Microsoft's Ballmer kills call for break-up

Would lose 'defensive' protection of Windows and Office, says analyst

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Helm agreed with Ballmer, but saw a different reason for Microsoft to remain one rather than many.

"The obvious downside [to breaking up the company] is that some of Microsoft's businesses have a strong defensive aspect," said Helm. "Bing, for example, may lose billions, but it protects Microsoft against platform competitors like Google."

In Helm's thinking, business units such as search and Xbox have forced rivals -- Google and Sony, respectively -- to expend resources maintaining their market position. Spin off those units -- search and the cloud in particular -- and Windows would be more vulnerable to market erosion.

"It's the Netscape strategy," Helm said, referring to Microsoft's move against the once-leading browser in the 1990s.

Nor does it make sense to split Microsoft into two large companies, one dedicated to consumer software and devices, the other solely to provide software and services to enterprises. "I have to agree with Ballmer there," said Helm. "Microsoft is in both enterprise and consumer software, and software is so sensitive to scale."

And it doesn't make sense to separate Windows from the Office franchise, added Krans. "There's a cohesion between those two," he said. "I think that's valid, and it certainly resonates with customers."

That's not to say Microsoft shouldn't listen to, and learn from, the calls for a break-up.

"It may be that, with the arrival of non-Windows mobile devices, the applications business will have to act more as an independent business, even if it's legally part of Microsoft," said Helm.

In 1999, a federal judge ruled in a long-running antitrust case, saying that Microsoft should be split into two companies, one to produce Windows, the other to develop all other software.

Microsoft later avoided that judgment by agreeing to a settlement with the Department of Justice and several states' antitrust regulators.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer or subscribe to Gregg's RSS feed . His e-mail address is gkeizer@computerworld.com.

Copyright © 2010 IDG Communications, Inc.

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