Ballmer’s exit: he was the wrong man, playing the wrong game
The inevitable has happened: Steve Ballmer is exiting Microsoft, which is a fading giant in the technology game. Has he poisoned the well for his successor?
The slow-motion fall of Steve Ballmer must be the most least surprising tech CEO exit in recent years. Microsoft remains a profitable, successful company, but it no longer has the attention of the buying public. 18 years ago, the release of Windows 95 was headline news for the general public. Now? Windows 8 is struggling to gain even marginal adoption amongst both consumers and enterprise. Microsoft is irrelevant in phones and tablets. It’s beginning to look like a footnote in the history of tech, and eventually someone was going to pay the price for that.
One only has to go back a decade to see a Microsoft that looked dominant. It had been slow to cotton on to the internet – but its ruthless push with Internet Explorer made it look as if it might determine how it was used, because it controlled the way most people viewed the web. Now, when people talk about the front-runners in technology, they tend to talk about GAFA – Google, Apple, Facebook and Amazon. Microsoft is nowhere in sight. That power was squandered.
Microsoft’s strength was built on the power of Windows and Office. The rise of iOS and Android eroded one part of that power base – and the decisions the company made in response damaged the other. The failure to release a broadly available version of Office for the emerging mobile platforms seems to have backfired on the company. If the intention was to build up demand for Microsoft’s own products, it’s failed. Demand for Windows Phone and Surface devices has been lukewarm at best. What’s happened instead has been the nightmare scenario for Microsoft: people are discovering that they can do without Office. Alternatives exist on Android and iOS, and they’re both good enough and compatible enough to do they job. The reflexive assumption that you need Office to get work done is broken in an increasing number of people’s minds, and it isn’t coming back.
In the end, whatever Ballmer’s virtues as a CEO, he was the wrong man for the job. He was appointed into a role that looked mainly defensive: protect the Windows/Office duoopoly that was the engine of Microsoft’s revenue. It had come to dominate computing. It just had to be defended, and he was the kind of aggressive competitor who could do just that. It was, and remains, a massive mis-reading of the market. The future of computing wasn’t decided – the desktop PC wasn’t the final form of computing. Microsoft found itself with a defensive warrior at the helm at a time of massive change – with the result that the world changed around it. As the smartphone and the tablet changed the centre of gravity of computing, Microsoft stayed exactly where it was, looking less and less relevant every year.
As Adam Penenberg puts it for PandoDaily:
The company had prospered throughout the 1990s as Windows became the world’s operating system, and in December 1999 its stock hit an all-time high of $119.94 a share. It has been dropping ever since. Apple, the company it almost drove out of business, has supplanted it as the most valuable tech company. Google has also left it in its dust. In fact, as Kurt Eichenwald pointed out in Vanity Fair, one relatively new Apple product: the iPhone, is worth more than all of Microsoft. The company that had been built on innovation had stopped innovating. Products took eons to get to market, and when they did they were either too late or often not very good.
The adverts for the Surface that trumpet its ability to run exactly like a desktop machine are perhaps the most iconic example of the problem. Deep in its corporate soul, Ballmer’s Microsoft believed that everything should be, basically, a Windows PC. The public had already rejected that idea. For once, Microsoft had been first to market – to had beaten Apple to both tablets and smartphones. Apple was the follower – but its offerings made Microsoft’s look irrelevant. Google stole Microsoft’s position as the fast follower, producing versions of Android that nipped hard on the heels of Apple, and which appeared on increasing numbers of devices. For all Microsoft’s defensive skill, it wasn’t even in the same battle.
There are people who are suited to running a business whose main challenge is incremental improvement on an existing model, and there are people who are better suited to working in environments of continual change. Unfortunately for Ballmer, he was the former in an environment more suited to the latter. The company needed a product visionary, who could keep the company relevant as the axis of tech shifted towards mobile devices, and instead it had someone whose impulse was to ignore or discount changes in environment. And so, he departs, leaving a company that is a faded shell of its previous self.
Most worryingly for the company, he leaves it just after implementing a major reorganisation of the company, which looks like a poisoned chalice for his successor. Whomever takes the top job is left with the unenviable choice of either implementing the second major reorganisation in a row, or dealing with a structure imposed by their failed predecessor. Ballmer has denied his successor the opportunity of a clean slate.
It seems possible that, of all the mistakes he made, this final act might be the most damaging to the future of the company.
Photo by Dennis Hamilton on Flickr and used under a Creative Commons licence.