the ability to make future profits, then a decade of doing so should have been sufficient to address that concern get the stock moving. Obviously something larger is at work. MS has shown that it is unwilling and/or incapable of reinventing itself. It has operated as if Windows and Office would produce milk forever. And instead of keeping even those products leading edge, it has poured the profits from those in spectacular and costly failures. It has experienced a large decline in relevance as a result, and now its future growth and future itself is in question. Nobody wants to invest in a company whose best days are behind it. And Ballmer and MS’s board have given investors no reason to see anything other than that.

  • http://twitter.com/keithccurtis Keith Curtis

    Microsoft’s problem is that it is tough to compete with the free software army which is 1000x bigger. The Linux kernel alone has 3,000 programmers. Linux definitely has problems, like Wikipedia does. But would you bet your business on Wikipedia or Encarta?

    This plays itself out in many businesses because for example, it was (relatively) easy for Google to get into the phone business because there was already so much existing free code to depend on: http://en.wikipedia.org/wiki/File:Android-System-Architecture.svg Android is as much a packaging effort as engineering.

    • guest

      “Android is as much a packaging effort as engineering.”
      Sure, Linux shill. Now run along and let the adults have a real discussion.

      • http://twitter.com/keithccurtis Keith Curtis

        I wrote code that ships in Windows. I knew programmers working on phones at Microsoft in 1995. And unlike you, I present facts and evidence. Google has programmers writing new code for Android, but much of their work is on codebases that already existed. The picture above explains. If you want to be pedantic, you could that much of their work is a packaging and integration task. However, integration is implied in packaging.

        Here is an example: How much work did Microsoft expend to make the Windows kernel have long battery life on a cellphone? Windows Phone 8 was the first version based on the NT kernel. The Linux stack had been working on that problem for many years for two reasons: because it was necessary for the many embedded devices where it is used, and because in the massive datacenters and supercomputers, the energy costs add up to a big amount of money. Google is leveraging free software so much for their success. They’d be nothing without it.

        BTW, I’m not a shill, I wrote code at Microsoft for 11 years and studied Linux for years and wrote a free book about it you can read to get more information. Post as a real person instead of an anonymous guest and we can make comparisons of our experiences and credibility.

  • guest

    His assessment seems more realistic than the incredibly optimistic one Ballmer expressed in his recent letter to shareholders. Not really sure why Ballmer did that. Usually CEOs try to be cautious about these things. And it’s going to backfire badly if a year from now the company is in real trouble. Of course if this leads to a big MS revival he’ll look like a genius. But his record of being right is pretty suspect at this point. This also seems to indicate that MS isn’t buying Netflix after all, as some has speculated.

  • Guest

    I hope Hastings is just stepping down from the board and not simultaneously announced as the next CEO of Microsoft. (shudder)

  • guest

    Was Hastings trying to help or hurt MS? He seems to have succeeded in only the latter.

  • panacheart

    Microsoft is really good at seeing those threats to its market. The company has competitive roles in every division. It’s always looking at threats. The problem is that the threats are everywhere, and rather than focusing on new innovation and looking forward, it’s always looking around at the “threats”, which are increasing in every domain. The problem is that its competitors aren’t looking at MS and saying “how can we do better”, it’s the other way around. Microsoft isn’t leading anymore, if it ever was. It’s banking on its monopoly of the desktop, and hanging on to enterprise office customers as long as it can (the rest of us have realized we don’t need office).

    Microsoft will always have a market as long as there are desktop computers. Nobody will take that away from them, not even a successful Apple. But MS is not even very good at its main game as an OS manufacturer. Windows is insecure and can’t be ported to other devices. CE may be replaced by the NT kernel. Most phones, tablets and other devices don’t use a Microsoft OS. Google runs and entirely on Linux. So as the world of electronics diversified, most companies created new gadgets without Windows. So if the desktop goes away, Microsoft may go away with it.

    The reality is that Microsoft was never an innovative tech giant. It survived through clever manipulative maneuvering which gave it a temporary monopoly. But it did so by alienating all of its tech partners and customers. Enterprise customers hate Microsoft. Phone manufacturers hate Microsoft. Microsoft hates all its phone hardware manufacturers too, and treats them with disdain. Microsoft had all of its partners by the balls with a monopoly and it played hardball with them, which was fine as long as it had everyone by the balls. The problem is that once you’ve escaped that stranglehold as a company, you’re left with an uncontrollable desire to get revenge. Microsoft has no friends, only reluctant partners.

    • sickofdisgruntledexemployees

      Okay, we get it. You didn’t succeed there and had to leave or get fired. Time to let it go.

      • panacheart

        No, you don’t get it. I’m not disgruntled, and I didn’t have to leave, and I wasn’t getting fired. I was in fact getting promoted. I’ve even been invited back since then.

        You clearly don’t get it. It’s just a really crappy working environment. The whole stack ranking and dog eat dog atmosphere is just crappy and I chose a happier place to be.

        You see, your attitude represents entirely the Microsoft psyche – total denial, and blame those who leave for not being good enough. But you go on like that if you like; it’s your life.