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Steve Ballmer's Big-Time Error: Not Resigning Years Ago
Nerval's Lobster writes "Any number of executives could take Ballmer's place, including a few he unceremoniously kicked to the curb over the years. Whoever steps into that CEO role, however, faces a much greater challenge than if Ballmer had quietly resigned several years ago. Ballmer famously missed the boat on tablets and smartphones; Windows 8 isn't selling as well as Microsoft expected; and on Websites and blogs such as Mini-Microsoft (which had a brilliant posting about Ballmer's departure), employees complain bitterly about the company's much-maligned stack-ranking system, its layers of bureaucracy, and its inability to innovate. Had Ballmer left years ago, replaced by someone with the ability to more keenly anticipate markets, the company would probably be in much better shape to face its coming challenges. In its current form, Microsoft often feels like it's struggling in the wake of Amazon, Google, Apple, and Facebook."
In an interview with ZDNet, Ballmer said his biggest regret as CEO was in how Windows Vista was developed. Opinions are divided on both the nature of his resignation and what it will mean for Microsoft. While the stock price is up, BusinessWeek and others suggest the purpose of the transition is to find somebody better able to anticipate future trends. That would certainly lead to more organizational changes within Microsoft, something employees suffered through just last month. Ben Kuchera at the Penny Arcade Report points out that this could mean Microsoft will try to re-enter markets it has abandoned. He asks the company to "stay the hell away from PC gaming."
In an interview with ZDNet, Ballmer said his biggest regret as CEO was in how Windows Vista was developed.
The aftermath of Vista is precisely when he should have resigned. CEOs of other tech companies have resigned for lesser debacles.
Ballmer resigned. Stock went up 7.29% in a big jump of about $20B in value.
So Microsoft without Steve Ballmer is worth $20B more than a Microsoft with Steve Ballmer.
That is the legacy of a great man.
Steve Ballmer the -$20B man.
Which 'splodes first: RMS, or MS?
Get thee glass eyes, and, like a scurvy politician, seem to see things thou dost not.--King Lear
Long ago (around the first IE anti-trust lawsuit installment) I heard the argument that breaking Microsoft into separate companies along the OS, Backofffice, Office, Database, and Internet (this was before XBox) areas would be best for the company's overall innovation and net profit. Ballmer never did that, either.
The theory was each element would be more free to do what it needed to do for itself, without the weird requirements to interconnect with the software and rules of the other groups, and as separate companies more of an "invisible hand of the market" could guide decisions instead of management. Collaboration and interoperation would still be allowed and encouraged because the sub-companies would all be wholly-owned subsidiaries, but management control would not span any two of them.
This break-up theory would address a number of things Ballmer seems to have said he was trying to fix over the years.
The question isn't if he should have been let go years ago, the questions are when he should have been let and what the hell took so long? Defenders like to point out that Microsoft has become more profitable and larger under Steve Ballmer. Ballmer had disaster after disaster at the helm of Microsoft, imagine what the stock would have done /without/ all the disasters the Ballmer created?
Personally I'm of the opinion he should have been let go after the fiasco that was Vista.
Folding chairs throughout the northwest can breathe a little easier easier.
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Prisencolinensinainciusol. Ol Rait!
My prediction is that by Windows 9, Metro will be an optional (and thus ultimately destined to be scrapped) feature.
The world's burning. Moped Jesus spotted on I50. Details at 11.
No one takes a nearly $1 billion write down and lives to make more humongous mistakes another day. There's got to be a line somewhere, and Steve finally crossed it.
would be good for Nokia to get rid of him and Microsoft will continue it's journey into irrelevance. Double Bonus!
You know it's time for the next revolution when your rulers' names end with roman numerals.
I use to work there and can relate to much of what the article says. It's a good place for a well paying stable developer job but definitely not for innovation. There is a group think there that has saturated the company, and if you are not with the prevailing group think people are dismissive of you and you stop getting invited to the meetings where strategy is discussed. I'm not bitter... The wife and I just started having kids at the time, so I certainly didn't make an effort to rock the boat--I just quietly did what I was told and took the paycheck because I had more important things going on in my life than trying to fight company politics and business tactics.
A while back, a slashdot commenter made the observation that Microsoft has a generation of leadership now that has never experienced the realities of running a business that faces the risk of failing and going under. I think this is true and it has negatively affected the company. I don't claim to be a rock star developer, but I saw a lot of smart and visionary developers at Microsoft. Unfortunately, however, being a leader and visionary wasn't rewarded--being a fun guy to have scotch and cigars with was the way to climb the ladder.
Okay, so I'm a clearly-labelled "Microsoft Hater." I haven't always been this way. I got really comfortable with Win3.11 and then Win95 came out I experienced a level of computer excitement I haven't had since I started using OS-9 level two. (I am still quite fond of OS-9 though... just been a very long time.) I loved what Microsoft did. The advancements were terrific and long-awaited and all the precious knowledge I had acquired and accumulated over the various versions of DOS and Windows still applied so I was still relevant and loyal.
