Steve Ballmer’s Dilemma | Hacker News Reader

Steve Ballmer’s Dilemma

cringely.com

49 pointschmars55 comments

There is this universal contempt for Ballmer that I don't understand. He has made several mistakes, but on the other hand: He has held senior positions in MS for 30+ years, including 12 years as CEO now. Except a handful of quarters recently, they have shown revenue and profit growth. (It is expected to go up again, but who knows.) In addition, they have made countless 3rd party developers successful.

While we can all be happy about Apple and Google being more successful of late, give that man some credit for his role in more than 30 years of sustained growth.

I think there's a perception with Ballmer that he been mainly interested in milking existing cash cows like Office and Windows rather than being especially forward thinking.

Considering how much money and credibility they have been putting into other projects, this seems baseless.

He is a hill-climbing optimizer - great at incrementally homing in on local optima. But he doesn't seem to be able to get the whole of MS to change direction the way Bill did, in a way that crosses the chasm to a hopefully larger optimum elsewhere. Instead, he seems to take gambles that don't really pay off. A lot of people in tech believe it's because he's not deeply technical and as a result isn't able to connect the dots at a larger strategic level.

He is amazing at communicating to business people however - a boss at a company I used to work for once came back from a partner briefing almost like an evangelical convert. That boss came from sales, and I think that's really Ballmer's forte.

This is poorly researched. This takes a consumer view of Microsoft which is only a small facet of what Microsoft does.

Microsoft basically runs 80-90% of the world's corporations and has a good shot at migrating those corporation's workloads to their cloud as that transition happens over the next 10 years. This is boring to write about but it makes a ton of money for Microsoft and isn't going to change anytime soon.

Probably right, but only if the premise is right: That the desktop and Laptops is dead and will be replaced by Tablets and Smartphones. And I doubt that.

First of all, and that is a standard-reasoning here, there will be for a long time be users of Laptops and PCs. People who work with that hardware like so many here. And of course gamers, cause despite all doom-prophecies the consoles never made the PC obsolete for the purpose of gaming.

Furthermore: Look at the numbers. For example: http://www.idc.com/getdoc.jsp?containerId=prUK23741112. That sales-downfall is not that much a fact the author believes it to be. Even if Gartners report is right and there was a decline this quarter, we are still talking about high volumes.

Though of course tables will probably impact that market, don't be too sure that they will replace that market completely.

If i were to guess, i would rather say there will be two quite healthy markets, one for pcs and one for tablets, with windows and its eternal foe linux still competing for servers and desktops for quite some time.

The desktop/laptop market is already pretty stagnant. It won't disappear, but no one is really expecting any growth, and many are expecting contractions as it becomes more niche. Its all about trends, not datapoints.

But that is my point. Even with a bit smaller core-market and for sure with a stagnant one, a company as big as microsoft has enough potential to survive and stay relevant. Be it with expanding via surface-tablets or whatever, but relying on their core-market. They are unlikely to disappear, contrary to what the article suggests, even without android-patent protection money.

Yes! But Microsoft still has to evolve beyond the PC market, which they can totally do (and are doing).

Survive yes, relevance no, not when you serve a legacy market.

No one is expecting growth because it's already near saturation. Attempting to use growth as the metric of health for companies the size of Microsoft or markets the size of (desktops+laptops) is some sort of pathology.

The market is at saturation, but there is an ongoing upgrade/replacement market to consider. If PCs are upgraded every 6 years instead of 2 years, your market is effectively 1/3rd as big. 6 years in consumer is not very strange, especially if their PC is collecting dust while they do everything on their iPad. In Enterprise, I'm not really sure for office workers, but definitely the workstation market, however big that is, replacements should continue to be very healthy.

Yeah I can't really see the PC market outright dying either.

I think it will diminish as there are some use cases where a smartphone/tablet will suffice instead, but in the long term both will continue to coexist.

I guess the question is, if Microsoft doesn't manage to successfully grab a slice of the smartphone/tablet pie, how big will the rest of it be?

I think the medium term future is of smartphones first, then tablets, then laptops, and least of all desktops. In many cases, you can just hook a laptop to a monitor instead of having a desktop and gain the portability of a laptop. My personal experience is that for non technical people, a tablet is the current ideal computing device. Its just much easier to use and very portable. The phone is the ideal communications device since you can carry it everywhere and you are used to using it to take and receive calls and text. Now you can use it for email, Facebook, twitter, etc...

With Moore's law and ever improving apps, tablets should gradually eat into laptop and desktop share.

My 5 year old has been using an ipad and iphone for several years. He still does not use a laptop. Touch is an easier interface than mouse and keyboard. My wife's desktop computer sits idle for months while the ipad gets used a lot.

