The Microsoft (MSFT) blogs are having a field day mining the stream of comments left on Mini-Microsoft after Friday’s annual employee meeting. The site has traditionally been a place for staffers to let off steam anonymously, but the tone and volume of the remarks made after this year’s gathering suggest that morale in Redmond has hit a new low.

We can’t confirm reports that employees left “in droves” during CEO Steve Ballmer’s speech, as WinRumors has it, but the comments speak for themselves. Seattle PI has published a representative selection here. The one that caught my eye focused on the difficulty Ballmer’s Microsoft has competing with the likes of Apple (AAPL) and Google (GOOG):

Steve Ballmer has done to Microsoft what George W. Bush did to the United States from 2000-2008 — run things straight into the ground. And all this praise for Steven Sinosfsky [president of the Windows division, seen by many as the next CEO] isn’t going to change much at Microsoft. As long as he and Windows have the dominating presence on Microsoft and all its businesses, innovation will find paths outside the company and elsewhere.

It makes me think that the DOJ had the right idea way back when — break up MS into several Baby-Bills.

All this talk about competing with Apple — haven’t this all been heard before?

I assert that Microsoft has already lost this ‘battle’ with Apple for two reasons:

1. iPad effectively dictates the rules of the game now.
2. Apple is simply better at what it takes to win at this game.

If you substitute ‘Google’ for ‘Apple’, and ‘iPad’ for ‘Search’ you get something remarkably similar:

1. Search effectively dictates the rules of the game now.
2. Google is simply better at what it takes to win at this game.

In these competitive spaces outside the enterprise, Microsoft, for all its software development resources, simply doesn’t get the larger concepts of –

1) Design;
2) Usability; and
3) Understanding the end-user customer experience.

Throwing more developers at the problem doesn’t make it solved. Turning all testers into developers helps in no way either.

Trying to compete with these companies to do something better than they do — when they already do it very well — is a setup for failure, and has been for a very long time.

The comments are attached to the Mini-Microsoft post entitled Friday! Friday! Friday! Microsoft Company Meeting Friday! They make chilling reading for Microsoft investors.