Will Ballmer Be Replaced As Microsoft CEO?

Strudelkugel writes "The Beast reports unhappiness with Steve Ballmer as CEO of Microsoft: Sources say the talk around Microsoft's Redmond, Washington, headquarters — which has grown increasingly loud ever since Apple surpassed Microsoft in market capitalization — is that the company's stock suffers from a 'Ballmer discount,' and that the CEO is on the clock to significantly move the needle on its share price over the next two or three quarters or face a potential move to oust him. 'Ballmer is on the list of mega-executives under pressure,' says a banker who has negotiated deals for Microsoft. 'If he was asked to leave the building, I suspect there would be more happy than unhappy people.'"

Comments

Not Surprising

[Nerdfest]

I find it amazing that he's lasted this long. The man has a bit of a history as a public relations problem.

Re:Not Surprising

[beakerMeep]

Seems they have had some decently grand failures too as of late. WP7 looks almost dead out of the gate, Kin was dead out of the gate and they killed Courier before ever seeing the gate. Couple that with continual loss of browser share versus Firefox, and you have some pretty bad failures. While Windows 7 did well I think many havent forgotten how badly Vista sold. Now, being MS I'm sure they had quite a few spectacular failures over the years but it seems they are pretty inept at reading the marketplace as of late. Though they seem to be doing OK with Xbox.

Still, the thing that bums me is that Courier could have been so great.

/speculation

Re:Not Surprising

[MBGMorden]

You have to remember though that the original Xbox was essentially not expected to turn a profit. Their goal was to use it as entry into the home console market. If you consider that as an end goal (rather than profits), then it was successful. It got Microsoft into a VERY difficult market. Look at all the companies that failed in that area, some with MUCH more experience in that domain: Sega, Atari, NeoGeo, NEC (TurboGrafx).

Microsoft broke into the market and has turned their unit profitable. As laughable as most people considered their first product, in North America Xbox360 is the de-facto standard console for traditional gamers (Wii is more profitable overall, but it targets a different market).

There's essentially no question that Xbox has been trending upwards the whole time. If they continue, then they'll make their money back overall.

Essentially, Xbox was loosing money at first, but is now profitable and trending up. Compare to Microsoft's other businesses: still profitable, but trending downwards, and it's easy to see which will work out better in the long run.

Re:Not Surprising

[UnknowingFool]

Essentially, Xbox was loosing money at first, but is now profitable and trending up. Compare to Microsoft's other businesses: still profitable, but trending downwards, and it's easy to see which will work out better in the long run.

While it is profitable now, even if you take out the original Xbox, the product line is still in the red overall even more so with the Red Ring of Death problems. At the current rate, it will take decades to pay back the original investment. As an investor, how much would you tolerate the company spending money only to get market share. Contrast that with the Wii which was also money losing at first but has since paid back the original investment.

Re:the Balminator

[ZeroExistenZ]

What's he going to do when they come to fire him ? Throw an entire office set ?

He'll cash in his layoff-bonus he surely has somewhere on contract, and start up something of his own.

Microsoft will flourish again with all the young idealistic minds working hard and get slowly more solid and standard-comliant, but wont get so much back into the front-game.

Balminator, on the other hand, will be very loud with his "next new best thing" and go after Apple's marketshare. Ultimately, he'll end up as a lonely old but relatively rich man and being moderatly successful in the furtniture durability testing-industry.

To be replaced by...?

[Just Some Guy]

I'm hardly a Ballmer fan, but what could he have done substantially differently? In my opinion, he inherited a pig with no obvious roadmap to future gains. He managed over the Kin debacle, sure, but he also managed the Xbox and that worked out pretty well.

I've read a thousand perfectly valid criticisms of Microsoft over the years, but I'm not sure that many of them can be traced back to Ballmer. For example, what changes could he have made to the Windows or Office lines to gain new growth instead of settling for trying to get current users to upgrade?

If anything, I think investors are expecting too much of Microsoft. Yes, it's somewhat stagnant. Of course it is! It already has something like 90% of the slow-growing PC market and roughly 100% of the "non-gratis office suite that runs on Windows" market. There's just not any growth left in MS's core competencies, and at least they're trying new stuff, even if the results are pretty embarrassing most of the time.

