Would break-up have been better for Microsoft? Still be better?

Did monopoly damage Microsoft? Would the shareholders and employees of Microsoft be better off if the company had been broken up and the shelter of living under a monopoly tent been taken away?  A Step Back for Microsoft. No, I don't think so. I think Balmer made a sound decision. Who wants Yahoo?

Steven A. Ballmer, Microsoft’s chief executive, walked away from a Yahoo deal on Saturday still looking for an answer to his company’s fundamental problem: its time-tested recipe for success isn’t working against Google, the leader in the current wave of Internet computing.

With a bid for Yahoo, Microsoft was trying to buy its way out of the problem. It was a controversial step and a gamble, but at least it was a big move. Now, there is no clear prospect of a quick fix for Microsoft, as the center of gravity in computing continues to move away from the personal computer, Microsoft’s stronghold, and to the Internet.

Microsoft remains a powerful company, and highly profitable, but its stock price has stagnated amid doubts about future growth. Years of antitrust scrutiny have tempered its competitive behavior in new markets. (italics added) 

Let's think about it another way: Years of living off monopoly profits have tempered its competitive behavior in new markets. That's what its shabby share price suggests to me. M'soft is a massive company. Revenues went from $44 billion in 2006 to $5i billion in 2007. But...But... They are not, as I see it, technological leaders. They didn't have to lead because they had the shelter of a de facto monopoly.

So there's another question: maybe it's smarter for M'soft to spend some of it's huge cash hoard rebuilding its operating system from the ground-up. Apple did so five (?) year ago and it saved the company. Obviously M'soft now is not even close to Apple's situation then. But M'soft may yet have to compete with the Mac OS. Maybe that is part of Steve Balmer's calculus. You can't buy cool. Google and Apple now have the cool factor and M'soft might be smarter to split itself up into more manageable companies, rebuild Windows (you wouldn't change the name of course) and let a thousand points light up a thousand flowers blooming i.e. get young, fresh blood with style to shake up the vast M'soft bureaucracies.

Question of the day: Would M'soft (in aggregate) go up in value if it was voluntarily split up? (I have no doubt that that question is being throughly analyzed this very evening.) Such re-creation of M'soft into 5-6 separate companies (each huge in its own right) might be the real resume-builder for Balmer.