But then Microsoft started souring things. They tried to take over Java... tried and failed. They started pulling some extremely dirty stunts with their "partners" and such to the point it harmed so many other out there. I couldn't see those immoral acts without my opinion changing about the company behind the products. Some people just saw money and work. I have always seen more and I can't unsee it. When I see an OS user interface or go over source code or anything that goes into the design and engineering of such systems, I don't just see objects, I see ideas and what people were thinking when they put it all together which invariably results in a sense of knowing something about the people behind the creation of all of these things. For me, it was pretty easy to tell when something was a cludge or if real planning and design work went into things or how much respect one party had for another when parties worked together on a project. To me all of those things were the human element of what came together in creating these things. I may be pretty unaffected by fine art, but when I saw what when into computing back in the earlier days, I found myself quite moved by some of the things I saw. It was my world.
Microsoft slowly destroyed my world and all the things I loved about it. Microsoft started out making really cool things but when they really started getting big, they were increasingly about destroying others and less about creating cool things. If you want to understand why a Microsoft hater hates, I think my case is pretty clear by now.
And a new Microsoft could also rekindle all the new and cool things all over again. Sure, it may not be a "wise business decision." Most cool things aren't. But I think we're all ready for something really new and cool. We aren't going to get it from Apple. Google and Android is pretty much levelled off already as far as I can tell. A new Microsoft holds an opportunity within itself to recapture the love and awe it once had. So why haven't they done it already?
We know why... I just wish they would.
Microsoft often feels like it's struggling in the wake of Amazon, Google, Apple, and Facebook.
That's because Microsoft has basically been a monopoly for so long they lost whatever entrepreneurial spirit they once had. For two decades now Microsoft has been about protecting Windows and Office which to this day remain their big money makers. It's really hard to blow everything up when you are making billions in profit every year. Balmer is a classic example of the and the company seems to be a case study in the innovator's dilemma.
Worse the company has to fight against the law of big numbers as well. There simply aren't that many projects available to you that are going to move the needle for a company like Microsoft. Microsoft brought in around $77 billion in sales last year with a profit of $21 billion. That means for them to grow just 5% a year they will have to essentially build a company that sells nearly $4 billion each year and next year the hurdle is even higher. To do that while maintaining a 27% net profit margin is absurdly difficult.
They have the bankroll to survive but it is not at all clear how they will find another opportunity remotely as profitable as Windows/Office. It's also not clear if Windows/Office has a long term future. Short term, nothing is going to hurt them but long term things are quite unclear. There are some serious competitive threats to Windows/Office out there. I think Microsoft management is aware of the problem and I think they are equally mystified about what to do about it. The fact that they offered over $30 billion for Yahoo speaks volumes about how empty of ideas they have become. (It speaks bigger volumes about how stupid Yahoo management was that they didn't take the deal) Even when they get the direction right (Surface Pro is a sound concept - integrating tablets and PCs) they tend to screw up the execution. They even tend to screw up when they try to buy their way into a market. It's taken them so much money to make Xbox competitive that I doubt they'll ever actually recoup the investment. Microsoft might be able to grow through acquisitions though I'm not sure they have the culture for it. I really don't see most of their acquisitions thriving. Anyone think Microsoft is going to do anything amazing with Skype? Didn't think so.
Frankly I think whoever takes over the reigns next is not going to have an easy time of it. I'm not ready to say Microsoft is doomed but turning that ship around is going to be a herculean task.
Microsoft didn't miss the boat. They inadvertently helped create the very circumstances which led to them being excluded from the current tablet and smartphones we have today.
Back in the PDA days, it was a two-player game: Palm vs WinCE (later renamed Windows Mobile to get rid of the awful abbreviation). As with Netscape vs IE, Microsoft competed its heart out until it won, then dropped the ball. After Palm was more or less vanquished, Microsoft rested on its laurel. Windows Mobile pretty much went nowhere (and some would say it even went backwards with Microsoft trying to foist the Windows Desktop interface paradigm onto it). Everyone could see phones and PDAs were going to converge (and those who couldn't should've gotten a wake-up call from the Blackberry), but Microsoft made no real effort to add phone capabilities to Windows Mobile. So in the end PDA features ended up being added to phones, instead of phone capability being added to PDAs. And when PDAs went away, so did Windows Mobile.
Microsoft was a major driving force behind the Tablet PC. The Tablet versions of Windows were actually pretty good, especially the handwriting recognition. But where they erred was they wanted to make sure every tablet sold was also a copy of Windows sold. So they focused on making sure tablets were high-end PC notebooks which converted into the tablet form factor. While companies were ok with buying a $2500 tablet, regular people weren't. The immense popularity of netbooks should've been a wake-up call that there was a huge untapped market for a small, (relatively) cheap consumption-only device. But Microsoft did its best to steer manufacturers away from these low-end devices which didn't use Windows (and in fact killed off the Linux-based netbooks by making "Starter" versions of Windows). So tablets were relegated to high-end high-cost devices.
