Farewell, Bill. Yo, Ballmer, now it's your turn!

Farewell, Bill. Yo, Ballmer, now it's your turn!

Summary: Steve Ballmer may be the worst CEO among large tech companies - now that Kevin Rollins got booted from Dell and Sanjay Kumar of CA is in jail. Put him in a room with Steve Jobs of Apple, John Chambers of Cisco and Mark Hurd of HP and he'd look like the bouncer, not a peer.


Steve Ballmer may be the worst CEO among large tech companies - now that Kevin Rollins got booted from Dell and Sanjay Kumar of CA is in jail. Put him in a room with Steve Jobs of Apple, John Chambers of Cisco and Mark Hurd of HP and he'd look like the bouncer, not a peer. He just isn't in their league and Microsoft is suffering for it.

Ballmer became CEO in 2000 after 20 years as a top business manager at the company. He's been intimately involved in company policy for decades. And like many hand-picked successors - like the 2 above - he hasn't measured up.

What hath Steve wrought? If he wasn't Bill's freshman roommate at Harvard - and Bill wasn't majority owner of Microsoft - any other board would have booted Ballmer years ago. He's cost Microsoft billions in profits while the stock price stagnated.

Just to pick some of the most obvious fiascos on his watch:

  • The Netscape anti-trust fiasco. Microsoft broke the law. The many follow-on suits by states, competitors like Sun and resellers like Gateway have cost the company over $4 billion, innumerable hours of executive time and the continued attention of European anti-trust regulators. And for what? IE is losing market share and is no more critical to MS success than it was 10 years ago.
  • The Google fiasco. Insisting on multiple frontal assaults against Google is pointless and costly. MSN is a money-loser and Microsoft will never catch Google's ad business. But does Ballmer look ahead to the Next Big Thing that changes the game? No, why start now?
  • All the other product and market fiascos. Virtualization: late to the game. The Xbox - losing market share to the Wii - will never pay back its investment despite a recent Halo-fueled lurch into profitability. Vista's 5 year development cycle. The continuing security mess. The smart phone failure - a market they should have owned. Major resellers, like Dell, offering Linux. The steadily shrinking cash horde. Continuing anti-trust troubles. The current OOXML debacle.

Any other CEO would have been shown the door years ago.

Missing Google was huge - and avoidable. Google made no secret of the fact 5 years ago that it was hiring the best and the brightest Microsofties. Hundreds left Redmond for Kirkland and Seattle.

That's the early warning signal whose significance Ballmer missed. Those Googlers are rich, while the loyalists are wondering why they stayed. Despite the incredible technologists in Microsoft Research, Ballmer could never get Microsoft on the technical leading edge in new markets.

The Storage Bits take Microsoft is loaded with smart, passionate people who sincerely want to do the right thing. Yet the industry has moved on while Microsoft executives - starting with Ballmer - haven't.

Steve, you've had a good run. You're one of the wealthiest people in the world. You've been integral to one of the greatest business successes of all time. But you've lost your mojo. You aren't the guy Microsoft needs.

Do yourself, Microsoft and Microsoft shareholders a huge favor: resign. Let someone else pick up the reins and, hopefully, take Microsoft to new heights.

Comments welcome, as always. How would you fix Microsoft? One thought: shut down MSN, sell off the assets, and use the billion or so to fund a few hundred software startups. A few are bound to hit if you leave them alone.

Update: True, Jerry Yang of Yahoo is clueless. But as I mentioned yesterday, Yahoo is going out of business because their infrastructure can't compete with Google.

Topics: Browser, Google, Hardware, Microsoft, Mobility, Smartphones, Windows

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  • So Robin, what are you trying to say? (kidding)

    Beware of 'flying chairs'.
    D T Schmitz
    • I'm trying to overcome my shyness . . .

      Your support is appreciated. :-)
      R Harris
      • I see you running a multi-billion dollar business

        Well, not really.

        I'm sorry, but I think you either see something that does not really exist, or you are doing a logic stretch in order to get your "pay per post" check a little larger. Ok, so you do know a bit about making some money. Beyond that, I feel the conclusions you draw are based more on a biased dislike for Microsoft as opposed to reading the facts for what the are.