I wonder if anyone at DEC or Data General gave much thought to the Altair 8800 and what it meant for their product lines. I think the innovation wave has moved from the PC to the Post-PC devices (or whatever term we end up with). We are 5 years from the iPhone or about the 1980 timeframe for the PC. The minicomputer was still a player in the 80's.

There will always be a need for certain segments to have more computing power, but the average consumer is getting very close to being served by tablets and smart phones. They can print wirelessly and add a keyboard when needed. Simpler ways to get a bigger screen for work are probably a given.

I expect the PC to become a hobbyist / Professional machine, and the tablets / smart phones to be for everyone else.

Desktops and laptops don't have to be "replaced by tablets and smartphones" for the latter to eventually outnumber the former by ten to 1 or more.

In which light, Windows 8 makes more sense - it's worth annoying x existing users in order to gain 10x new users.

Though a lot of people who used to use laptops for home email and facebook are now perfectly served by tablets and phones.

This all depends on what is meant by "dead."

There are many businesses, like minicomputers and 370-architecture mainframes that continue to be large money-making businesses, but that have no mind-share because there is no upside, and nothing new to be done.

It looks inevitable to me that PCs will stop being a consumer business. The only people who will buy them are people who need them, plus some remnant who are too used to them to change.

If the premise (maybe I misunderstood) is that the threat facing Microsoft is a result of not inventing anything, then how is Apple not subject to the same threat?

Microsoft got big for the same reason that Japan got big - doing the same thing more efficiently and often cheaper than incumbents.

I guess I'm struggling to understand the real point of that post.

Sustaining vs. Disruptive

          -- or --

Reactive vs. Proactive

My thoughts exactly — Microsofts didn't invent the PC, the GUI, the internet, etc. but neither did Apple. Ideas don't matter, execution does.

The Surface, while not as perfect as it perhaps should have been, certainly is a promising device, and I thus wouldn't yet write Microsoft off as doomed.

MS is not a startup, that can go by with a promising product. It needs massive amounts of sales and with the current strategy Surface is not going to get them. IMHO MS should allocate an enormous amount of money, like $20T, just to get market share. Sell Surface way under component value, stop the stupid non-business use licensing of Office, take the risk to secure long-term high volume contracts with component vendors.

One of MS problems is there are no high DPI tablet panels on the market now. Apple has prepaid for all non-Samsung production and Samsung is keeping theirs for their own tablets.

I don't know why you're getting down voted because what you said just makes sense. I mean, that's what Apple did and no one can argue that they weren't successful.

Someone else who worked at MSFT made a comment one of these days saying that the reason why they don't react more appropriately is because they are 100% right on their vision for Windows.

Well, I think they're wrong. Time will tell.

> MS is not a startup, that can go by with a promising product. It needs massive amounts of sales and with the current strategy Surface is not going to get them.

Out of curiosity, why do you assume the Surface needs to sell in huge volumes? If every single Surface is sold at a profit, and the Surface division is even slightly profitable for Microsoft, I don't see why it matters if they sell 10,000 or 10,000,000 of them.

To me it seems like the genius part of what Microsoft is doing is that Windows RT and/or the Surface don't actually need to succeed in terms of market share. They just need be taken seriously for long enough to drive down prices of Intel's x86 chips, so that Windows tablets have a shot against ARM tablets long-term. As far as I can tell, that seems to be working already. (Intel Atom Z2760)

They also have a massive Enterprise business, most of which will probably upgrade to Windows 8 eventually, buying them quite a bit of time to watch this unfold. Not to mention Xbox, etc. And of course, on top of all that, there is still the chance that Windows RT will somehow be a hit.... which would be even better for Microsoft, because it would end their Intel pricing problems for good.

To me, this seems like a decent plan for a software company that until now has only been losing relevance and market share. It’s a better plan than bleeding out cash selling super cheap hardware to gain market share (Amazon’s Kindle Fire), waiting too long to give up the dying cash cow as the market changes (RIM), focusing only on extremely high quality products while your company dies around you (Nokia), or killing off the consumer version of Office for no apparent reason (which is presumably profitable as-is).

I agree that market share is important, but I think Microsoft will face some serious issues turning market share into profit. Both Apple and Amazon skim the profits off their huge ecosystem here, but Microsoft doesn't have any equivalent.

"MS is not a startup, that can go by with a promising product"

Only that they always do. There's some (older) running joke about how Microsoft products start getting useful/successful with version 3: Windows, Word (Word 6 being the 3rd major WinWord release), Internet Explorer, XBox.

The first few iterations often were "notable" at best (IE 1 couldn't even display images).

