I can't believe that the article doesn't contain the slightest mention of any of the numerous disasters that took place under Ballmer's leadership. The writer makes it sound like Ballmer's only fault was that he was only a little too slow to change the company. In reality Microsoft lost billions due to tactical business errors like the Surface, Xbox hardware failures, Windows Phone, and the Zune.
That is an interesting narrative. Microsoft didn't "lose" anything, they have made billions over the last decade. So you have a profitable company bringing in billions of dollars that is pretty much qualifies as "doing a good job."
So when people talk about the 'lost billions' they create a hypothetical Microsoft, the one of today which made billions of dollars but also dominated in new markets and made billions more. There is absolutely no evidence that Microsoft could have done both, regardless of who was at the helm. It would have been epic, but it isn't clear that it was possible.
So this article was Ballmer's take on his reign, he's not going to say "I didn't capture the smartphone market" he is going to remember that he made a lot of money off enterprises for his employees and his shareholders. I would happy to be that successful.
Google has never made serious money off their hardware products or operating system products, Apple has never made serious money off their operating system products or their network products, and Microsoft has never made significant money on either network products or hardware products. All three have a space where they are really good, all three are so so in the other two spaces. Why is Ballmer presented as an idiot and Page and Cook not?
"Why is Ballmer presented as an idiot and Page and Cook not?"
Maybe because Page has not defined his company's success in terms of how many Nexus devices it sells; nor does Apple define its success in terms of how many licenses it sells to enterprises. Ballmer, on the other hand, not only has entered foreign market spaces such as Web search, hardware, and phones. He has also thumped his chest about how Microsoft is going to wallop the competition in those spaces. Google and Apple typically do not talk about how they are going to beat everybody else; instead, they talk about how good their products are. Ballmer laughs at other companies' products and enters the market late and says he will beat everybody else.
Thus, Ballmer has failed on the terms that he defined for himself. He said he would wallop other companies. He did not. Not only did he not wallop other companies, but while trying to do so, he destroyed good products and hurt Microsoft in its strong markets. See for instance Windows 8, which is useless for Microsoft's big corporate customers and gets it nowhere in the tablet space it has so desperately tried to make headway in.
So, maybe if Ballmer spent less time chasing markets that Microsoft is no good in, and more time reinforcing the company's strengths, he would not be presented as an idiot.
Its a reasonable criticism that he wasn't able to follow through or execute on his vision for the company, like Apple couldn't follow through on its Ping vision or Google its 'iGoogle' vision. Any I still disagree on the narrative that he 'lost billions.'
Imagine if Apple spent billions on boondoggles that made it such that instead of having $150B in their bank account, they only had $100B or $50B - because that's what's evident - MSFT might have double it's current cash ($80B) [1] if it had executed well on those new key ventures.
Is it any less a managerial failure to repeatedly fail to execute like this than it is to push a company from profitable to unprofitable (or run it into bankruptcy)?
And that's ignoring the cultural morass that failed policies like stacked ranking promote - that could likely have poisoned Microsoft's productivity well.
Well if you are unconstrained from reality you could argue that Apple could have made MacOS available for any x86 laptop and sold it from $50/copy and completely STOLEN what was left of the technical Windows market. But no, their stupid reliance on only putting it on some over priced hardware left BILLIONs on the table.
You see how that works? In lots and lots of ways MacOS is much better than Windows 8, and yet Apple won't sell it to Dell or Lenovo to pre-install on their laptops, they won't even talk to them about it. But it would be cool (and we know its possible with all the Hackintoshes out there). Everyone agrees that Microsoft fumbled on the phone business and Apple executed very well. Apple so far has totally fumbled their network products offering, social music network? icloud? not stellar.
"Unconstrained from reality" is an understatement for your example.
I'm not arguing that Microsoft should have abandoned their cash cows and say "put office on the web" as a target.
Instead they should have, for example, actually stove to make money from their Xbox division (it's still in the red from it's inception).
Or made phones that didn't suck back in the early 00s - I had a colleague doing testing for mobile enterprise software for WinCE and each weekend he'd show me his return list - a half dozen or more OQO, HP, Dell, or Compaq handsets that just up and died during his testing - every week.
Ultimately, Microsoft could be making so much more than what they are. Apple's 1st and second most profitable areas didn't even exist 8 years ago. Microsoft's have existed for 20+, they simply can't make a new profitable venture. That's a failure of management.
I don't know of anyone who set out to not be successful. That is why looking backwards in time is so strange sometimes. You say "Gee, that decision cost you so much time and money!" but you don't necessarily get to see what they were looking at when they made it. Imagine one comes to a fork in the road, unmarked, both lead in the general direction of your goal, one of them has a bridge washed out. At the bridge it is obvious which fork to take, at the fork, which cannot see the bridge, not so much.