        But that is just my opinion.
  • Are you Linux Geek?

    Strangely, I'm open to the idea Ballmer should go - I'm not convinced that his performance has been all that good. So in a sense I agree. But this article lacks the facts and reasoning to justify it - it reads like yellow journalism.

    This article actually sounds like a product of Linux Geek - you know, the schmoe how has been predicting that MS is on its last legs for the past 3 years. Let's see - they just finished their best quarter and raised their projections for the next couple quarters (and this is a very conservative company) and yet the company is about to collapse.

    Let's see: 1)Xbox losing share to the Wii - Huh? Is this fact based on "next gen" consoles? In which case, 360 being the 1st, would have nowhere else to go but lose market share.

    But in reality, MS probably would not swap consoles with the Wii. Why? Because MS views the 360 not only as a money maker, but an entry to the home and a potential platform to build other consumer services on (iptv, downloads, media connectivity, etc.) The Wii cannot be any of those things, and is a product island unto itself. MS thinks that as part of a larger strategy they will make more money ultimately. They may be wrong, but that's the idea. They actually now make money on every 360 sold, which is why the division now turns quarterly profits. If all they cared about was market share, they could easily cut the price of the 360 another $50 tomorrow. But I honestly believe that MS is happier having 30% of the total market and moving forward on their bigger strategy without further heavy loss, than 60% of the market while taking bigger losses. They will never recoup their Xbox investment straight up, but they couldn't have ever gotten an MS consumer product in so many homes and on the shelves of so many ordinary stores without it.

    2) Netscape - if people had abandoned Windows for a web based platform back then, then the Windows franchise might have been smashed and MS would be Novell. Saying they were dirty for doing antitrust stuff makes sense. Saying they were dumb for fighting against Netscape is unbelievable ignorance. It's like saying, "What was the point of America sending soldiers over to fight the Germans in WWI? The Germans just came back and started another war in WWII!" How much money does MS lose if Netscape wins? Isn't that what everyone is saying Google is going to do today?

    3) Google - so multiple assaults on Google are pointless and costly. You say look ahead to the Next Big Thing. What is it? What is it Ballmer should be telling MS to do? Or are you just saying he should pull a rabbit out of a hat? Do you and George Steinbrenner share planning meetings together?

    4) Shrinking cash horde - uh, hate to break it to you, but that's by design. Most financial analysts tell you a company can have TOO much cash on hand, believe it or not, and MS was a classic case. Obviously, MS is posting record profits. So if they wanted to inflate it at will, they could just stop paying a dividend, which most of their competitors don't do. Or they could stop acquiring companies. Of course, paying a dividend and acquiring companies are exactly what any financial analyst would tell a company with a huge cash hoard to do. Last time I looked, MS still had plenty left in the piggybank. Some analysts think MS should actually take on DEBT. Look it up.

    You have a few good points, such as the failure to grasp the smartphone market (too gutless and pandering to the carriers), the bad Vista development cycle, and inability to turn research into products (stuff gets watered down by existing divisions protecting their turf.)

    But given the numerous misanalyzed points in your article, you've undercut what could have been an interesting one and you might as well have titled it "Microsoft hoses data - yet again."
    • Good post.

      You might have added that the internet advertising market Google now dominates is going to get larger. It's another market in which Microsoft can become a solid runner-up and still make significant profits.

      Google's waste-of-time scattershot efforts to find other markets in which to participate shows the company can be constrained because it has a single source of income.

      Microsoft's investment in servers was unpopular on Wall Street but happened anyway. One of the advantages of having a lot of cash and the support of the Board.
      Anton Philidor
    • On the debt part

      Why one earth would any financial analyst say that? That's sound complete obsurd. You have billion in the back so you should blow it and take on debt? That's nuts.

      Of course if you had a reason to collecting interest of Microsoft debt then sure I can see saying that but it's not in Microsoft's best interest to do that. Debt is never a good thing. It is sometimes unavoidable and necessary but it is never a good thing. If you don't have to go into debt then it is in your best interest not to go into debt. At the same time avoiding debt by passing up opportunities is just as bad as those are examples of when it is necessary to go into debt if don't have the cash on hand.
      • He is correct on the debt part

        It has to do with Taxes, Interst, ect.