A lot of this "PC is dead" stuff is very bizarre a few reasons.

(a) Some are projecting trends based on the very beginning of the smartphone/tablet "era." IE, 5% of pageviews from smartphones in 2011, 10% in 2012, 80% in 2015.

(b) PCs defined as a computer with a keyboard, mouse & screen are the most pleasant thing to work on for long periods. People who work in offices, students, etc. are still going to use a PC. If you plug bigger screen and keyboard into your 2016 android, it's now an android PC.

I do think the world is changing in a way that affect MS. There are now 2 new OS's that have the potential to pivot into Windows killers. On 1-$200 devices, consumers & manufactures can afford to be more adventurous and try new OS's. So, 2 potential competitors could become 5 or 10 in the next few years.

I also think PC prices may keep coming down without volume going up.

On the other side of the equation there are risks too. People are buying more "computers" then ever before & spending a lot of money on them. Families that spent $1000 every 4 years on a home pc now also buy 3 smartphones a cheap tablet and a cheap netbook.

MS know this. They may not have the high hit rate that Apple do, but they are an impressive company with a history of winning and more experience than anyone in platforms.

This "PC is dead" hyperbole is annoying mostly because the more accurate "PC is changing" is so much more interesting."

That was a fun read, but I don't agree with some of it. For the first time in a decade I am considering becoming a Microsoft customer and buy the pro version if the Surface, depending on how reviews are.

I do agree that the desktop computer market will collapse. I have suggested to most of my non-tech friends that the transition to using a good Android tablet or an iPad unless they do video editing of a lot of writing in which case a small laptop works better.

I think the problem is that it's difficult to know what your computing needs are necessarily going to be ahead of time.

Maybe you are not generally a creative person but you wake up one morning inspired with a short story idea. Or maybe you have a strong reaction to something political and you have an urge to write an essay about it.

At that point you realise that all you have is a crappy on screen keyboard to write it with.

MS agrees w you and put together a very slick cover/keyboard for the surface.

Such supposition and widespread fabrications have been leveled before at Microsoft, and the PC itself. It's all bunk.

PC gaming is steadily increasing in sales volume accounting for more than 50 percent of all video game sales. Considering there are 3 gaming consoles (that are cheaper than PCs) vying for that other 50 percent, it appears that PC sales are increasing not decreasing.

Another factor to consider is that PCs do not require replacing as often as they did in previous generations. The article makes no mention of these factors.

The death of the PC has been greatly exaggerated, mostly by those with investments in consoles, tablets, and phones. The exaggeration bears no resemblance to reality. World of Warcraft and its expanding genre of games do not play on phones, tablets, or consoles. The PC is far from dead, and will remain so into the distant future.

Posted from a PC.

> Having not invented any of the products it is known for, why should we expect Microsoft to invent its way out of declining markets? We shouldn’t

But Microsoft isn't trying it invent its way out of declining markets. They're trying to copy thier way into new markets - in this case smartphone and tablet. It's what they've always done with great success, it's what they will continue to try. (They're often referred to as "fast follower".)

For this reason, I think Cringley is wrong in his conclusions. Microsoft is a lot of things, but likely to just give up is not one of them.

Yes, MS is trying to get better at inventing. No game-changers have come from that yet. MS is trying to get better as design - surface, Win8 and winphone8 are the best example of that yet. Make of that what you will.

Honestly, I think Surface is already a success. I've seen and heard dozens of people talking about their experience with it, that they are getting it, etc.. I guess a lot of people were holding out for more PC like tablets with USB ports and Office to make the switch and MS did a good job marketing.

Just because something is a success, though, doesn't mean it is better than Apple or Android for everyone or that it will take over the market. It just means it is profitable and has a spot in the marketplace where it can be improved multiple revisions. It took Xbox a couple revisions before it was really a major player, which happened mostly due to Xbox Live providing the modern internet gaming experience everyone else had to copy.

You don't have to blow everyone out of the water to have a successful product or company, and in MS's case, they just have countless companies they run their business on their software who will be their best clients. If if MS was a failure with consumers and they only sold to businesses already in their thrall, that's still a good business with room for products.

Cringely forgets there's a Board of Directors. They could oust Ballmer and install someone else.

And all this talk of the PC dying -- what about all that work that's done using PCs? Where's all that going to go? To tablets? I don't think so.

Then Ballmer can hand that money to Warren Buffett or to Buffett’s successor and let them manage Microsoft as a mutual fund rather than a technology company.[...] Nothing else makes sense to me.

He was doing alright until the end.

That's just a tongue-in-cheek statement in the vein of "What the hell could Ballmer be thinking!?"

