Five reasons why Ballmer needed to go

Five reasons why Ballmer needed to go

Summary: At long, long last Steve Ballmer is leaving Microsoft. Here's why.

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TOPICS: Microsoft, Windows
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Steve Ballmer is going to retire from Microsoft sometime within the next 12 months. Well, that's the official story. I think Microsoft's board finally gave him a choice: Jump or be pushed.

Ballmer-Monkey-Boy
There will be no more "Monkey Boy." Ballmer is leaving Microsoft.

Why? Because Ballmer's been a flop even before the summer of 2008 when Bill Gates left and he officially became Microsoft's top dog. How has he failed? Let us count the ways:

1) Vista and Windows 8 Fumbles

Vista was a flop. It was so bad that Microsoft had to give Windows XP Home a new lease on life to beat back Linux netbooks that were eating up the low-end PC market in 2009. Steven Sinofsky then saved Microsoft's desktop operating system bacon with Windows 7.

As bad as Vista was, Windows 8's sad sale numbers made it look like a winner. Long before it became clear that no one really wanted Windows 8 with its annoying Metro interface, Sinofsky had been shown the door. Ballmer should have been shown the blue screen-door of death instead.

2) Tablet and smartphone non-starters

The writing is on the wall: People are buying tablets and smartphones. The PC will never go away, but there's no growth left in those markets. Under Ballmer, Microsoft tried and failed over and over again to make an impact in the mobile space.

True, Windows Phone 8 has made some gains, but it's done so because of the collapse and fall of the BlackBerry empire more than by any virtues of its own. Google's Android is well on its way to dominating smartphones the way Windows used to own the desktop.

As for tablets, Ballmer can put out as many ads as he wants about how the Windows 8-powered tablets such as the Lenovo Yoga are better than iPads; it doesn't matter. Android-based tablets have overtaken the iPad and Windows-based tablets have barely any presence.

As for Microsoft's own much ballyhooed Surface tablets, they've gone nowhere. In particular, Surface RT has proven a total and utter failure.

3) Microsoft's online failures

You don't need to use Bing to see that quarter after quarter Microsoft's Online Services Division loses money. The "good" news? It's no longer losing half-a-billion dollars a quarter.

Maybe Microsoft should have bought Yahoo after all. In little more than a year, new Yahoo CEO Marissa Mayer somehow managed to make Yahoo the top US Web property in July 2013. Thinking of which, if Microsoft had bought Yahoo and then brought Mayer in to run it, they'd have a much better "insider" candidate for Microsoft CEO than the current pick of the executive crop.

4) The corporate culture from hell

Ever hear of stack ranking? It's Microsoft's personnel and department ranking system. In it every staffer, and unit is rated on a 1 to 5 scale. So far, so typical. What makes stack ranking poisonous is that one out of every ten staffers and departments must be given a bad rating.

Say you have 100 people in your division and five of them really aren't much good. Too bad. As a boss, you still must label five otherwise OK employees as failures. At the same time, you have to fight to make sure your department doesn't fall into the 10 percent pit or you're likely to be in the unemployment line soon too.

Combine this draconian system with Microsoft's annual attempts to reorganize itself. After years of minor shakeups, Microsoft decided to really and truly reorganize itself to focus on shifting the company from a software company to a devices and services one; to make it "One Microsoft," a more agile and responsive tech company.

It was a nice idea. Microsoft divisions had fought like cats and dogs in a sack thrown into the river. There was no "One Microsoft." There were divisions fighting among themselves for the top and some that were clawing for simple survival.

Could Ballmer pull off this top-down cultural and management change and make Microsoft into a gentler, kinder company? Management experts like Paul Carroll didn't think so. Indeed, Carroll couldn't think of a single CEO who'd pulled off the kind of sea-change Ballmer had called for.

Microsoft's board didn't think Ballmer could do it either. They appear to think that Ballmer couldn't change a toxic corporate culture into one capable of dealing with a far more competitive business landscape than the one Gates faced as a start-up in the 1970s.

5) The market didn't believe in Ballmer

Ballmer was never really a good CEO choice. He was always first and foremost a salesman . But, when year after year all he could had to sell was sizzle instead of steak, the market turned against him.

In January 2000, Ballmer became CEO. On August 22, 2000, Microsoft's stock closed at $35.62. On August 22, 2013, it closed at $32.39. If you look at Gates' last days in 2000, when the stock was around $55 a share, it's decline is even worse.

For over a decade Microsoft has largely declined in real value. Its rivals? Apple's currently at $501.42 and Google's at a mind-bending $871.29 a share.

Is it any wonder that for years analysts have been screaming for Ballmer to be shown the door. Unsurprisingly, now that the market knows Ballmer is leaving, Microsoft's stock has bounced up about 6-percent.

