Dear Yahoos: Does Qi Lu Have What It Takes To Fix MSN?
Here's what we do know: Fixing Microsoft's Internet business is going to require one hell of a talent. Not because there aren't worthwhile assets there, and not because Microsoft lacks resources or conviction. Just because Microsoft has had 13 years to get its Internet act together, and it has failed to do it, and we just don't see what is likely to change now. We also know that this is not even remotely about "technology.
Specifically, Dr. Lu is going to have to deal with the following:
- Mission. Microsoft has about a dozen different Internet businesses: search, display, ad network, portal, email, online apps, messaging, etc. It needs to have one. This is going to require a major structural re-org--all accomplished without offending the REAL power bases at Microsoft, the Windows and Office guys (see below.) It's also going to require a brutal evaluation of where Microsoft can compete and where it can't and why.
- Branding. "Microsoft's Internet business" just isn't going to cut it. Neither is the grab-bag of brands Microsoft has collected over the years, the existence of each of which appears to be an attempt to come up with something cool without offending one or another of the many other constituencies and brands within the Microsoft empire. Microsoft's Internet business needs ONE BRAND. Now.
- Politics. At Microsoft, the Internet business will always play third banana to Windows and Office (and Steve Ballmer would be an idiot to run the company any other way). We assume that means that every time Dr. Lu does something that might annoy or threaten the Windows or Office guys, he's going to have to get permission first. That is REALLY annoying. And it's going to take a special kind of individual who can build a real business out of all these parts without being driven mad in the process.
- Profits. After 13 years of online striving, Microsoft's Internet business is still burning billions of dollars a year. Even clobbered AOL is making money. If Microsoft's Internet business is ever to be a real business, Microsoft has to fix this. That's going to be no easy task.
So is the good Doctor a Superman? We hope so. If not, he's just going to be the latest in a long line of Microsoft Internet honchos who have moved pieces around the board without ever really accomplishing anything.
Yahoo colleagues, we need to hear from you. Does he have what it takes? Please enlighten us!
See Also: Meet Microsoft's New Digital Head: Qi Lu
As a well respected Engineering outsider, I would suggest that Lu is going to have the respect of the traditional powerbases and his knowledge of high availability/scaling web services will be useful in the Cloud Wars.
Panama was in dire straits when this guy was brought in. He was single handedly responsibly for delivering Panama. He is the man!!
One of the few execs at yahoo, who commanded respect from everyone.
"Steve Ballmer would be an idiot". Have you no sense of history ;-)
Microsoft only got where they did because of W H Gates Senior whose prescience was to steal stuff that was (ostensibly) free and sell it for lots of money backed up by his law firm Preston, Gates & Ellis (name now changed to dump baggage). "After 13 years of online striving, Microsoft's Internet business is still burning billions of dollars a year." How can any legitimate company do that, lose so much money - (don't forget the others like Zune, XBox, WebTV.....). Free money isn't available anywhere, you can earn it or steal it.
Microsoft is in a monotonic decline and can't see past the inertia. Their position today represents the events of maybe five years ago, that's really difficult to come to terms with, understand or even visualize. If Microsoft gets a turn around in place tomorrow it won't be clear for half a decade, far past The Street's attention span.
The inevitable collapse of MS was clear eight years ago. There is no turning back now, they have pissed too many people off. The best thing MS could do is close down, give the money back to the shareholders and open source everything.
Seriously. Not that it will happen. It is however the best for customers, developers and mankind in general barring a handful of shareholders and executives. It is clear they won't give up because they are issuing bonds, 20+ billion dollars in the bank is not enough.
Cloud computing: one company is miles ahead but they haven't let on at all yet, just put a few small pieces in to place.
is Lu can go free, just about anyone in yhoo can. so, this is really bad for yhoo.... not even if they still want to keep some value to sell to msft!
For the guy who said Qi Lu worked 15 hours ( I presume he means per-day )...How many days per week does Qi Lu work? I'm mainly curious as I'm a 7 days x 12-15 hours per day guy myself...perhaps too competitively so. :P
Thanks.
Good luck though!
If he were hired as CTO of MSFT Internet, then I'd rate it an A+ hire.
But... GM of a business is a different banana.
B/B- with strong upside.
Steve, ya done good here!
I do have a couple observations to make though that might be interesting to Microsoft watchers.
First, there are at least three large online groups that are not (at least according to this announcement), going to report to Qi Lu: Windows Live, Office Live and Ozzie's Live Mesh group.
Qi Lu is basically getting Search, MSN and the shared Advertising technology used by all of the online businesses.