I'm not apologizing for Microsoft executing poorly, what I am saying is that there success is a matter of positive degree rather than one of success or failure. We can productively discuss if they may have been more successful had they invested differently but there shouldn't be any discussion that they are not successful.
I don't know where you are in your career or life, but I know that everyone gets a chance to look back and see some things that look obviously stupid in the future looking toward the past. If you are like me, and you see some things that would have really made things different (I turned Bill Gates down when he offered me a job in 1978, I held my tech stocks in 2000 hoping there would be a recovery, Etc.) don't dwell on them. Figure out whether or not you made the right decision with the information that was available, and if so let those past decisions lay in peace and not haunt your dreams.
I have found that this statement : "Ultimately, Microsoft could be making so much more than what they are." is nearly always true. When looking back in time, a path can be plotted which would have made you more money (I could have bought 1000 BTC for $250 for example, I didn't) but that exercise is useless unless it helps to learn something about how to make better decisions right?
r00fus I think that huge pile of Apple cash is a problem for Apple just FYI. It's indicative of a lack of new product vision as they're not doing anything but piling it up from selling legacy products.
Hard to believe that sitting on a pile of cash is a problem. I would think having a huge pile of cash allows you to make smarter, less-pressured decisions. That's my small business perspective.
Do you have any examples where accumulation of cash corresponded with lack of innovation. No challenge, just curious.
> Do you have any examples where accumulation of cash corresponded with lack of innovation. No challenge, just curious.
Aren't we discussing an article about Microsoft? Certainly the perception is that Microsoft has not innovated. (Whether or not you agree, that's at least the general perception.)
Microsoft has been piling up the cash, despite the fact that Microsoft has been paying a dividend for ten years. They've bought back 20% of the outstanding shares. They've bought dozens of companies. They've spent a billion dollars repairing Xboxes.
And despite all that, they just can't spend it fast enough. Their cash hoard just keeps increasing in size.
> There is absolutely no evidence that Microsoft could have done both, regardless of who was at the helm.
I don't buy this argument. Anyone can say "no" instead of saying "yes." It was Ballmer's responsibility to green-light major products for launch, and he decided wrong time and again.
Microsoft has tripled its revenue in 10 years. Its profits have been tripled as well. As much as people hate on Microsoft, it is at its core... an extremely profitable buisiness.
That's missing the point - Even if the sum total was positive the revenue came from businesses such as Windows and Office which everyone agrees are set to decline.
Microsoft was supposed to be in a position to offset the decline from Windows/Office by being a leader in the SmartPhone/Tablets/Online game. Instead, they kept losing money big time and constantly readjusting to no avail in those areas and there is still no sign of them picking up steam at a rate they need to.
There are a whole lot of people who will never migrate away from traditional desktops and laptops, nor away from Windows and Office. The prices of those products could be raised substantially before these is any price sensitivity, because the direct product pricing is a small part of the lifecycle expense of those "seats."
Microsoft has a lot of time and a lot of money to help figure out what comes next for them. Though the money can be kind of a curse. It enabled them to overspend on projects until they became permanent unkillable money losers.
Mostly they need to get rid of dogmas and let their people rip and make something that isn't Windows, and has no Windows legacy tail to drag around (I did not say no migration path or protocol-level compatibility).
> Even if the sum total was positive the revenue came from businesses such as Windows and Office which everyone agrees are set to decline. Microsoft was supposed to be in a position to offset the decline from Windows/Office
It is true that Windows and Office grew over the past ten years. On the other hand, the Server & Tools division grew from 12% of Microsoft's operating income in fiscal year 2003, to 31% of operating income in fiscal year 2013.
Also, there is no decline in "Windows and Office." There is a decline in Windows -- but not in Office. Maybe you think that Office will decline, but the analysts don't. So it's certainly not true that "everyone agrees" it is "set to decline."
And what happens when Windows isn't the most widely used Enterprise platform because they failed at SmartPhones and Tablets and Google happily took their Exchange revenue? Kind of opposite of iPod effect. Things are more interdependent than they look.
Sure, it would take a long time to make a dent but reduced consumer side influence of Windows and office cannot possibly be good for Microsoft's Enterprise business in the long run.
Who were Microsoft's biggest competitors circa 2000? Sun Microsystems? BeOS ? Apple's G4? The big players in Server-space have lost to Linux, but Microsoft has managed to remain big with Azure, Office 365.