Re:To be replaced by...?

[Zelgadiss]

The problem with the guy is he has practically no vision.

Most of what MS has been doing, ever since he took over, is playing catch up with Google and Apple.

For their investors, it's not enough that they try new stuff, the new stuff has to "work".

Re:To be replaced by...?

[FreonTrip]

A quick visit to Mini-Microsoft yields a lot of insight, especially in the comments thread. The management system's apparently poisonous and horrifically bloated, leading to lots of in-fighting and internecine political battles between rival divisions within the same company. Most employees also languish under a tiered review system that is overtly strict in its implementation and prone to misuse by the aforementioned management. I'm inclined to believe that a lot of promising developments are being sacrificed at the altar of upward career mobility for a largely administrative segment of the company, and that everyone else basically suffers and watches the rest of the world pull ahead.

Re:To be replaced by...?

[Anonymous Brave Guy]

I'm hardly a Ballmer fan, but what could he have done substantially differently?

The three most obvious, from a commercial point of view, are probably (a) avoiding the whole Vista fiasco, (b) handling the release of the new Office UI better, and (c) not running so many loss-making divisions in the name of diversification.

Microsoft are in the business of making operating systems and office software, two products that almost everyone with a computer uses at some point. There is plenty that could be done to help people using these products to work more efficiently or enjoyably. That could legitimately drive both paid upgrades and, potentially, sales of back-end software and on-line services that support collaboration using those client-side tools.

But Microsoft aren't doing those things. They've had a catastrophic release for each of their main products, and in doing so, they have managed to kill the automatic upgrade cycle that has been their cash cow for a decade or more, with corporate IT types now seriously questioning why they should pay the Microsoft Tax and possibly upgrade their hardware as well every time a new release of Windows or Office comes along.

Not innovating merely requires laziness, but not innovating and killing a tried and tested business model that all but runs itself and has been successful for years? That requires serious talent at executive level, and the buck stops with the CEO.

Re:To be replaced by...?

[nine-times]

he also managed the Xbox and that worked out pretty well.

Except for losing out to the Wii, having a... what is it? 55% failure rate?

I'm not sure that many of them can be traced back to Ballmer.

When your in charge, lots of things trace indirectly back to you. Who did you hire, and who did you fire? Who didn't you hire, and who didn't you fire? What guidance did you give to your management team, and what guidance didn't you give? It's not just "What could he have done to make Windows/Office markets grow?" but "What other business opportunities did he fail to capitalize on while sitting on Windows/Office?" It's a whole wide world out there, with loads of opportunities.

I'm not saying that Ballmer is bad at his job. I honestly don't know enough to say, really, except from my perception of how Microsoft is doing. However, if you think Microsoft isn't doing as well as it should, then I think you have a hard time not blaming Balmer a little. He's in charge. If it's someone else's fault, he should have fired that person and replaced them.

Re:To be replaced by...?

[TheRealFixer]

Really, though, the same could be said of any company that size and age. Very large companies nearly always, over time, develop into unwieldy mega-bureaucracies, comprised of individual fiefdoms solely concerned about their own headcount and perceived influence. They become microcosms of nations. They have well-defined class structures, their own culture, sometimes even their own currency internally.

Replacing Ballmer isn't going to change any of that. A new CEO might excite the board and top investors a little, perhaps shuffle some HR/management policies around a little. But in the end, the same issues that are inherent in being a company of that size are still going to be there.

Re:To be replaced by...?

[rev_sanchez]

They're being compared against Apple and that comparison is not going well for Microsoft. That isn't 100% fair as Microsoft's history of being primarily a software producer doesn't match up well with Apple's history of producing quite a lot of hardware but they're the 2 platform giants of personal computing and Microsoft has been throwing it's hat in the hardware arena lately.

Right now they seem intent on making poor copies of Apple's previous generation of products (Zune/iPod, Zune HD/iPod Touch, Zune Market Place/iTunes, Vista/OS X) and there's every sign that their Windows 7 phone software will follow the same pattern against the iPhone.

What they do have is business buy-in as the OS that runs all of their niche business apps on cheapish hardware but if cloud computing takes off and web apps become the norm for business then the winner will be Google because they're already pretty good at it and Microsoft is again playing catch-up.