Office being offered for free for the RT tablet doesn't show that Office's value is zero, it shows that Office has enough value to sell someone on a Microsoft tablet. Also I think Microsoft putting more emphasis on their services which are truly baked into the new OS.

"Their smart phone patents score them $15 for every new Android license."

Not true. They only get $5 from HTC, and probably less from Samsung, because these sort of things are tied into other deals. So maybe they get $5 from Samsung on Android patents, but they give them $10 cheaper Windows 8 licenses, or whatever. Someone as big as Samsung would not have accepted to give up so easily and pay for the patents if the deals wasn't good for them.

And Microsoft was okay with that, because once they got Samsung to "pay" to them, they could just tell all the other manufacturers that "Samsung paid", and they'd all get in line. Typical "protection tax" tactics. Either way, Microsoft is not getting rich off Android.

> That’s $20 million per day ($830 million per year)

How could they let that slip?

IMHO steveb is the type of manager that can milk existing customers/markets, but not effectively lead MS in a full scale war vs Google, Apple and Amazon. The only way I can see MS not becoming IBM 2.0 is billg return.

In 2012, Fortune ranked IBM the #2 largest U.S. firm in terms of number of employees (433,362), the #4 largest in terms of market capitalization, the #9 most profitable and the #19 largest firm in terms of revenue. Globally, the company was ranked the #31 largest in terms of revenue by Forbes for 2011. Other rankings for 2011/2012 include #1 company for leaders (Fortune), #1 green company worldwide (Newsweek), #2 best global brand (Interbrand), #2 most respected company (Barron's), #5 most admired company (Fortune), and #18 most innovative company (Fast Company).

IBM SUCKS!!!

Yes, it does, from my point of view. It's just another boring, suits-driven consultancy avoided by the really smart people.

You're either young or live in a SV bubble that thinks that "really smart people" only want to work for Google, Apple or some hip startup.

Yes, that's exactly the case for engineers/designers/project leaders ;-) Smart people have a choice and IBM is a poor choice for anyone with ambitions, beyond a steady paycheck.

I would say that if you want your own company you wouldn't work for any company because at the end of the day you are still working on someone else's product. Doesn't matter if it's Apple, MSFT for Acme Box corp.

However when you say "Smart people", are you saying that IBM's Watson, the latest Intel chip or the latest drug are create by stupid people because their company is not mentioned on HN.

C'mon let's keep real. This is like saying: as long as you don't drive a Bentley there is no difference between an Audi and a Kia.

IBM is a poor choice for anybody with ambition to work with latest cool web frameworks doing 'social-X'. If your ambition is in chip design, AI, massive data processing, quantum computing and more theoretical work, then IBM probably isn't too bad a place.

You hit the nail on the head. :)

The final transformation into IBM 2.0 will be complete when most of the people compelled to use MS products are not the same people who chose to buy the MS products. Are we there yet?

In that I suspect very few cubicle farm employees actually got input into their computer environments, we've been there for decades.

To become IBM 2.0, Microsoft would have to kill its R&D budget, outsource everything to India, and focus on short term gains. Really, Microsoft is really far away from that, you could say they are even more forward thinking than Apple with one of the last industrial research labs in place (IBM and its consultants has basically killed IBM Research). Disclosure: Microsoft employee.

Yes, that is now. But if Surface and a few more extremely expensive attempts fail, sooner or later MS will have to close the lab, fire many developers and concentrate on extracting value from it's existing shrinking markets.

Or Microsoft could do a reset like Apple did in the late 90s. That would still involve closing the lab, firing many workers, and focusing purely on a narrow set of products that it can make lots of money on.

Yes in a hypothetical future where microsoft loses massive amounts of money it may need cut spending and double down on it's existing competencies.

But that's a pretty damn facile statement.

It can be said of any company that has a revenue stream. The only ventures that's not true for are governments with sovereign currencies (and even then there are limits)

Well the future is hypothetical by definition, isn't it? MS has two choices now - invest in R&D and try to secure new markets or make maximum profits for it's shareholders from exiting markets. MS may not "need" to cut spending but every billion they spend on projects like Kim, Bing, Surface is a billion that could've been dividend or share's buy in.

Yes, I think MS still has room to avoid the fate of pandering to the enterprise. MS research continues to shine, but I recall that IBM research shone brightly in the 80's.

I hope that MS can stay primarily focused on people who make their own buying decisions, but I'm worried (eg [1]). "A computer in every home" would have translated very nicely to "a device in every hand." Alas, I'm not really sure what MS stands for these days beyond "backward compatibility" with its understandably addictive revenue streams -- which is also eerily reminiscent of IBM in the 80's.

[1]:http://news.softpedia.com/news/Microsoft-Says-No-to-a-Comput...

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