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Ballmer Admits Microsoft Whiffed Big-Time On Smartphones
Nerval's Lobster writes "During an executive Q&A at Microsoft's Financial Analyst Meeting on Sept. 19 (video), outgoing CEO Steve Ballmer admitted that Windows Phone had a minuscule share of the smartphone market, and expressed regret over his company's inability to capitalize on burgeoning interest in mobile devices. 'I regret that there was a period in the early 2000s when we were so focused on what we had to do around Windows that we weren't able to redeploy talent to the new device called the phone,' Ballmer told the audience of Wall Street analysts and investors. 'That is the thing I regret the most.' Back in 2007, Ballmer famously denigrated the first-generation iPhone as an expensive toy that would fail to gain significant market share. He was forced to eat his words after the iPhone became a bestseller and ignited a huge market for touch-screen smartphones. Google subsequently plunged into that smartphone arena with Android, which was soon adopted by a variety of hardware manufacturers. While the iPhone (running iOS) and Android carved up the new market between them, Microsoft tried to come up with its own mobile strategy. The result was Windows Phone, which (despite considerable investment on Microsoft's part) continues to lag well behind Android and iOS in the smartphone wars. Even as he focused on discussing Microsoft's financials, Ballmer also couldn't resist taking some swipes at Google, suggesting that the search-engine giant's practices are 'worthy of discussion with competition authority.' Given Microsoft's own rocky history with federal regulators, that's sort of like the pot calling the kettle black; but Ballmer's statement also hints at how, in this new tech environment, Microsoft is very much the underdog when it comes to some of the most popular and lucrative product segments."
I've worked and consulted for plenty of companies where a sales guy get promoted to the top. It never works out well.
Absolutely.
Ballmer is the one that put the "Every department MUST rate their employees, and MUST fire the employees that have the lowest ratings. Every year." system in place, which is...insane. And stupid. In fact, it's so insane and stupid it's almost unbelievable. This guy is the CEO of one of the richest companies in the world? And he put a system in place to ENSURE that EVERYONE spends most of their workday sabotaging the other employees in order to save their own job?
Ballmer only got/kept the job because he's buddies with Gates, and buddies with the Board. That's how it works in EVERY corporation these days, but generally the CEO is somebody that, at worst, is harmless. Ballmer was actively incompetent, and his idiocy damaged the company. He should be sued by the shareholders.
I disagree that was the problem. The problem was that he made the same mistake that most of us geeks on here make - projection. He thought that people wanted smart phones to be little computers. Most of the commenters on here want the same thing - a little unix box that they can ssh with and such. He led MS down a path of making little pocket computers, complete with Start menus and everything. And you know what? They were more successful than just about any other smart phone. Things looked good... good enough to dismiss the iPhone as a toy when it came out.
And he was right, it was a toy. But apparently the toy market is a lot bigger than the pocket computer market. It turns out that people wanted a pocket toy, and not a pocket computer. That the toy happens to use a computer to make it so much fun is a technical issue.
Where Balmer gets blame is how badly MS executed on their toy once it became clear that the market liked the iPhone. Google figured it out IMMEDIATELY, so it's not as if it was too much to expect. Sure, initial Android sets kind of sucked, but they were toys and they were cheap - so people could overlook a lot. And since then, it has gotten quite slick. Microsoft, meanwhile, assumed that kids were the driver and brought out that ridiculous Kin based on CE. Then they tried coming out with a refreshed CE in 6.5, which fooled no one. Finally, after losing out the low-end to Android and the high-end to Apple, they come out with a proper Windows Phone. Even then, while it certainly has it's merits, it is essentially another iPhone/Android and really brings nothing to the table that would make people choose it over the competition. And on top of this, it was still trying to pursue the "charge for software" model, when the chief competition is free!
Now they finally made the right move in buying a hardware vendor. If they go toe-to-toe with Samsung, I'm not sure they will ever recoup their investment. After all, Samsung is vertically integrated and is a monster in their capacity to turn a small profit on low-end phones. They are going to have to chase Apple (and Samsung) at the high end. I wish them luck!
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
This is a cop out statement if I ever heard of one.
Just Wiki http://en.wikipedia.org/wiki/Windows_Mobile#Windows_Mobile_2003
And you will see that at one point Microsoft had 41% of the "smartphone" market at the time. Their only major competitor was RIM.
I mean Microsoft defined "smartphone", their phones allowed you to run apps, games and multimedia and was the natural evolution of Windows Pocket PC which was also a major player in the early 2000's.