Microsoft doesn't need more developers, it needs designers focused on the user experience and the next generation of personal computing. That's tough to do when your best customers are business who don't want the cost of teaching their users a new UI but if Microsoft doesn't do something they are in for the same slow, steady decline.

Re:To be replaced by...?

[Skuld-Chan]

Also - not that I was a big fan of the Kin, they really shouldn't have let it die in a fire like they did 48 days after launch for largely petty political reasons. When you ship a product - you stand by that product and make it the best possible no matter what.

The reason why is because doing anything else makes customers lose trust in your brand. Example - plenty of people probably can't imagine getting a Windows 7 phone at this point for fear they'll drop it as well or it won't be supported after 2 months.

Yeah one could argue they shouldn't have released it, but they did green light it and should have dealt with it better.

Re:To be replaced by...?

[zach_the_lizard]

Also - not that I was a big fan of the Kin, they really shouldn't have let it die in a fire like they did 48 days after launch for largely petty political reasons. When you ship a product - you stand by that product and make it the best possible no matter what.

I agree, they shouldn't have cancelled the Kin in the way they did, but then again, they shouldn't have had the political infighting that led to its demise in the first place. It's not a good sign when a fairly major product is a failure because of intense internal rivalry. They are supposed to be on the same team!

Re:To be replaced by...?

[Locutus]

Ballmer must have read "The Innovators Dilemma" and has, as Bill Gates has before him, threatened and eliminated every threat to their income channel( Windows desktop and server ). They have always spent over a billion dollars per year on projects and marketing specifically targeting new products others have created and they've been successful protecting Windows. They have really never put much effort at all into making products better for customers for the customers sake, it has always been about limiting choice and preventing movement to other products.

They did Pen for Windows to block Go Inc from doing tablet computers in the late '80s and early '90s. They did Internet Explorer and Windows 95 to block IBM Web Explorer and OS/2 initially and then Netscape. Windows NT went from a failed desktop OS to a "Workstation OS" to a server OS to block OS/2 Server. Windows CE to block PalmOS, Xbox to block PS2/PS3, MS .Net to block Java, Silverlight to block Flash. All these things they blocked or limited their growth were already out there, ran on Windows and because they were not tied only to Windows presented a chance of a loss of control and therefore a loss of the Windows monopoly and income stream.

Microsoft has hardly ever had to innovate, they just leveraged the control they had and made something good enough to sell so people thought they were getting something new and improved.

IMO, the iPhone, iPod, and iPad all represent a threat to Microsoft not because they can take away Windows desktop sales but because they show Windows users that a different way to do something can be easy, can work better, and can be fun and enjoyable. Android and ChromeOS are what is keeping Ballmer up at night because they are being targeted across many hardware manufacturers devices and that kind of flood would quickly spread into Windows customers minds of a none Microsoft choice for doing lots of stuff outside of Windows. But, also with very little effort those same systems can do almost all of what Windows does.

Danger, Danger, Will Robinson! Steve Ballmer will be pissing off many because he _must_ spend spend spend to block Android, ChromeOS, and limit Apple iOS growth. So if they give him 3 quarters then he's out in 3 quarters and by then, if he fails to block Android and ChromeOS, Microsoft will be over the edge and headed down a steep slope of losses anyways so he'd welcome to chance to cash out. IMO

LoB

Re:To be replaced by...?

[thesandtiger]

I'll add a biggie:

Recognizing that the marketplace is changing and that while Windows is dominant NOW, things are rapidly moving towards an OS agnostic world that uses open standards.

The people who, 20 years ago, were terrified of trying anything new are generally filtering out of the workplace and have been (and continue to be) replaced with people who grew up with computers as everyday things and aren't afraid to try something different. I can only imagine that as younger people who grew up with computers being completely ubiquitous, and with the stuff they use built on open standards, this will only accelerate.

Fear of change and a fundamental lack of understanding of tech were their bread and butter, but that is going to end, and soon, and they've done nothing to position themselves for the sea change that will be coming. They've been so intent on holding on their old (and, it must be said, profitable) way of doing business that when things do change they'll have to move faster than they ever have to adapt.

