An Open Letter to Steve Ballmer

(page 3 of 3)

You know what would be a bold move, Steve? Admitting that Microsoft doesn't belong in the music player business, or the search business, or the advertising business, or the automotive entertainment business. The Zune? It's a joke. Kill it before you embarrass yourself further. And are the combined forces of Yahoo and Microsoft really going to make a dent in the Google search advertising juggernaut? That's like asking two fifth-graders to play Kobe Bryant in a game of two-on-one. The results will speak for themselves.

Buy It and Spin It Off

It all sounds very misguided, how you say that by spending all that money on Yahoo you can grow so much bigger, when what you really need is to be smaller.

But since it's clear that I'm not going to change your mind about buying Yahoo, here's what you should do: Once you close the deal, package Yahoo with your online services division, the entertainment and devices division (yes, the Xbox, too), and spin the whole thing off.

Remember that bit about focus? This would help you get it back. Put all those things that Microsoft isn't very good at, put them in a box with Yahoo and cut the apron strings. Sure, keep an equity stake, even a majority. But this formidable new entity would function best outside the Windows-centric reservation. If this new company's plans don't coincide perfectly with some future set of features coming to Windows, so be it.

The alternative, if you force these businesses to fester within Microsoft, is that these businesses will always play second fiddle to Windows—and fail to meet their potential.

This new entity is going to have to be nimble to compete with Google, Facebook, and probably one, two, or five other companies we haven't heard of yet. With luck you'll have enough time to whip the whole thing into fighting shape before it's too late. That's assuming it's not too late already.

Hesseldahl is a senior writer for BusinessWeek.com and his Byte of the Apple column, covering all things Apple, appears biweekly at www.businessweek.com/technology.