7. Swallowed Up

For final years of the 1990s, I had no contact with Microsoft marketing, to my relief. In 2000, this changed. A tributary of the The Microsoft Chronicles involves Visio, the maker of a diagramming software package. Visio was located in Seattle (near Microsoft) and always made its software very compatible with Microsoft's.

In summer 1999, the executives of Visio decided they'd like to cash in by selling themselves to Microsoft. They gave these two primary reasons:

1. Visio stock was languishing, while Microsoft's was galloping upwards toward $120.
2. Visio sales would benefit from Microsoft's international sales force.

The price tag: US$1.2 billion, Microsoft's largest purchase to date. It wasn't clear why Microsoft would want to buy Visio: the usual reasons didn't apply:

* The Visio software worked so well with Office that there was little Microsoft could do to improve the situation.
* Visio had no significant competitors, nor did Microsoft need to fend itself from diagramming competitors.
* Visio had a vibrant developer community, so that didn't need boosting.

There was some talk of integrating Visio technology into Office, but I don't think that ever happened. The sale would be a stock swap, based in the price of Microsoft's shares. As is usual, it took a few months for the deal to complete. But in those few months, the shiny gleam in the eye's of Visio executives became a duller luster:

- In early 2000, the Internet bubble popped, and along with it, Microsoft's shareprice began its slide to today's price of the mid-20s.
- As a result, Visio shareholders got far less money than they anticipated.
- Visio executives, who used to hold titles like president and CEO, suddenly were "demoted" to the level of vice president. Within six months, several high-ranking Visio employees left Microsoft.
- Software sales of Visio were internationalized, but also marginalized. Microsoft salespeople have hundreds of products to sell; to them, Visio was just one more stock number.
- Visibility of Visio plummeted, as it had to take its turn in the Microsoft PR machine. Prior to the sell-out, Visio could ship press releases several times a month; now it rarely ever gets a mention.
- Microsoft's agreement with Autodesk, in whatever form it might take, meant it no longer pursued AutoCAD-compatibility. Indeed, Visio 2002 had more problems reading dwg files as did Visio 2000, and Visio Technical was turfed.
- Development ground to a crawl, with three years between releases.

This is background for my second battle against Microsoft Marketing. This time, though, I was prepared.