Why the retiring Steve Ballmer deserves more credit than he's getting

Why the retiring Steve Ballmer deserves more credit than he's getting

Summary: People love to hate Steve Ballmer, but he's been hugely successful at Microsoft, and deserves a more considered judgement that includes his successes as well as his failures

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The larger-than-life but now (literally) retiring Microsoft boss Steve Ballmer has been roundly trashed online over the past few days. Suffice it to say that if Ballmer were a play, it wouldn't have survived for a second night, let alone 33 years.

Yes, he made some painful mistakes. But on any rational judgement, Ballmer has been one of the world's most successful businessmen, and built what is still one of the world's top 10 companies by value. Much of Microsoft's success is down to Bill Gates, but the two friends have worked as a deadly duo since 1980, when Microsoft was a tiny, 29-man company. Ballmer deserves some credit for that, besides his $15 billion-worth of stock.

Since becoming CEO in 2000, Ballmer has more than tripled Microsoft's annual sales (from $23 billion to $78 billion) and more than doubled profits ($9.4 billion to $21.9 billion). In that time he's returned $164 billion to shareholders while adding around $90 billion to Microsoft's net assets. Very few CEOs have done better. Many tech companies — AMD, Dell, HP, Intel, Nokia, Sony, Sun etc — have done worse under multiple CEOs. Indeed, Ballmer has done much better than many people expected a dozen years ago.

As analyst Horace Dediu said at Asymco: "He did exactly what all managers are incentivized to do and avoided all the wasteful cannibalization for which they are punished."

11-14AnnualShareHoldersMeetingPR_BillandSteve_large (600 x 387)
Bill Gates and Steve Ballmer at an Annual Share Holders Meeting. Source: Microsoft

Ballmer also established Microsoft as a powerhouse in server software and applications, transformed Windows, Office and Windows Mobile, acquired Skype and Dynamics, and with Azure, made a very strong move into cloud computing. Microsoft is still closing in on Ray Ozzie's vision of "three screens and a cloud", but the range and quality of its products is markedly better than when Ballmer took over.

Ballmer has managed all that in competition with free software — Linux, OpenOffice, Java etc — all of which were supposed to have killed Microsoft long before now. At least, that was the fanboy hype.

He has also managed it in a decade where Microsoft was under the constant close supervision of the US Justice Department and what looks like a vendetta from the European Commission. Hal Berenson, who left Microsoft in 2010, wrote in a blogpost:

"After the DoJ settlement, he had to spend a good chunk of his tenure finding a way to settle with the E.U.  And then run the company under the terrible burden of complying with both settlements.  Between the actual restrictions from these settlements and the general caution about antitrust that then pervaded the Microsoft culture, Steve was essentially running Microsoft with one hand tied behind his back.

"The truth is, I don’t think Steve gets enough credit for saving the company.  Without him Microsoft probably would now be a footnote in tech history." 

 

Of course, it's not all good news.

Ballmer hasn't been successful in important areas such as mobile phones, tablets and search in particular. However, looking at the Windows Mobile and Windows XP tablets that he inherited from Gates, hindsight suggests he didn't start from the best place.

Ballmer also failed to get the sort of devotion from Microsoft staff that Gates enjoyed, and that gets people to put in long hours and aim for the greatest possible outcomes. The hated stack ranking system obviously hasn't helped. Either way, Microsoft lost a lot of good staff. Worse, many of them went to rivals such as Google, and it shows.

But in the end, Ballmer's most obvious failure has been his public persona, which is one reason why he is being judged so harshly. In public, Ballmer has usually seemed the pumped-up football coach, and blustering can work pretty well with people who are on your team. However, it goes down really badly with your enemies, and on TV. Ballmer's an extremely smart guy (and, unlike Gates, actually graduated from Harvard), but that's not his image. And in an age of ignorance, most people take the image for the reality.

Gates managed to turn himself from a belligerent, squeaky-voiced kid into a man who could attract huge audiences at Comdex and CES — which Ballmer failed to do — and he's now become something of a saint. In contrast, Ballmer doesn't seem that much different after 33 years at Microsoft. He's still loud and gaffe-prone when he should have developed a more relaxed, avuncular twinkle.