The marketplace has changed, too. It used to be that companies would try to compete with MSFT and get wiped out (bought or just crushed); now there are companies that exist solely to help their customers migrate away from MSFT products, or that develop tech that allow people to host their legacy apps on non-MSFT platforms.

Ballmer has been a caretaker CEO at best. MSFT is in a worse position, now, than they were when he took over, relative to the rest of the market. They've got massive resources and a really huge influence, but they're going to need to reinvent themselves in the same kind of way IBM did if they want to continue to be relevant.

Re:To be replaced by...?

[Blakey Rat]

The three most obvious, from a commercial point of view, are probably (a) avoiding the whole Vista fiasco,

How? That's a lot easier said than done... I'm pretty sure there isn't even a clear consensus on what exactly caused the Vista fiasco in the first place. Everybody has their own opinion.

I mean, the last time they had an OS release that poor (Windows ME), at least the schedule was rushed to hell and back. Vista, on the other hand, was both slow *and* bad.

That all said, I think it was mostly a perception/marketing problem:

1) Vista wasn't bad on hardware built to support it... but Microsoft gave the logo to vastly inferior hardware that they had to have known wasn't capable of running it well. Vista should have been sold initially as a "high-end" OS, since only high-end hardware could *really* knock it out of the park. They could have set a high bar for the logo, and rebrand XP as their low-end, mobile OS. (Until Windows 7 could take over both roles.)

2) A *major* failing was getting hardware makers on-board with their drivers. I have no idea what they could have done more to solve this, but I think something like Windows 7's long free preview period would have been a good idea for Vista. (Part of the issue here was also the long gap between OSes-- hardware makers hadn't had to make or update drivers for a long, long time before Vista came out.)

3) Microsoft was never in control of the Vista brand, pundits were. The average computer consumer probably saw a dozen articles talking about how awful Vista was before they'd ever actually used it, or before they heard anything from Microsoft about it. (Their Mojave campaign pretty much proved this one)

Anyway, by the time Windows 7 came out, the hardware issue was resolved (both by making the OS leaner, and by the normal increase in computer performance over 2 years), the hardware issue was resolved (Vista drivers finally worked well, and Windows 7 could use those), and the marketing was much, much better. Result? Successful launch.

(b) handling the release of the new Office UI better, and

I don't agree with this; I think they handled it quite well. What changes would you have proposed?

One major gap, though, was the slooow availability of the Mac file conversion utilities. Microsoft has been doing pretty well with Office on Mac, but that one issue really reminded everybody that the Mac is a second-class citizen, which is a shame after all the work they've put in to applications like Entourage.

(c) not running so many loss-making divisions in the name of diversification.

I agree. I'd like to see them drop the pointless web search and advertising focus. Yes, this means giving Google a practical monopoly. But:

1) Microsoft has spent BILLIONS on this, and is barely any better-off than they were before, and

2) Microsoft is simply no good at it. But that's ok, you can be no good at things! Just accept it and move on.

They've had a catastrophic release for each of their main products, and in doing so,

The Office 2007 release was not catastrophic by any measure, except for maybe Slashdot chatter.

Not innovating merely requires laziness, but not innovating

Except Office 2007 is exactly the kind of innovating that people have been asking for, and you just panned it.

Man, I was enjoying your post until the last couple paragraphs. :)

Will he be replaced? No.

[SmallFurryCreature]

Stock is a LOUSY indication of a CEO's performance. Even the article itself makes this clear, earnings went up together with profits, yet stock price went down.

The stock market is about emotion and it seems to be run by 12yr old boys. "OMG the MS did notzers hve 9 trillion winnezers, SELLORS!" This is after all the stock market that gave billions in value to web companies that gave things away for free and refused to buy stocks in decades old companies with reliable safe markets.

Ballmer, as much as I despise the guy, is the CEO MS has to have. Yes, MS COULD try to be an Apple, but it can't. No Zune team, the problem ain't Ballmer, the problem is YOU! The MS staff, those 100.000 people who couldn't come up with an original thought if it bid them on the ass because you are to busy watching the stock market.

Just as a dog reflects its owner, a CEO reflects his company. MS is the boring spreadsheet maker. It can't do an iPod or indeed a PS3. Little Big Planet could NEVER have been a MS project. Simply doesn't fit. Why do you think MS bought up so many game companies and then sold them again? They try to buy the color they lack only to find everything turning gray in their hands. They got the midas touch, expect that everything turns to lead. And lead sells very well indeed. But it ain't sexy.