* Sun Microsystems / Java is basically dying at this point. Oracle screwed the pooch on this one. C#/.NET are big, and the biggest users of Java don't even use Java anymore. (See Android and Dalvik)
* Internet Explorer has actually survived past Netscape Communicator, Mozilla (the original), and is making inroads into Firefox. Its a bit weird that Firefox was able to capture IE's marketshare, but IE has remained consistently in the top browsers for far longer than any other web browser right now.
* Some products, like Microsoft SQL Server and MS Office, have been repackaged into new forms. Office 365 is price-competitive against Google's line of "cloud" products, and Azure is profitable.
New business ventures have also begun
* XBox / Gaming has been generally considered successful (despite mostly losing money so far)
* Purchases, such as Skype, have brought Microsoft into other markets, like VOIP.
-----------------
Most of Microsoft's "business ventures" are very successful. Windows Phone was the dominant Smartphone of 2007, with 42% marketshare. That is hardly a failure by any stretch of the imagination. I'm talking about Windows Mobile platform and older btw. (Future of Windows Phones, such as Windows Phone 8 / Lumia devices seems relatively positive, especially in India)
Again, why are businesses... in business? To make money. PERIOD. And Microsoft is by all accounts extremely successful at it.
Those were stumbles the biggest failures are not as easily seen.
One of them was the way MS responded to the economic downturn. Despite having billions in the bank MS acted scared. They put the brakes on bonuses, promotions, and hiring. They indulged in a series of layoffs, giving many the impression that their jobs were not secure. MS had the money to project strength, to acquire talent from its competitors, and so forth. Instead they project weakness and abused their own employees.
And the result was that many of the most talented people left the company. People who saw that MS no longer had their back, people who had the easiest ability to find more interesting, more rewarding, or higher paying work elsewhere. And that exodus is still ongoing. It's a process of evaporation. As so many good people leave that diminishes the goodness of the rest of the company, which causes even more people to leave.
The changes in corporate culture and Ballmer's bad strategy decisions have had their role in people leaving as well. Moreover, Ballmer has been pruning the company of high level leadership which could challenge his authority. With predictable results.
Overall the difference in the average quality of people at MS is astounding. It used to be, even in the mid '00s, that the best and brightest work there. Now only a few people at MS fit that category and the ability of the company to execute on projects has been diminished in untold ways.
They referenced "missed opportunities", which is where I presume that stuff fits in. It seems like the main purpose of the piece was to be - for lack of a better term - a "business tear-jerker". You're supposed to see him as a human being.
It did a good job at that, but I agree that it glossed over some truly bad things that happened under his command.
It's refreshing to see Ballmer's attitude towards Microsoft: he's willing to do whatever's in the best interests of the company, even if he personally would prefer to stay around longer (and make more money in so doing). How many professional CEOs can you say the same of? How many people who worked their way up the rungs of leadership would voluntarily step aside, thinking they weren't the right person for the job?
Bear in mind Mulally not only saved Ford, but saved the Taurus:
"I arrive here, and the first day I say, 'Let's go look at the product lineup.' And they lay it out, and I said, 'Where's the Taurus?' They said, 'Well, we killed it.' I said, 'What do you mean, you killed it?' 'Well, we made a couple that looked like a football. They didn't sell very well, so we stopped it.' 'You stopped the Taurus?' I said. 'How many billions of dollars does it cost to build brand loyalty around a name?' 'Well, we thought it was so damaged that we named it the Five Hundred.' I said, 'Well, you've got until tomorrow to find a vehicle to put the Taurus name on because that's why I'm here. Then you have two years to make the coolest vehicle that you can possibly make.'?" - http://www.fastcompany.com/1573670/what-other-automakers-can...
As the driver of a sixth-generation (2011) Ford Taurus, which is in fact a pretty cool car, somehow it doesn't seem so crazy that Mulally could save Microsoft as well...
Yes, that's interesting. I think the decision to keep the Taurus brand was a mistake, since Ford tarnished it with too many shitty cars over the years. They have some really good brands (Fiesta, Raptor SVT, even Focus) but I would consider Taurus irreparable, just like FrontPage.
The company logo needs an update too, IMO.
And they have an incredible iconic brand, "Model T", I think they would do well to use it again.
Some new innovation in trucks would certainly be interesting. As a driver with over 200k on my F-150, I could see some sort of T-150 being a pretty sweet redesign.
I have had the pleasure of seeing Alan Mulally give a couple of talks on leadership, and I can say that he is one of the most inspiring leaders I have ever seen (good video below of a talk he gave). Not because he drives people, but because he empowers them. Microsoft is a company with over 100,000 FTEs and honestly I don't think you need a great tech visionary leading as much as you need someone at the top to empower the tech visionaries running their products, and get out of their way.