To say that Microsoft did not invest talent into mobile devices and phones in the early 2000 is pure, unadulterated bullshit.
Yes, iPhone was a disruptor in the market, but Ballmer simply turned over and gave up on Windows Mobile products. It was 100% his own incompetence as a CEO to maintain a product that had, at one time, a major segment of the market.
Its like Ballmer is trying to make it sound like he just didn't see the potential for Microsoft to capitalize on phones and was too focused on desktops, and not the bigger reality that Ballmer is just incompetent as a CEO for letting a product that once defined the market at the time slip into irrelevance.
Ballmer the Blamer, this is going to define him as he wraps up his days at Microsoft.
I haven't thought of anything clever to put here, but then again most of you haven't either.
Absolutely.
Ballmer is the one that put the "Every department MUST rate their employees, and MUST fire the employees that have the lowest ratings. Every year." system in place, which is...insane. And stupid. In fact, it's so insane and stupid it's almost unbelievable. This guy is the CEO of one of the richest companies in the world? And he put a system in place to ENSURE that EVERYONE spends most of their workday sabotaging the other employees in order to save their own job?
(as an ex-Microsoftie) the negative impact of the review system wasn't just about saving yourself from landing in the bottom 10% and being managed out, it was all through the scale also for the top performers. There was a forced distribution curve, across often quite small and visible groups of employees. Only so many % in a certain pay level band and role type could get the best rating, only so many % could get the next level etc. This had significant impact on your yearly bonus, and on your career opportunities.
Problem was: 1) You often knew who your internal competition for getting a good rating was (and you were often asked to provide 360* feedback on them...). 2) The people who decided on your final rating (moving people up and down to fit the curve) was usually skip-level execs that had no direct visibility on your performance unless you played politics - which this obviously became a very strong incentive to do. Getting a good rating was about focusing on internal success factors and self-marketing (making sure you were perceived better than your internal competition) much more than external (customer/market) focus, performance and results. I still believe the senior leadership team grossly underestimate the toxic effect this have on the org, and how much focus and resources are wasted on these internally driven motivations.
This was one of the main reasons for me leaving. I'm now very glad to be working somewhere were we can succeed together. It makes such a difference. And for friends still there, I really hope the new CEO can put an end to this madness.
Let's not forget the monkey dance
Really, the stupidest thing the man ever did was laugh out loud in public at the iphone. That pretty much says it all. He doesn't understand technology. That would seem to be a nice quality to have for his role. The entire strategy there is wait for someone else to do something nice, get some traction, use your own market share to muscle your way into the market, and then start pushing everybody else out. That worked for Gates, but Ballmer was too slow to react. Constantly. Could not see it coming, and then laughs at the biggest shift in technology in the last decade. Dweeb.
But that isn't why it is popular.
W..w..W - Willy Waterloo washes Warren Wiggins who is washing Waldo Woo.
Finally, after losing out the low-end to Android and the high-end to Apple, they come out with a proper Windows Phone. Even then, while it certainly has it's merits, it is essentially another iPhone/Android and really brings nothing to the table that would make people choose it over the competition.
And I think this is a big issue that people overlook: People have a tendency to think in dichotomies, rightly or wrongly, especially regarding issues in which they lack deep knowledge. As a result, markets tend to be perceived in people's minds as a choice between the default/incumbent and the alternative/newcomer. This is in fact part of what has kept Windows in such a dominant position for so long. People are only willing to consider the two options that they were most aware of: commodity Windows machines or Macintoshes.
The tables are flipped on Microsoft in the mobile market. For all the same reasons Linux has trouble breaking into the desktop, Microsoft is having trouble breaking into phones. People are increasingly seeing their phone purchase as a choice between iPhone and Android, seeing one as the default and the other as the alternative, and people generally aren't looking for a second alternative. If Microsoft wants to succeed, it's not enough to be "as good". They have to be significantly better in ways that people care about, and they need to maintain the advantage few a few years, without allowing Apple and Google to catch up, so that there's time for people's contracts to expire. Good luck with that.
> what do you expect? ballmer got his MBA at harvard at the same time the current GE CEO was there. and that's where the ranking system was born, at GE
What you are referring to is the Jack Welch approach. Its a strategy that was developed to eliminate excess employees. It works. Its biggest pro is that once implemented it shows the main result of excess employee elimination in a short period of time. It has two major flaws one that appears in the short term and one that appears in the long term if you continue to the use the strategy. The major flaw in the short term is that you can have a department full of amazing employees but you're forced to eliminate someone, this is probably something most companies are willing to accept when deploying the strategy. The other major flaw which Microsoft is now seeing is what happens when you keep this strategy around for too long. It creates a hostile environment where no one wants to help each other. No department wants to see the other succeed nor do they want to see their co-workers succeed because you're in constant competition for your own job.
