Last week, Microsoft CEO Steve Ballmer issued a vast formal memo setting out “a far-reaching realignment of the company,” one that would bring together its “silo” divisions to create “serious fun so intense and delightful that [it] will blur the line between reality and fantasy.” Despite the hyperbolized doublespeak, the go-to cliché for a corporate reorg of this type is “rearranging the deck chairs on the Titanic.” But to understand what’s happened at Microsoft during the past decade—as their bread-and-butter PC sales have declined, as their products (save for the Xbox) have stagnated, as Apple and Google and Amazon have lapped them on every course, as their stock has remained flat while Apple’s has soared by 4,000 percent—we wouldn’t look to a century-old passenger liner disaster. To really grasp the decline and fall of Microsoft, we need to look to the landmark HBO series The Wire.
What does Microsoft in the Ballmer era have in common with drug kingpin Avon Barksdale’s organization in The Wire? For years, both of them had the strongest package. They owned their territory, owned their market, owned their users. They were untouchable. Then times changed, bringing new competitors with new, intense products. Their own product went weak. But they couldn’t let go. “We got a weak product, and we holding on to prime real estate with no muscle,” Avon’s cerebral second-in-command, Stringer Bell, complains to him. For the Barksdale organization, the product was heroin and the real estate was the drug-ravaged Franklin Towers housing project. For Microsoft, the product is Windows and the real estate is the PC.
“We fought for every one of them Towers,” says Avon’s loyal sister, Brianna, “and to give them up now would mark us as weak.” The Towers were their pride and their security. Likewise, Microsoft hung onto their PC towers. They fought for them, even took on a massive antitrust lawsuit for them. As David Bank wrote in Breaking Windows: How Bill Gates Fumbled the Future of Microsoft, after Internet Explorer displaced Netscape Navigator in the ’90s, a debate ensued within Microsoft between the “doves,” who wanted Microsoft to embrace the Internet with or without Windows, and the “hawks,” who wanted to make Windows a mandatory part of the Internet experience. The hawkish position refused to accept the inevitable: The Windows high—like any high—would fade. Desktop apps would give way to far more addictive Internet sites.
Still, the hawks won. There was no room for a Stringer Bell–style dove to strike out and make a deal with an ambitious youngster like Marlo Stanfield (Google) or a wily long-standing rival like Proposition Joe (Apple) for a share of profits and a shot of innovation. (“It’s not even a thought, man,” Avon chided Stringer.) Why should they cut deals with the riff-raff? They had crushed Lotus, Novell, and Netscape. Office and Windows were stable, profitable behemoths. Sure, Linus Tovalds—aka Omar Little—was a perennial annoyance, robbing Microsoft of server profits by giving away Linux for free, but he didn’t threaten the main business. For novelty’s sake, they could cut Windows with all sorts of adulterants (remember Active Desktop? Or MSN Explorer?) and users would still keep buying, at least for a while. As far as Microsoft was concerned, consumers didn’t have a choice, because Microsoft couldn’t imagine being bested by upstart punks any more than Avon Barksdale could:
Avon Barksdale, October 2004: Marlo. Who the fuck is Marlo? An independent with no fucking support got all the prime real estate and we doing what exactly? Young boy ran us off the corner? ... Since when do we buy corners? We take corners.
Steve Ballmer, November 2004 (as quoted in a sworn affidavit by former Microsoft engineer Mark Lucovsky): Fucking Eric Schmidt is a fucking pussy. I’m going to fucking bury that guy. I have done it before, and I will do it again. I’m going to fucking kill Google.
Unable to innovate, Microsoft repackaged their product—as WindowsME, as Vista, as Windows 8—just as Stringer Bell was forced to repackage his weak product: as WMD, as Pandemic, as Bird Flu. At a grindcore show in 2007, I met a hip young woman who was being paid to push Microsoft’s Zune media player on me and other audience members. She admitted that she owned an iPod herself.*
Microsoft just couldn’t compete with the strong stuff: iPhones, iPads, Google, Facebook. With Windows 8 they mixed two weak strains together: the Windows desktop and Metro’s touchscreen UI. They put a touchscreen interface on machines without touchscreens. It was the opposite of synergy—it was a speedball.
And it had a lot to do with bad management. There’s too much personnel turnover in the drug trade for managerial rot to really set in—for the Microsoft analogy on The Wire, you’d look not just to Avon Barksdale’s intransigence but to his nemeses in the Baltimore police department, with its toxic strains of authoritarianism, politics-playing, bean-counting, and pure sloth. Consider Windows Vista, the much-maligned follow-up to the genuinely decent Windows XP. It took five years to produce something that was far worse than its predecessor. Three years into it, in mid-2004, they threw out all the code and started over. There was a big reorg then, too, just like now. Reorgs are the product of endless turf wars between executives and keep managers occupied with PowerPoint charts. Reorgs keep peons nervous about where the axe will fall, as does the brutal zero-sum stack rank review system that dictates that every good performance review in a group must be balanced by a bad one—and thus that you can only excel if your peers fall behind.
What reorgs don’t result in is a stronger product. They result in slow, clunky, buggy, yet long-in-the-making junk like Microsoft Surface, or Vista, or Kin. Why did it take two years to realize that Vista wouldn’t work? And how did Kin, Microsoft’s iPhone competitor, even get released? It landed in May 2010, it was universally loathed, and then it vanished. A contributor to the infamous Minimsft blog—ground zero for disgruntled employees—put it this way: “We all knew that Kin was a lackluster device, lacked the features the market wanted and was buggy with performance problems ... But when our best ideas were knocked down over and over and it began to dawn on us that we were not going to have any real affect [sic] on the product, we gave up.” Or, as the Baltimore police department’s deputy commissioner Rawls once said to a frustrated underling, “What part of ‘Bend over’ didn’t you understand?”
The Microsoft employees who stuck with the party line ensured that Kin would fail as badly as the War on Drugs, and that Prop Joe’s iPhones would lock people into multiyear addictions. “We began counting down to the 2 year point,” the Minimsft writer added, “so we could get our retention bonuses and get out.” Which is sensible enough. In 2006, just as Vista missed the holiday season and cost the company millions, Microsoft paid out $1 billion in bonuses to 900 top employees. As Baltimore police lieutenant Ellis Carver says of drug-trade soldiers: “They fuck up, they get beat. We fuck up, they give us pensions.”
David Simon, creator of The Wire, once said, “I am very cynical about institutions and their willingness to address themselves to reform.” He was talking about all institutions, from police departments to Congress to Microsoft. But there’s one place where the Microsoft/Wire analogy breaks down. Avon and Stringer faced jail and death. The cogs in the Baltimore PD were all trying to save their jobs. And Baltimore had next to no money. But as far as anyone can tell, Steve Ballmer cannot be fired, and has billions at his disposal. He is kingpin of Microsoft until he decides otherwise. So what’s his excuse?
Correction, July 19, 2013: This article originally referred to a woman who, while promoting Microsoft's Zune media player in 2007, admitted that she owned an iPhone. She actually admitted that she owned an iPod. (Return to the corrected sentence.)