Note that I don't blame Ballmer for Microsoft's flat share price over the past dozen years. Microsoft and many other tech companies were ridiculously overvalued in Bubble 1.0 around the turn of the century, and that kind of stupidity takes a very long time to unwind. The graph below shows how Microsoft's share price compares with other PC industry giants — Dell, HP, and Intel — after January 2001.

In the end, Ballmer's reign has been a bit of mixed bag, but a fair judgement must include both sides of the story. He could have done better, but he could have done one heck of a lot worse.

Microsoft's share price from 2001-13
Microsoft's share price from 2001-13. Source: ZDNet screen grab from Yahoo Finance.

 

Topics: Steve Ballmer: The Exit Interview, Microsoft

Jack Schofield

About Jack Schofield

Jack Schofield spent the 1970s editing photography magazines before becoming editor of an early UK computer magazine, Practical Computing. In 1983, he started writing a weekly computer column for the Guardian, and joined the staff to launch the newspaper's weekly computer supplement in 1985. This section launched the Guardian’s first website and, in 2001, its first real blog. When the printed section was dropped after 25 years and a couple of reincarnations, he felt it was a time for a change....

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34 comments
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  • Ballmer was incredibly successful with the business stack

    He basically kicked Sun and HP out of the enterprise niche, and overtook Oracle and IBM in everything but heavy iron mainframes. He created a partner (consultants) ecosystem second to none, and put out some damn good products. He got Exchange server and activesync into a near monopoly position... And he did all this playing much cleaner than Bill Gates did. And he is more forward thinking than he gets credit for - he kicked Cloud butt with Google and is catching up to AWS.

    He does bear some responsibility for longhorn - that did happen on his watch. And yes, he bears some blame for getting blindsided by the BYOD and devices era. But i don't think it can be argued he was bad for the business.
    Mac_PC_FenceSitter
    • Blindsided? I don't think so ...

      Microsoft began development of the Surface tablet in 2009, the same year that Apple started developing the iPad. Apple beat Microsoft to market by a year by abandoning the Mas OS X infrastructure. The Microsoft approach, was (and is) dependent upon a "Windows Everywhere" strategy and the mantra is "compatibility".

      In 2010 I bought an iPad and I quickly learned how hard it was to use in my role as an IT professional. In 2011, I quickly found the Kindle Fire equally lacking. The smaller screen just made things worse.

      In 2012, I bought a Surface RT and was instantly productive with it. I could easily use it with my Windows IT infrastructure. Ten months later, I use it every day. I use it as a tablet - for casual content consumption. I use it to seamlessly access my employer's IT infrastructure. I use it to access my personal home-based Windows infrastructure. And, I have found it suitable to use as my only computing device while travelling.
      M Wagner
      • Larger than usual whoop

        How many units do you think they'll sell to IT Professionals?
        Robert Hahn
  • Balmer is just a beancounter.

    And beancounters do not make good technocrats.

    He maintained both the stock price and profits by raising prices, not expanding the market.

    He could not identify new markets, nor guide their development, (phone, tablet, search, games,...). Even the Xbox is still a failure even though it is now beginning to turn a profit (8 years of losses are not made up in 2 years - so that is still an 8 billion loss, just buying a market).
    jessepollard
    • the comments of the fearful

      Because people like you fear the truth.
      William Farrel
    • Gee, I don't know ...

      Upgrades from one version of baseline Windows to the next have always been around $100 for the early adopter. That hasn't changed much.

      The same applies to MS Office. TODAY, baseline MS Office comes for free with your free SkyDrive account.

      Sure, the full-blown versions are now more expensive but for $100 per year (5 seats), you can get the entire suite - continuously updated - instead of spending $400 or more for a single-seat license every three years or so.

      There is far more free and open-source software for Windows today than ever before and it doesn't have to be replaced every year, as is the case every time Apple upgrades Mac OS X.

      Further, I am still running Windows 95 software without difficulty on Windows 8. This may not be typical but it is possible.

      Further in 2000, you would spend $1500 or more on a 128MB Windows PC with a 10GB HDD. Today, you can buy one for $350 or less with 4GB of RAM and a 500GB HDD.

      No matter how you shake it - you get a much better deal on a Windows computer today than you did in 2000 when Ballmer took over as CEO.
      M Wagner
    • That gotta be dumb thing to say, xbox a failure.

      Xbox a failure? Which planet are you on? Xbox sold 60m+ and 5-6m paid subscriber and it is a failure to you?
      jonnybr
      • Let him be

        Just let the guy continue his delusions. ;-)
        Koymik
      • It's pretty easy to argue that Xbox is/was a failure.