Its a strategy that can work and it did for General Electric, but Jack Welch had other strategies he mixed with this strategy that made it work with GE.
The world basically hates Microsoft. There are tons of reasons for it, but when it comes to new computing devices (that is to say, non-PCs) they do NOT want Microsoft running it because of their horrible experience with Microsoft stuff. It's a discussion which would last until the end of time as to what and who is to blame if the people's experiences were caused by others people and that it's not Microsoft's fault or even if it's just perception which is no longer valid. It doesn't matter. It's like the stock market -- it is what people believe it is and that's the end of the story.
So when given a choice, people choose "not Microsoft." Not so much that they choose Android or Apple of whatever. It's that they voted "not Microsoft." And I think that says more than enough in a completely clear and understandable way. However, has Microsoft paid any mind to this problem? Have they worked to reverse those problems at all? Once again, opinions will vary, but I'm saying NO. No visible effort at attempting to win the hearts and minds of the users. They already have dominance and all their effort was, in my opinion, coasting and doing just enough to maintain and take advantage of their dominance.
To this day, one example of Microsoft hubris sticks in my mind the strongest and I just can't get beyond it. Microsoft one day changed their volume licenses of Windows to "upgrade only." This enabled them to sell two copies of Windows for each computer sold. A business who wanted to save money on licensing used to buy enough seats for their users and that was it. But Microsoft just changed the license terms and said "you have to have Windows in order to qualify to use your volume licensed images." When I learned about that, I was just furious. No longer can we save money by telling Dell, "no OS... we'll take care of it." Sell it twice and use it once. Come on!!!
Not only did they lose the good will of the end users who hate Microsoft for speed, usability and stability reasons, they started taking advantage of the businesses who are their primary source of money.
So when people have a choice, choosing "not Microsoft" seems like a rational choice.
I regret that there was a period in the early 2000s when we were so focused on what we had to do around Windows that we weren't able to redeploy talent to the new device called the phone,' Ballmer told the audience of Wall Street analysts and investors. 'That is the thing I regret the most.'
Should be...
I regret that there was a period in the early 2000s when I was so focused on what I had to do around Windows that I wasn't able to redeploy talent to the new device called the phone,' Ballmer told the audience of Wall Street analysts and investors. 'That is the thing I regret the most.'
Absolutely. Years ago I was working for Microsoft at the Mountain View campus when Ballmer interrupted his address to a cafeteria full of employees to chastise a guy who had an iPhone, belligerently telling the crowd that we should all practice brand loyalty the way his family did. At the time I was still holding out hope for Windows Mobile, and had a Blackjack in my pocket, but I remember thinking Ballmer was a royal asshole, without a shred of humility and unable to have the common sense to recognize an engineer's choice of superior technology. At the time there were a number of MS employees in the audience with iPhones in their pockets. Ballmer could have made points by admitting the worth of the competition, and trying to rally opposition. Instead he just looked like a chair-throwing lunkhead.
Wir sind geboren, um frei zu sein - Rio Reiser
Microsoft was not looking to make a Phone a PC
I worked at Microsoft from 2004-2005. This was before the iPhone or Android phones. Most people had flip-phones. If you wanted a smart phone, you either got a Blackberry or a Windows phone. Those were the most advanced phones on the market. They were around years before Apple thought of getting into the phone business.
Keep in mind that Microsoft mainly earns its money through the sales of Windows and Office. So, every product they make is engineered to drive the sales of those two products. One of the initial groups I interviewed with at Microsoft were the guys making the Windows phones. (No, I didn't end up working with this group.)
Yes, they absolutely were attempting to bring the Windows PC experience to the phone. And yes, that was a disaster.
The problem was that tiny screens don't work well with a Windows type of interface. Users don't like the clutter. Microsoft needed to make the interface transparent and focus on what people actually wanted to do with their phones, which is use applications.
Hiding the Windows interface doesn't work when you're attempting to promote Windows. Marketing which promotes "Windows on your phone!" doesn't sell phones. I remember thinking during my interview, "what does Windows on my phone actually get me? Why would I want that?" Microsoft itself couldn't adequately answer that question until the iPhone and Android came out and focused on the apps. Even then, Microsoft still screwed up their answer to the iPhone and Android. They simply can't get away from promoting Windows and Office.