He does seem to be quite the leader, but there are very strong correlations between aircraft development and production (where Mulally came from) and car development and production. For Ford, Mulally is a person with deep background in design and physical manufacturing in addition to having great leadership qualities. Is it enough to just have leadership capabilities and weak roots in the core skills of the company?
Even if you say that Microsoft wants a strong future presence in hardware manufacture - building phones and tablets is a very different game than building planes and cars.
I still don't think one has to be the subject matter expert in everything a business does. Mulally should be an expert in building teams to make complex manufactured devices, and he should be hiring (or empowering) experts who understand services or tech functionality better than him. We can't hope that every leader can be a Steve Jobs or an Elon Musk :)
Satya Nadella is a software company guy with the vision to turn Microsoft around. Does Nadella get picked this time around or in 4-5 years after a biz guy continues steaming ahead in Ballmer's shoes?
The larger the company and its existing revenue streams, the greater the resistance to any significant change. Even with Ballmer out, this law of corporate inertia still holds.
As entrepreneurs, the above is actually good news - it's why we have a decent chance of blowing past the incumbent.
Regardless of what some may say about him, spending 30+ years at a company and serving as CEO of your remaining years shows the trust that Steve had. Similar to when Bill Gates left, it will be a sad day when Ballmer is not around.
It certainly is more insightful than a Youtube video of him sweating and yelling "DEVELOPERS" or another rehash of his iPhone-will-never-amount-to-anything quote.
"The Ballmer Years" stock price graph is extremely misleading because the number of outstanding shares has changed. If they want to track Ballmer' performance they should graph market cap.
It depends on your perspective. If you're one of Microsoft's shareholders (the perspective the WSJ may be writing for), market capitalization is not directly relevant.
If Jane owns 100 shares of ABCD that most recently traded at $10 apiece, and then the issuer issues 1,000 new shares to its employees but the shares continue to trade at the same price, the market capitalization has increased but Jane's stake hasn't changed in value.
Shareholders do care about price return and dividends. They might also care about total return, subject to some reinvestment strategy and tax regime.
Market cap is also problematic because it can't be calculated in real time. Reporting companies generally only publish a share count once a quarter. They publish two numbers: the gross count of shares outstanding on a particular day (which doesn't count in-the-money options and other live claims on a company's equity) and the fully-diluted share count averaged over the quarter (without publishing the strike price distribution of the options).
Neither one is exactly what you'd need to calculate an implied whole-company market valuation anyway, so in general any attempt to measure market cap is necessarily going to get an uncertain, out-of-date, imperfect metric. (A useful one, don't get me wrong! But not what principally matters to the shareholders.)
If dilution is a significant factor and you are sitting on a cash pile you can't possibly spend fast enough, then that's a problem with an obvious solution going unsolved.
This is pure speculation, but I don't think Elon would like a "turnaround guy" type of job. He seems to be driven to do really big things that people say can't be done. I don't think Microsoft's shareholders would appreciate the distraction, and to Musk, I'm pretty sure that even "put Windows on top of BSD and open source it" wouldn't be his idea of "big things that people say can't be done".
"Steve was a phenomenal leader who racked up profits and market share in the commercial business, but the new CEO must innovate in areas Steve missed—phone, tablet, Internet services, even wearables."
Why does MS insist it has to be everywhere there's any money to be made? Apple is happy being a phone/tablet company, Google is the Internet gig, but MS has to have a finger in every pie, right?
That's not really true. Google is trying to capture nearly everything, too. Enterprise (docs), phone, tablet, computer, search, advertising, social, ISP, wearable products (Glass), etc.
I guess because they always have, it's the position they are most comfortable in. A company where everybody uses Windows desktops and Windows tablets and phones is much more likely to buy Office and Windows servers because of the whole vertical integration. Once you start letting non MS technology through the door you start to lose that and people will look more closely at non MS solutions in other areas.
My question is what's next for Steve? Being Bill's bulldog has been pretty much a lifelong career for him. In his place I don't know that I'd be happy anywhere else; I might decide to enjoy the huge sacks of cash money I'd made and spend more time with my kids.
To me Ballmer = Cook where Bill = Steve. Cook is taking over a company dominant in it's markets. It's raking in huge sums of cash selling legacy products. There's no sign that Cook can ensure Apple makes the leap to the next big thing. Indeed, coming up through Apple he's probably not the right guy just as Ballmer is now realizing his deeply engrained MSFT strains makes him not the right guy for a new environment.
I think people should wait at least five years before bothering to analyse Tim Cook's tenure over Apple, because at this point, it's just stupid to even try.
