Yahoo and Microsoft – Bread and circuses?

This morning I awoke to the news that Marissa Mayer, the new CEO of Yahoo, was awarding Yahoo employees with a free smartphone, and, from what I can derive, some coverage for service plans as well.

On the heels of Microsoft’s news last week leaked during their company meeting of free personal/work Windows Phone 8 devices, Windows RT devices, and accelerated replacement of work systems with Windows 8-capable PCs, this is interesting news to consider.

Perhaps some may call this jealousy – but I’m not sure either of these moves is that great of an idea (from an investor perspective, I would question both – if I were an investor in either), moreover, I don’t think that either will move the needle in terms of adoption. I’m not talking in terms of the trivial “92,000 employees pushes Windows Phone 8 over the finish line” either. I’m saying that, if we figure out how many millions each of these moves cost Yahoo or Microsoft, and you could look at the end result and see the difference it makes on how the community at large uptakes either one’s products or services – or how it affects the financial bottom line – as a result of employees having these devices, the answer is “not much”.

As an EXMSFT, I can tell you that the company meeting is, by far, the largest opportunity that Microsoft’s senior leadership gets annually to incite morale in employees. This year Microsoft will ship an insane amount of products – and among the server products, they look to be doing quite well. Among clients, and especially among Windows Phone, questions remain about how well Microsoft can hold on or push forward.

A good friend suggested the other day that upon hearing of Microsoft’s move, the first thing he thought of was breads and circuses. An interesting thesis. I have to say – not trying to be cynical – this move, and especially Yahoo’s, had so much more to do with trying to lift morale at a company no longer at peak morale. Microsoft and Yahoo have both made great numbers of employees wealthy over the years. I don’t  believe either one tends to make the majority of minions (the developers, testers, program managers, product managers, marketers – the people who actually make the company move forward) wealthy any longer. Years ago, wealthy Microsoft employees would gleefully spend inordinate amounts of money to buy the latest hardware and software that the company and it’s partners had produced.

I’m concerned that the moves by Microsoft and Yahoo both reflect an attempt to try and motivate a slowing, frustrated workforce with toys and services that, if each company was doing better, the employees could buy with stock grants or options (as the case may be), and more importantly in Microsoft’s case, that employees would be buying if the products were farther along in building their market and employees wouldn’t feel duped by buying. To Microsoft’s defense, WP8, Windows RT, and Surface RT are new, and so employees are being given early evangelism roles with these pieces of technology. But I can’t help but wonder where they’ll both be in 24 months. I’ve had so many conversations with friends at Microsoft who bought into the Zune ecosystem early and fervently, only to be angry and frustrated years later when they had bought devices that docked to, and music that played on, Zune devices – only to throw them away when Zune ignobly died. Microsoft offered WP7 devices to employees too – and I think it in general encouraged employees to become more familiar with Windows Phone 7. But each of those devices is now effectively abandoned again less than two years after employees got them, unable to run Windows Phone 8 – though any apps or content they purchased should likely work fine on their new device.

Maybe these moves at Yahoo and Microsoft will move the needle forward. Perhaps they’ll make Yahoo employees excited and drive them to build even better mobile-enabled Yahoo services. Perhaps they’ll make Microsoft employees jazzed to work at Microsoft if they were a little demotivated, and further drive those who still love working at Microsoft – and in turn drive adoption of Microsoft technology across the board as employees both evangelize, and build software and services that connect best to, these devices. For now, I look at both, and wonder how much money was spent, and what net effect it will really have. We’ll see in time.


  1. It goes without saying that the internal cost won’t be even close to retail, but I’m wondering if it goes even further. What if Microsoft’s Windows Phone partners (or maybe one key partner in particular) are providing the devices at or even below cost? That of course helps.

    I won’t speak for Yahoo (unless they’re going to make this specifically about WP devices) but I think Microsoft HAS to do something like this. They need to turn as many employees into WP evangelists as they can. Here in the Dallas-Fort Worth area, Windows Phones are almost invisible, and many people won’t buy what they don’t see in common use.

    When I worked for Nokia, I was also provided free phones and full international service (as were many employees) and I was one of their most active salesmen. 😉 Too bad the product evangelism of a single employee wasn’t enough…

  2. Good points. Frankly I’ll be surprised if much of the cost can be eaten
    by partners – but surely some can, especially at that volume. We’ll
    likely never know how much it really cost – but I doubt it was free. 🙂