When you manipulate a market like this and steer people away from the direction the market wants to go, you create a lot of invisible pent-up demand. Apple managed to latch onto that demand with a tablet which neither used Windows nor Intel CPUs. Microsoft (and Intel) only have themselves to blame for trying to steer the market in a direction more favorable to themselves, rather than producing what the market wanted. That may have worked in the 1980s when computers were predominantly bought by businesses who could justify their high price by the additional profit they'd help generate. But once people began buying them for home use, the market became much more price-sensitive. I mean what was the point of buying a $2500 tablet PC, when you could buy a $800 laptop and a $500 iPad?
Who are they kidding?
Rule #1 for a large company: you don't anticipate markets with an eye to joining or ruling them. You kill them before they can start. If you can't do that, you play catch-up, or you use legal weight to try to stop them.
They were behind on phones and tablets in 2010 just like they were behind on the internet in 1995. They got *lucky* in 1995 that they could buy their way into it (at great expense: giving away IE and then all of the legal fees involved for the anti-trust cases in just about every country in the world...).
They simply couldn't get that lucky now 'cause everybody knew they would try and so could out-innovate knowing that was the one thing they could do that M$ couldn't (and never could, not since day one...).
Large companies, unless you're Apple (willing to sacrifice one generation of customers for another), or Google (able to get most of the products to drive eyeballs back to your core income stream), simply don't innovate. They simply don't try to take over businesses they aren't already in (except by buying their way in, a-la Oracle). Microsoft had all the brains in the world but would NEVER have actually let them create a new product line if it ever put Windows or Office at risk. Never. Just like Xerox could never market the desktop workstation because the paperless office was a threat to their copier business.
Microsoft simply would never have been able to compete here. Ever. Internally they couldn't muster it, externally the other companies knew how to handle them.
"But remember, most lynch mobs aren't this nice." (H.Simpson)
-- Joe
They have a much richer set of offerings and ecosystem for end-users as well.
Despite years of trying, Amazon has done what Microsoft STILL could not: make solid inroads into the music market dominated by iTunes. And every item you purchase on their site (electronic or not) ends up in your cloud player collection, making it a very attractive deal.
And Amazon has the entire e-book market locked-up, an impressive competitively-priced competitor to Netflix (Microsoft has no such offerings), and don't forget the successful Kindle/Kindle Fire tablets to enjoy all that content on!
Even though it's not the standard on Android, I have a feeling more people make use of the Amazon App Store than Microsoft's Windows Phone Store. Microsoft can only wish they had made all these right moves years back, instead of letting everyone gallop ahead of Win Mobile.
Man is the animal that laughs.
And occasionally whores for Karma.
Eh, after using it a while, it's kind of a toss up. Windows 8 actually does have a few nice features, and I am able to do some things far easier than I can do in Windows 7... However, there are some changes that were mindbogglingly stupid.
The thing is, the the much maligned Start screen isn't really as bad as people make it out to be. I believe people are just using it wrong. In their defense, I don't think Microsoft makes it clear to their users how it should be used, and how it works best if used differently than the old Start Menu worked.
I think many people just haven't figured out that it's ok to remove apps from their Start Screen and customize it just be their favorites. Unlike the Start Menu, the Start Screen still allows you to easily access lesser used programs through the search charm or through the All Apps button. There's no reason to have some huge cluttered mess of everything you have installed on the Start Screen like the average Start Menu has.
Though, most Windows 8 metro style apps are rubbish. Only a few seem to be worth using instead of a standard Windows version, and I find that metro apps don't handle multiple monitors in a way that really makes sense.
I don't care for it enough that I want to bother upgrading my home machine from Windows 7 to Windows 8, but I don't hate it enough that it would bother me if I picked up a laptop that had Windows 8 pre-installed.
On the other hand, over the last few years I've found the number of reasons for sticking with windows to be slowly dwindling, and I might consider using Linux for more than VMs and toy machines.
See, the thing is, America, or rather the OECD in general, isn't interesting any more. PCs have penetrated everywhere they're going to, the population isn't growing any more, and all that's left is replacement. And there are all these annoying parasites and egg-robbers around (Google mail and docs, the various office apps for iPads, web-based workflow like Yammer, the BYOD wave, etc., etc.)
In the OECD, it's death by a million cuts for Microsoft. The slow decay back into the swamp. Not so slow, if they mess up Active Directory.
The computing market growth is in Asia. (To a lesser extent, also in Latin America, and Real Soon Now, Just You Watch, in Africa.)
And what are the Asians buying? They're buying el-cheapo 800x600 (or worse) TN panel 512MB RAM ARM-cored tablets running Android, made by Coolpad/Yulong and a million no-name backstreet factories on razor-thin margins.
Microsoft can't compete with that: its business model is high cost rent-seeking.
When Asians finally have high-enough incomes and want to go up-market, they won't want to buy something that's been perceived as a loser for the last couple of decades (as will be Microsoft's case by 2020), they'll want either what they already use (Android, or possibly Tizen by then), or new and shiny, and preferably made in their own country.