Business

Microsoft and getting softer: a CEO exits, to applause

By Richard Poplak 28 August 2013

How’s this for the ultimate boot-print on buttocks story: a man walks out of a company, and the stock rises 9%. Welcome to the life and times of Steven A. Ballmer, Microsoft’s erstwhile CEO. By RICHARD POPLAK.

In hindsight, it could only ever have ended this way. If I may quote the epitaph that is etched on Steve Ballmer’s proverbial gravestone, an utterance he made way back in 2007: “There is no chance that the iPhone is going to get any significant market share”.

Um, you’re fired, bub.

As it stands, Steve Ballmer, who has headed up the most storied company in tech for the last 13 years, has not been fired but is taking voluntary retirement. In this case, voluntary should be considered to mean “at the barrel of the gun” and while Microsoft shareholders haven’t been in outright revolt, they’ve come close. Ballmer, as evidenced by his not-so-wait-and-see approach to touch screen smartphones, has missed one tech revolution too many. He will miss no more, at least not from the helm of the sinking S.S. Microsoft.

Watch: Steve Ballmer’s err, exuberance

How bad have things become at Microsoft? Last year’s Windows 8 was the tech equivalent of a 747 smashing into a passenger train full of nuns. As New York Times tech reviewer David Pogue put it, the operating system was basically a two for one deal, which really meant that it was doubly complicated. “You have what feels like two different Web browsers, each with different designs and conventions. In TileWorld, the address bar is at the bottom; in Desktop Windows, it’s at the top. In the desktop version, your bookmarks appear as a Favorites list; in TileWorld, they’re horizontally scrolling icons. TileWorld has no History list at all (only autocomplete for recently visited sites)”, wrote Pogue.

Despite the fact that Microsoft now makes decent phones and better-than-decent tablets, it has won over precisely no one. The “no chance of significant market share” statement applies royally to those products (4% at last count). Ballmer was way, way too late to the game. How could that be?

Ballmer is, of course, the PC guy.

Watch: Ballmer sells Windows 1.0

Cast your mind back into the mists of history, and you’ll recall a company visionary enough to believe that every human with access to electricity would have before them on their desk a computerised machine that got a little better, and a little faster, every year. Inside the hard drive of said machine there existed Microsoft DOS or WINDOWS, Microsoft Office, and other applications that crashed often and demanded many a reboot, but were slightly more convenient than etching out an annual report on a slab of granite. When the Internet came, Microsoft delivered Explorer on almost every machine sold, and while they were accused of running a monopoly, everyone was certain that their run would never end. But end it most certainly did. Microsoft now subsists on three products: Word, Office and Xbox. Their existential position is thus precarious, to say the very least.

In the 13 years since Ballmer took over, the company’s stock price has dropped almost $20, from a high of $53.31 in 2000, to $34.75 before his promise to leave soon, just a few days ago. It now boasts 99,000 employees and has a market cap of about $289-billion, down from $555-billion 13 years ago. It still banks bucks – its profit last quarter was a healthy $5-billion. And while this is by no means disastrous, the question is: where does the company go next? Ballmer has not exactly paved a smooth road into the future. Mostly because he believed that the future was one big, happy, huggable PC, replete with a touch screen.

Ballmer, now 57, knows Bill Gates from back in their Harvard days. While Bill is busy feeding and cleaning us Africans, he expects the company to tick along so that his shares keep purchasing our mosquito nets. Reports suggest that Bill is losing patience, as many shareholders most certainly are. What’s more, Ballmer will only step down in a year, which means 12 more months of stasis in which Apple and Samsung will go head to head on new iterations of their signature smartphones and tablets, while Google ushers the world into the wearable computer age.

So, a new chief who will have the unenviable task of remaking Microsoft while safe-keeping Ballmer’s $11-billion worth of shares (he will not, one imagines, be a quiet stakeholder), to say nothing of the many billions more held by other A-types, and the 99,000 employees who would probably dearly love to remain employed. Who would this person be?

Could Gates come back, a la Steve Jobs, and transform the company he helped start from has been into will be? Unlikely (see above re: philanthropy), and let’s remember that Gates missed almost as many new tech tricks as Ballmer did. Lou Gerstner once rescued IBM, but he doesn’t have the technology brain to invent new products and segments on the fly. Is there someone, anyone, within Microsoft’s massive bureaucracy up to the job? Perhaps, but most likely the saviour will have to come from outside the company, minted credentials placed prominently above their desk.

What is certain is that Microsoft needs a visionary. And those are, apparently, in short supply.

The next 12 months may prove to be the most critical in Microsoft’s history. Without the right CEO the company will continue to flounder. It needs not only to enter the cloud computing age and go to battle on mobile, but also offer and invent entirely new segments. There needs to be an iPad in Microsoft’s future. If there isn’t, Steve Ballmer’s $11-billion worth of shares will amount to little more than scratchy toilet paper. He’ll have no one else to blame. DM

Photo: Microsoft CEO Steve Ballmer speaks at the launch event of Windows 8 operating system in New York, October 25, 2012. REUTERS/Lucas Jackson

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