        Why do so many people and companies move assests and cash into plans and investments simplisticlly labeled "tax shelters"?

        Yes, you can have TOO much cash in the bank in which you are constentlly paying taxes on the instrest earned, and think of what the interst, and then what the taxes on said interest would be for 30 billion dollars.
        • Well...

          The amount of tax paid by Microsoft is probably not much influenced by the interest paid on the $30 billion. Tax law is not straightforward and simple.

          I suspect the point was that sinking the money into productive use would reduce assets, but could produce more income each year. I wonder, though, if this analyst was among those complaining when Microsoft decided to invest in a valley full of servers. That's investing in the company's own future, and at least some analysts thought that not a good idea.
          Anton Philidor
      • Re: On the debt part

        Sometimes, over-simplified thinking makes things sound absurd.

        To highlight my point, let me exaggerate this example.

        Lets say couple of years ago MSFT's board foresaw the explosive growth in AAPL's shares. They figured that they had to ride that growth and decided to take a 50% stake in AAPL. Lets also say they would have needed $100b to get a 50% stake in AAPL (completely made up number). Since they didnt have $100b cash on hand, they would have had to raise capital from the debt markets.

        Now, in 2008, the debt they had taken back then would have handsomely paid off, wouldnt it?

        So when analysts say they should take debt (and there are quite a few smart analysts that do), they dont mean flush your money down the toilet; they mean buy companies that can provide growth (preferably organic) to your bottomline. The notion of debt is not really absurd if it is planned strategically.

        Not having a job and buying a 50" HDTV on credit card - now that kind of debt is absurd.

        Believe it or not, MSFT is on an acquisition spree. They dont buy willy-nilly though (atleast, hasnt seemed that way so far). Their board is actually very conservative.
        tick tock
    • Their numbers ARE growing these days ...

      George Mitchell
    • Excellent post

      It may be time for Ballmer to go but not because MS is run so poorly but because it could be run better.
  • RE: Farewell, Bill. Yo, Ballmer, now it's your turn!

    What I would do...
    Buy into Apple; stock is low and ups are massive a good time to get in. Buy into Google they are still a major innovator and there is plenty of scope... Scale down on MSN it's messy, lacks focus and will not progress any further. Sell off Hotmail it's slow, over complicated and spammed to death; recommend move to an open source environment (not integral to MS needs anymore). Xbox needs partners like Intel, even the like of HP and Cisco, share the burden and advance the new technology going forward with R&D spend shared, buy latest components off the shelf, time & energy should be invested in content and marketing. As for the mobile side, synergies with key partners including some small start-ups where there could be new innovative enticers to come... By Microsoft diversifying and taking more well known partners in some of the divisions it will help reverse the worlds negativity towards the company.
  • Dump the current kernel and pick a decent Linux/BSD kernel

    That's what would revive Windows. The current Windows kernel is as leak as a basket and defective as well.
    • no no not linux bsd maybe

      but not linux or it would become gpl .....
    • Replace the kernel?

      You know the difference between a kernel and the rest of the an OS/platform, right?

      The kernel is the least of your worries - you can lock up a kernel pretty quickly ... as McAfee and Symantec were wont to gripe about last year.

      It the rest of the OS and even worse, the apps that you install on your OS that is the headache.
  • Do you feel any better after getting .....

    .... that vapid tirade off your chest? Just because you hate Microsoft does not qualify you to judge CEO peformance. If you are a stock holder take it up with the board.
    • I guess you hate the truth. Everything he said was true.

      Balmer is hurting Microsoft.
      • Everything he said was opinion.

        Learn the difference. I guess you can't handle the truth!
        • Isn't that what a blog is

          Just opinion. I read it as opinion and not many facts were presented to back up the opinion but then you don't always have to back up the opinion when expressing it.

          At the same time if you don't back up your opinion then you should expect to be challenged and the blogger here does ask for comments so it makes sense for your type of post. No need to be rude or anything however, not saying you were just saying that in general.
          • Absolutely!

            I wasn't the one claiming it was truth!