Where does Microsoft go from here? That's a good question and I don't have a good answer.

What I do know is that it needs radical change. Yes, it still make billions, but in 2013 it's still a PC operating system and business PC software company in a world that's turned from PCs to smartphones, tablets, and the cloud. To remake Microsoft, even with all its riches, into a true 21st century technology company is going to take radical change.

It can be done. IBM did it. General Motors and Ford did it. Until we know who will take over Microsoft's reins we can't even really guess if Microsoft will be able to do it.

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Topics: Microsoft, Windows

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112 comments
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  • Finally

    I never understood how they let him stay for this long. The spiral downward may be irreversible.
    D.J. 43
    • I don't see a real future for Microsoft unless...

      It is hard to sell an operating system now that need to be replaced every so many years. There just isn't that much inovation to support that.

      With Google apps and open office the office suite is a no starter as well. So what is the new leader of Microsoft to do with this highly commercialized product line?

      Unless they can remake themselves around a new killer technology, face it even killer app won't do it, they do not have great prospects on the horizon. In all fairness though toxic environments are rampant throughout the whole IT community. MS sounds good compared to the fortune 100 company I used to work for and still do but not on their payroll a vendors instead. I was too useful to dump so they passed me off like an asset.
      adams484
      • contrary to sjvn's wishful speculation

        MS has made a very successful transformation to a broad based company. Azure has always been the best cloud platform available. Now MS has the best mobile os as well. And their online versions of office and exchange and ERP and CRM etc etc are performing fantastically. Bing continues to take search share away from Google, Xbox dominates, and Windows Phone is set to soon pass iPhone,and already has in many parts of the world. WP9 devices and Surface2s have great opportunities. The xbone needs a bit more whole home entertainment focus though. They need to bake the mce experience into it. With its W8 core now it should support great new virtual disks and networked tv tuners.
        Johnny Vegas
        • Re: Azure has always been the best cloud platform available

          Now, this is what I call wishful thinking.

          "has always been" requires some history. How old is Azure?
          danbi
          • You haven't seen Azure, obviously

            Azure is slick, you obviously say things without looking at them first.
            Amazon uses Firefox to manage it and is basically Xen.
            Hands down, Microsoft puts a slick interface on everything they do.
            Look at Google Maps, after several years, they are finally getting that it's crapware trying to save and edit locations.
            noozhour
          • Please explain your comment or some links

            “Amazon uses Firefox to manage it and is basically Xen.”
            RickLively
          • They are saying

            same people are saying that Surface RT is the best tablet; they are saying that iphone is a failure; they say that WP7 is the best fluid phone OS; they say that Zune was fantastic and, this is the best part, that WP will not only come close to compete, but to surpass IOS!

            This is wishful thinking at his best. Reality, Apple wiped the floor with the whole Microsoft mobile offering; as we know, MS was king of the hill, at that time, they had killed Palm, the only competitor left alive; in short they were headed to world supremacy, they already had supremacy on the desktop, and they were spreading everywhere (internet was another war they lost).

            Enter the iphone. It annihilated anything MS had at that time, in less than 3 years; this is pure genius from you know who, and this is Ballmer at his best, meaning clueless. But hey, they are the bests, at every category they are entering, Zune is fantastic, RT is a killer and WP8 is the real deal...

            I fully understand why those people are so bitter! That's why you read so often here that it will happens that WP8 will surpass iphone! People that believe such a thing are as clueless as Balmer.
            theo_durcan
        • There are many areas in which MS has been impressive

          and you mention some of those.

          The particular area where MS has been least impressive is mobile computing even though they had, in some cases, a 10 year head start on other competitors. There have been too many failures (and too few success) - Windows CE, Windows Phone, Windows RT, Surface RT, Kin, Zune . . .

          I wonder how those Windows Phone 7 programmers feel after parading the coffin down the street? It seems to have signified the end of MS and mobile products!

          Overall, MS has a very poor track record for a company that has to compete in a mobile world, albeit that it may be competing very well in other business areas.

          XBox 360 dominate? Exaggeration aside, that a is a big call. Sure, MS have done well with XB360, but the overall results for it compared to PS3 are roughly similar and the PS3 came onto the market 12 months later. More so, neither holds a candle to Wii sales. Even worse, the XBOne has had a truly inauspicious start. When announced, MS made a vast series of statements about what would and wouldn't be allowed etc. To date, it has had to back-track on a very large number of those eg no indie developers, "always-on". I'm very curious about what the sales will be of XBOne. So far, it seems that MS has done all in its power to bite that hand that feeds it!
          Wakemewhentrollsgone
        • "Azure has always been the best cloud platform available."

          "Always" starts from a very long time and yet Azure was released on 1 Feb 2010. Three and a half years is hardly "always".
          Wakemewhentrollsgone
        • WP soon pass iPhone?