        If you look at Entertainment and Devices Division numbers over the lifespan of the Xbox project, they lost hundreds of millions to billions quarter after quarter FOR YEARS before starting to make a small profit. While it's arguable about when EXACTLY MS began making money on the Xbox, it doesn't take an MBA or CFP to realize that the time value of the money MS has spent for the returns it's made are underwater. Microsoft would have been much better off buying Apple stock or Oil Futures than developing and selling the Xbox. Hell, you could even make the point that with the Surface fiasco, they didn't even get valuable hardware development experience from it.
        matthew_maurice
        • Actually, you're very wrong, and with the Surface tablets, and with XBox,

          Microsoft learned some very valuable lessons about how to build great hardware. No one can argue that the Surface tablets are better than anything that came before, including iPads and Android tablets. If you're judging by the sales figures, then you would be right, but there are many times when the best is not always the best selling. That's the case with the Zune players, and that is the case, so far, with the Surface tablets. But, like the Xbox before, the Surface tablets only need time before they can become successes. The Xbox took time to become the best, and the best seller, and Surface tablets are going through the same growing pains.
          adornoe@...
  • Why the retiring Steve Ballmer deserves more credit than he's getting

    Not sure where all the hate for Steve Ballmer is coming from. He deserves a lot of credit for the successes Microsoft has achieved during his time as CEO. He's made public events fun and exciting. No one else went on stage to do that. Best of luck to him.
    Loverock-Davidson
    • Ballmer is worm ridden filth...

      He let scum like Sinofsky implode Silverlight and now Windows 8 with its new COM internals is a development mess.
      jackbond
  • The successes one can list

    are limited to dollars and cents, and even those can be attributed to the facts that the industry itself has grown during his tenure and he inherited a monopoly to begin with. If you benchmark that against other CEOs in the tech world rather than just point at the very large numbers MS has produced (and would have produced had any other merely competent CEO been hired instead), you'll find that his performance was quite mediocre. I think it's obvious that MS has merely stayed afloat and has done so in spite of him, not because of him.
    Michael Kelly
    • Monoplies are not illegal ...

      ... further, as long as Linux dominates the research machine room (and shares the commercial machine room), and Apple dominates K-12 education, and dozens of Linux and UNIX distros offer free (or almost free) desktop solutions, Microsoft is not technically a monopoly.

      The market place has never been more open and yet, 90% of the world's personal computers are running Windows.
      M Wagner
  • A magic eight ball floating in a bucket of puke...

    could have quadrupled sales.
    jackbond
    • Jealous much?

      Maybe you should try being a CEO.

      Give the old guy some credit already.
      ForeverCookie
      • Those that can - do

        those that can't - spin.

        Ballmer is a CEO, jackbond never was.

        No one's ever offerd jack a CEO position, so the best he can do is pretend to know what the deal is.

        Sad for him, really.
        William Farrel
    • oh...

      And yet here you are trolling the pages of ZDNet. If you are so sure of your insights, why not apply for a job at Microsoft, or better still see how much time of the day the recruiters at Microsoft give you when you pitch for Ballmer's job. Your comments betray you utter lack of understanding of operating a multi-billion dollar business.
      crystalsoldier
  • He made MS

    Ballmer's skill in sales and making cut throat contracts made Windows the de facto OS. His deal with Dell that they pay for every computer they made, whether it had windows on it or not was a big reason they never put any other OS up as a choice. Why should they if they're going to pay MS anyway. Many others followed suit to get rock bottom prices for the OS preinstalled.
    But great conquerors don't make great rulers, he should not have been given the helm. He has no vision, he can make someone else's vision come to fruition but he has none himself.
    So yes he deserves much more credit he's been given but he also deserves the flack for MS becoming stagnant.
    new gawker
    • Dell has been offering Linux on its systems for years.

      So has HP. Lindows / Linspire tried to sell their own Linux systems for several years and no one wanted them so retailers like Wal-Mart quite buying them for resale. Ubuntu and others have tried to - without success.

      Linux was the first platform on netbooks - but few wanted them. One Laptop Per Child tried to sell Linux computers to Third World governments but they wanted their children to have Windows.

      Few of the world's Fortune 500 companies would say that Microsoft has stagnated.
      M Wagner