Windows Live is paired with Windows, and reports to VP Steven Sinofsky. Office Live is (much more loosely) paired with Office and reports to Stephen Elop. Ray Ozzie's stuff is completely outside the core groups. Oh, and XBox Live and Zune Social are both part of their core groups and report to Robbie Bach.
Ideally, this should be fine -- Qi Lu's group contains the primary online services and should provide shared technology for the others. But it does mean that he does not have direct ownership of everything Microsoft does on the web, so there may still be things he cannot untangle.
The second observation is that with tihis announcement, Microsoft has quietly gone from having three large businesses each led by Presidents (with full P&L control, their own CFOs, etc) to four.
Up until the middle of this year, there were three groups: Entertainment and Devices, led by Robbie Bach (basically XBox, Zune, Windows Mobile, Embedded and Automotive); Business Division, led by Stephen Elop (basically Office, Exchange and enterprise communications); Platforms and Services Division, led by Kevin "KJ" Johnson (basically Windows and all of the online businesses listed above).
When KJ left for Juniper, they didn't replace him.
Instead, SteveB has now created a President for a new group that didn't exist before: Online Services. And that still leaves Windows, Windows Live, Windows Server and Developer tools without a parent group (these groups like the online groups, have reported directly to SteveB since KJ left.
The logical thing to do would be to pull these groups into a group with its own president(the "Platforms" group, for example). And there has certainly been no public announcement of a search for a leader for this group.
Pure guesswork here: it may be that the priority was to find an online services leader, so there was less noise about a "platforms" leader. But, it may also be that they have the right person in mind and are waiting for the right moment. Of the groups above, the only person with chops and near-universal respect to step up is current Windows and Windows Live SVP, Steven Sinofsky. If SteveB does intend to put Sinofsky in charge of all of these groups. I would expect them to let the organizations sit the way they are until Windows 7 is safely in the bag before changing anything.
But keep in mind that he's 100% technical. Branding, politics, and profits aren't in his background. He can give MSFT some sorely needed product direction, but I think he'll struggle on the pure business side. He's just not a sales/marketing/strategy guy.
No matter how much they improve their search, if you don't have the traffic, you don't have the advertisers. So you don't get the yield. Qi already proved that once at YHOO.
Expect Ballmer to be back at the table with Yahoo soon. They can't succeed at search without that traffic. They'll shell out for it one way or another.
The guy is where the Yahoo advertising mess rests, first competitor to adsense bombed and never opened to public, no merging of display and text advertising happened even now. Neither did the burbank teams merge culturally, no innovations in display, incorrect expectations of Panama, never rose to the Google challenge, list goes on.
Yes, he is rumored to put lots of hours, but he was not a janitor being paid per hour.
Starting to drag MS down by being on their side is the best thing he will do in the last five years.
What this means is that MSFT's cash cows are going to continue to erode, and some success (finally) with the Internet division is in order. Just scrapping it won't be an option in the long run in my opinion.
As Henry rightly points out, branding is likely the most important bit to fix, anything else will amount to just more uncoordinated flailing. Unfortunately it is highly unlikely that an engineer like Lu will have even the first clue about it...
Also for those stating that Qi lacks business background - what about Eric Schmidt? He was a total techie, spent a very limited (and rather unsuccessful tenure) at Novell as CEO before going to Google. Things turned out fine for him.
The irony of this all is that if MSFT eventually acquires YHOO, then all the incompetent execs there will end up reporting to Qi.
Thanks. Lots of interesting comments in here. I love this blog. :)
Qi understood the business implications of the Google deal (great for Google; lousy for Yahoo), and became disillusioned with the judgment of Yahoo senior management.
MSFT is Qi's only and last chance at winning the war against Google, since Yahoo has effectively taken themselves out of the running. Beating Google is his life-long passion and mission. So of course the guy is going to take the job at MSFT, albeit the odds are not in his favor in overcoming Google.
Whoever says Qi does not have the business experience does not understand the man or the search business. Qi is super smart, has a great understanding of the economics of search and search advertising, has an incredible work ethic, and inspires other people with his passion for the business and leading by example. If those at MSFT Online division had any iota of vision and motivation, then they will rally around Qi Lu.
Also, Qi will be able to attract top talent to MSFT because he is such an inspiring leader. After all, it's a shame that Qi wasn't even on the radar screen of the Yahoo board in its search for a CEO. This tells you the difference between the Yahoo board and Ballmer, who, through the hiring of Qi Lu, is already demonstrating that he is a hell of a lot smarter than the Yahoo board.
I have been with microsoft for 8 years, the last couple of years with the adcenter group.
One big challenge Qi will face is how to fix the chaotic engineering practices in these live groups. >80% of the principals and GMs are BS people, not real engineers. They however got promoted on a yearly or 6 months basis, still.