MS can't ever be sexy, it is not its role in life. IBM isn't sexy either and it does very well because of it. If you want sexy, you go to Sun... and yes that Sun has been bought up says a LOT about how well sexy works. If you want a boring reliable server, you go IBM.

And if you want to outfit 10000 workplaces with an OS/productivity solution, you go MS.

The Zune and Windows Mobile are side excercises, they may someday result in a profit on their own but the cash cows remain Windows and Office and nothing has changed under Ballmers leadership. It is just that in the stock market, improving your earnings and profits results in a lower stock price because you didn't give all your money away and hope to make it up in bulk.

Re:Will he be replaced? No.

[Asic Eng]

No Zune team, the problem ain't Ballmer, the problem is YOU! The MS staff, those 100.000 people who couldn't come up with an original thought if it bid them on the ass because you are to busy watching the stock market.

Well, if a single programmer doesn't succeed, then it might well be his own fault. If a whole development team fails to achieve results, you might want to look at the managment structure - wrong hiring strategy, unrealistic goals, poor planning, are likely candidates. If the whole company has a bad culture - then you need to look at the people who are running the company. You don't get thousands of people conspiring to do a bad job, if their performance is bad in then there has to be a reason.

Apple vs. Microsoft No Longer Relevant

[Slash.Poop]

One has a primary focus of SOFTWARE and secondary focus on GADGETS
One has a primary focus of GADGETS and secondary focus on SOFTWARE

Re:Ballmer Out, Dark Knight Radick in!

[nschubach]

I'm not sure... Ballmer has done more for the "Microsoft driven by a crazy monkey" image than anyone. If they replace him with someone with a higher approval it may make a lot of unhappy people who would rather keep the lead weight at the top and bring Microsoft back down to the competitive arena.

Personally, I think the best thing all around would be to have Microsoft's market share crumble to less then 50% and promote more competition. With a competent CEO that may be a longer curve than leaving Ballmer in charge of the direction of the company.

Re:It's not just Ballmer

[TheLink]

OpenOffice sucks, it's ok for the price I guess, but it sucks. The mods may mod me flamebait but it has bugs that would not have passed proper QA.

Example: http://www.openoffice.org/issues/show_bug.cgi?id=56449

There are others I've had that I can't really remember in detail - I think I had some problems with Impress - when I ended certain bullet text entries with certain characters, weird stuff would happen - mades me wonder how screwed up the underlying code is.

Other options: http://wapedia.mobi/en/Office_suite?p=1

I've tried the eval version of Kingsoft Office and it does look quite like MS Office. I think they just need to make an Outlook compatible that works with Exchange and they would either be a great success or sued to oblivion by Microsoft ;).

Re:Ballmer Out, Dark Knight Radick in!

[MemoryDragon]

The problem is not Ballmer, the problem is generally the way they do business. Microsoft never was about invention it was about copying or buying the competition. This worked until the late 90s when most people were not exposed to the better competition. The game has changed now, and Microsofts problem still is the lack of innovation they still copy apple like they did the last 30 years but people know the original nowadays.
Add to that that Bill Gates despite his constant mispredictions had a good feeling where technology was heading or at least recognizing it before it was too late while Ballmer as the sales guy never had it, but also the upper and mid management does not seem to be in touch with that sense (probably an MBA thunking layer they built on top of engineering)

Microsoft simply has become what Bill Gates despised in the early 80s, the next IBM. Boring but there, earning lots of money, but not really that interesting anymore.

Re:It's not just Ballmer

[guruevi]

They're losing market share quickly though. On campusses across the world students are chosing Apple machines with Mac OS X over comparable or even cheaper Windows models. Any geek worth it's salt is either dual-booting or exclusively Linux. They lost the tablets, they lost the next generation of netbooks and unless Windows 7 on Phones is a lot better than either version 5, 6 or Kin they are going to lose the phone market as well. It's not necessarily market share but the way the market is going. Sure, they're entrenched in companies worldwide which gives them the market share but they're slowly, and in some niches quickly, losing the market mind (we wish we could convert to something else except for this...) as well as the market share.