Casebook No. 45: Microsoft - Redmond ... We Have a Problem.

ABSTRACT
After years of neglecting Silicon Valley, it looks as though Microsoft has begun to wise up. It finally moved its Bay Area Embassy to, duh, the Bay Area, and has launched an ad campaign to speak directly to developers. Now it comes down to the real work-work that rests on the shoulders of one Larry Cohen.
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Larry Cohen has a problem.
As Microsoft's GM of Silicon Valley developer and business relations, the man has been charged with an agenda that many would consider cruel and unusual punishment. His task: undo all the bad feelings the company has created in the Valley over the last two decades.
To be sure, Cohen is an affable fellow. The kind of guy who always has something pleasant to say. The kind of guy people like to be around. But his quest requires more than attractive qualities. He must give Microsoft a face, infuse the Redmond monster with a personality and make it more approachable to anyone confused, angered or afraid of a juggernaut with a $400 billion market cap.
The trouble is, in case you haven't noticed, it's not like the company's image problems are behind it. This drawn-out DOJ affair has only increased perception of the company as ruthless-making Microsoft bashing much more than an insider sport these days.
That's partly due to the degree of success Microsoft has achieved, to be sure. But it has just as much to do with how the company has achieved that success-with arrogance and aggression, directed at both competitors and the government.
Oh, yeah, and denial. That's been a big part of the image problem, too.
Speaking of which, Microsoft continues to point to proprietary research showing that consumers still have a positive view of the company's products. Industry watchers in the Valley, on the other hand, will have none of it. "There is a strong view from Silicon Valley that Microsoft is a big, elephantine, vicious, cheating, conniving and dishonest company whose main goal is to steal your ideas," says Richard Brandt, senior contributing editor at Upside who once covered Microsoft for Business Week.
"Microsoft has traditionally sucked at being part of the [Silicon Valley] community. They have taken an arrogant approach and the last 10 years is evidence of the backlash," adds a source close to Microsoft.
So what if the Valley doesn't like Microsoft, you say? There are no real people in the Valley anyway!? True enough, except that the Valley remains the pre-eminent hothouse for software developers, as well as fledgling Internet companies-read: potential investments and partners for Microsoft.
Of course, Microsoft is fully aware of the importance of Silicon Valley. Having once relished the role of snooty outsider,