TECH SLIDESHOWS

» More

15 Influential Innovations
We decided to take a look at great innovations of the recent past. So, which 15 innovations have changed the way we live?
Top Ten States For Technology
States like to promote themselves as fertile ground for innovation — so we put those claims to the test.
World's Most Liked Brands
What are the most “liked” brands on Facebook, and what are they doing to maintain such a massive following?

YOUR DIGITAL LIFE WITH DAVID POGUE

» More

TOP HEADLINES

» Markets | Economy | Companies

- Consumer Confidence Has Biggest Drop in Eight Months

MOST POPULAR

News

Blog Posts

Videos

SPECIAL REPORTS

» More

- The Facebook IPO
  Get up-to-the-second breaking news on the Facebook IPO, including in-depth coverage, expert analysis, and Facebook’s stock price.

HOT ON FACEBOOK

Greenberg: Why Microsoft Should Be Broken Up

Published: Thursday, 27 Jan 2011 | 2:33 PM ET

Text Size

By: Herb Greenberg
CNBC Senior Stocks Commentator

Should Microsoft break itself up?

Jim Schrager's opinon: Yes.

Schrager is a clinical professor of Entrepreneurship and Strategy at the University of Chicago and a consultant to many companies.

Microsoft Office 2010
Source: Microsoft.com
He believes Microsoft [MSFT Loading... () ] is simply too unfocused. That’s one reason, he says, many companies get in trouble—and the reason so many conglomerates are unwinding themselves.

One of his favorite rules of strategy: “Focus equals power.”

I first met Jim in the early 1990s when he was my source on a column about why Wal-Mart [WMT Loading... () ] was about to lose its way, when it began veering from its rural strategy and expanding into urban areas. (He nailed it and Wal-Mart’s stock was dead for years.)

We caught up today for the first time in years. Among his thoughts:

After researching Microsoft, he says he believes “focus” is what management is missing. “If you’re unfocused and you’re trying to compete with a focused player, over time the focused player wins,” he says.
Away from its core products, he believes Microsoft does too many things and fails at most.

“This is Microsoft’s GM [GM Loading... () ] moment; they need to get rid of all of the crap and do all things great. A follower doesn’t win. The big money is already made by others. And Microsoft can prove it by staking out its territory and owning it.”

While Windows 7 is great, he says, it took three tries to get it right (after XP and Vista), in part because of the lack of focus.

“They’re like Sears [SHLD Loading... () ]—“the world is passing it by. This happens all of the time when management falls asleep at the wheel.”

Schrager believes Microsoft would wow the market if it sold off everything but Office and Windows, its goldmines.

Herb Greenberg
Senior Stocks
Commentator

Still don’t get what he’s trying to say? Think about McDonald’s [MCD Loading... () ]decision to spin off Chipotle [CMG Loading... () ]. Even though it was a great concept, it was a distraction and drag on the core business.

Chipotle went on to be do exceedingly well. So did McDonald’s, which had appeared to be losing its way.

And so can Microsoft, Schrager says, assuming management doesn’t get lulled into complacency by its hoard of $44 billion in cash.

My take: A bundle of cash like that is hard to beat, especially if some of it is returned to shareholders. But in the end, over the long haul, it’s not the just cash. It’s the strategy. And when you step back and think about it, it’s not clear Microsoft has one.