          If you extrapolate using WP's 75% July 2013 sales growth indefinitely, I suppose you could predict they'll pass iPhone within a year. Shame Android phones had 70% sales growth. Extrapolating both by those July 2013 figures and given their current market positions, it'd take over 130 years for WP to pass Android.
          hrlngrv 
          • He has almost destroyed Microsoft...

            ... which is indeed one the greatest things for whole IT culture. Me and millions of others have during the last 4-7 years left Windows and moved to either Apple or Linux/Open Source Software ecosystems.

            We don't need Microsoft ecosystem in a modern 2010's IT world. It's just an Neanderthal.
            Napoleon XIV
          • Apple, open source?

            Moving to Apple or to open source?, both directions are opposite!. Apple is ultra controlled closed ecosystem, opposite to freedom. Linux is freedom and MS is in the middle.,
            ToriToriTori
          • Linux has now 90% of servers...

            ...95% of supercomputers, 80% of smartphones, 67% of tablets and there is no doubt that it will have much bigger slice than just 4-5% of notebooks near in future.

            The whole culture is changing. Modern humans have arrived and old, slow and ignorant Neanderthal has in fact died out.

            http://news.discovery.com/history/archaeology/neanderthals-died-out-humans-120329.htm
            Napoleon XIV
          • The Neanderthal

            By the way, the Neanderthals did not extinguish, they are at least fast and intelligent as the cromagmon, and some recent discoveries suggest that we descent from the merge of cromagmon and Neanderthal.
            ToriToriTori
      • contrary to sjvn's wishful speculation

        MS has made a very successful transformation to a broad based company. Azure has always been the best cloud platform available. Now MS has the best mobile os as well. And their online versions of office and exchange and ERP and CRM etc etc are performing fantastically. Bing continues to take search share away from Google, Xbox dominates, and Windows Phone is set to soon pass iPhone,and already has in many parts of the world. WP9 devices and Surface2s have great opportunities. The xbone needs a bit more whole home entertainment focus though. They need to bake the mce experience into it. With its W8 core now it should support great new virtual disks and networked tv tuners.
        Johnny Vegas
      • contrary to sjvn's wishful speculation

        MS has made a very successful transformation to a broad based company. Azure has always been the best cloud platform available. Now MS has the best mobile os as well. And their online versions of office and exchange and ERP and CRM etc etc are performing fantastically. Bing continues to take search share away from Google, Xbox dominates, and Windows Phone is set to soon pass iPhone,and already has in many parts of the world. WP9 devices and Surface2s have great opportunities. The xbone needs a bit more whole home entertainment focus though. They need to bake the mce experience into it. With its W8 core now it should support great new virtual disks and networked tv tuners. Ballmers successor will inherit a great foundation. Notice how sjvn forgot to mention that everything he said about the board was pure speculation.
        Johnny Vegas
      • contrary to sjvn's wishful speculation

        MS has made a very successful transformation to a broad based company. Azure has always been the best cloud platform available. Now MS has the best mobile os as well. And their online versions of office and exchange and ERP and CRM etc etc are performing fantastically. Bing continues to take search share away from Google, Xbox dominates, and Windows Phone is set to soon pass iPhone,and already has in many parts of the world. WP9 devices and Surface2s have great opportunities. The xbone needs a bit more whole home entertainment focus though. They need to bake the mce experience into it. With its W8 core now it should support great new virtual disks and networked tv tuners. Ballmers successor will inherit a great foundation. Notice how sjvn forgot to mention that everything he said about the board was pure speculation.
        Johnny Vegas
      • contrary to sjvn's wishful speculation

        MS has made a very successful transformation to a broad based company. Azure has always been the best cloud platform available. Now MS has the best mobile os as well. And their online versions of office and exchange and ERP and CRM etc etc are performing fantastically. Bing continues to take search share away from Google, Xbox dominates, and Windows Phone is set to soon pass iPhone,and already has in many parts of the world. WP9 devices and Surface2s have great opportunities. The xbone needs a bit more whole home entertainment focus though. They need to bake the mce experience into it. With its W8 core now it should support great new virtual disks and networked tv tuners. Ballmers successor will inherit a great foundation. Notice how sjvn forgot to mention that everything he said about the board was pure speculation.
        Johnny Vegas
        • You can say it 100 times if you want to, Johnny

          It doesn't make it any less of a fanboy spin
          CaviarRed
        • Hey Jhonny, leave the craps table and follow this advice...

          Stop using dialup and an obsolete browser.
          Stop using dialup and an obsolete browser.
          Stop using dialup and an obsolete browser.
          Stop using dialup and an obsolete browser.
          Stop using dialup and an obsolete browser.
          GlassKeys