I'd love to sit down and talk to him, and see if his vision is a bit more long range than your average industry analyst, similar Paul O'Neill's vision on worker safety and Alcoa in 1987.
But new product development, particularly consumer product development, at Microsoft has largely fallen flat in the Ballmer years. WinPhone, Win8, Kin?
So while Ballmer has certainly increased the profitability of Microsoft, critics are IMO right to point out that they've been unsuccessful in developing future products to ensure their long-term survival.
Under Ballmer, Microsoft had the same pattern repeatedly: Zune, Kin, Windows Phone, Surface, Windows 8 -- they took too long to see the need, took way too long to make the product, and when they did it was either not good enough, too late, or both.
This is completely irrelevant. By the same logic, iPod was nothing special, just another mp3 player.
IE and XBox managed to muscle into an established market. This is harder than making a new market, and should very much be congratulated.
> In fact with IE 6 he so badly misjudged the market that he assumed the game was over and didn't even bother continuing development. IE 7 didn't come out until 4 years later!
Not so much misjudged, but started seeing as a threat. IE development hit a wall because the meme that web-based apps will replace windows-based apps got popular, and Microsoft didn't want to wipe out their own monopoly. IE4-IE6 were, at the time, absolutely crushingly good. IE6 is now remembered as the really bad browser, but that is because they stopped updating it, and in the later years it had to compete with much, much better browsers.
> You count XBox as a success, yet MS is in the hole over XBox by over a Billion dollars and will probably never make money on it, taking past losses and write-offs into account.
XBox also supports windows game development, strengthening their main money maker. What is that worth?
Microsoft did a complete re-write to componentize the browser and after IE3 (I think), IE was generally better than Netscape. At least, Walt Mossberg said so.
Hard to know why Microsoft stopped developing IE6 and you may be right. However, the next browser was scheduled to appear with the next OS, which was Vista, which turned into a debacle. If Vista had come out on time then it might not have been so bad.
You will recall that the US gov sued Microsoft on the basis that the browser was a separate market from the OS, whereas Microsoft argued it was a part of the OS. This gave Microsoft no incentive to develop IE on the sort of separate fast-track schedule that would have been best for the industry, and for consumers.
That's probably just one of the ways the anti-trust action helped harm consumers. Another was that it gave OEMs complete freedom to install crapware, which also harmed the whole PC industry.
Surprisingly little known story: in short MS was afraid of Linux as desktop OS, OSS world was seen as capably of quickly copying any innovative single feature. This is resulted in idea of "integrated innovation": produce innovation in app development, app framework, data access, communication, os based on it and ship it all at once, so Linux would never catch up (.Net Framework, Avalon - WPF, WinFS, Indigo - WCF, Longhorn). Obviously, plan failed (well, Linux failed to come to desktop too).
So IE was seen as done and future to be elsewhere. After IE6 ship with XP, IE team was transformed into Avalon team, consumed bunch of other teams and at it's peak Avalon project had something like 500 people working on it (after much struggle and numerous delays it shipped as WPF). So for something like two years, starting at summer of 2001, only 4-6 people worked on IE - IE Sustained Engineering team, patching security vulnerabilities. Then it became obvious that they can't keep up and some rearchitecture and refactoring are required in order to fix security problems for real. So IE Security Team was created, and some old timers were transferred from Avalon to do this security fix up, probably around 20 people.
Then it became obvious that "integrated innovation" is, in fact, too integrated to ship on time, Avalon and Longhorn are nowhere is sight, and browser war is effectively being lost for the second time to Firefox, of all things (MS management couldn't take fork of OSS fork of NN seriously for awhile). So IE Security Team was expanded, became IE7 team and happily started to work on a browser again, 3-4 years too late.
>However, the next browser was scheduled to appear with the next OS, which was Vista, which turned into a debacle.
As you can see from the story above, initially it's wasn't scheduled to appear at all.
Presumably all that happened under Allchin after bradsi left....
There is another twist - after XP Windows was split into two branches (since they didn't want to delay client to wait for server): Server and Longhorn. Brian Valentine managed Server (shipped as Server 2003), at same time different war room, different managers managed Longhorn ship. So essentially experienced management team was shipping server, and non-so heavy weight - Longhorn. Then some people were taken to manage XP SP2 (result of "security push"). So there is no surprise Longhorn had problems and required "reset" to finally ship as Vista.
And the lesson is: never ever branch to v+1 and v+2 branches unless absolutely required - one of them is going to be neglected.
IE6 was a terrible browser, but it was the best browser at the time. The anti-competitive behaviour helped, and then of course they sat on their laurels for years, but the best browser won.
Everyone seems to forget the most important examples...
If you forget that they now have 12 or so divisions with $billion plus in revenue.
But no product lines last forever - even Windows is bleeding market share, and upgrade rates are dropping like a brick. It seems a lot of people are happy with Win7 (or even WinXP) and not moving.
This strikes me as a Blackberry situation - market leader by a mile, but attempts to modernize and develop the Next Big Thing have all failed. They have enormous momentum and can coast for a long time - but what happens after? RIM failed to react to changing markets due to iPhone/Android, and arrogantly threw around their (momentum-based) sales numbers. Then those dried up.
Profits are a lagging indicator for a once-successful company. A large company with entrenched products can coast for a long time while in decline. For example, RIM basically sank in 2007-2008. They had opportunities to save themselves well after that, but that's when it started, and they passed up those opportunities. However, their decline didn't really show up in their financials until 2012.
Microsoft looks to me like they're the same way. Surface and the new Windows Phone are analogous to RIM's late, lame attempts to ship a large-touchscreen Blackberry. Microsoft is profitable for the same reason they've been profitable for the past couple of decades: Windows and Office. However, that's now a declining market. It's still huge, and they can milk it for a long time, but it's on the way out. It looks like they missed their chance to move on to something else in favor of hanging on to their cash cows as they sink.
http://www.microsoft.com/investor/EarningsAndFinancials/Fina...
The "Entertainment and Devices Division" is profitable, but contributes a negligible quantity to the overall profits.
And either way, the home game console is also a declining market.
Source?
I think the numbers back it up to an extent, though:
http://en.wikipedia.org/wiki/List_of_best-selling_game_conso...
None of the latest generation of consoles are near the top, despite the fact that populations are larger, and the population of people able to afford video game electronics is much larger. That the PS3 and Xbox 360 barely outsold the original NES, despite having access to a billion or two more potential customers, says to me that the market is declining relative to the overall computing world.
The Playstation 2 for example was king of the hill and dwarfed its competition (Gamecube/Xbox) but still overall you're looking at about ~200 million units. However, with the current generation you're looking at Wii, PS3, X360 all sharing an about even share with PS3 and X360 very closely tied, but the total is around ~250 million units.
So we're still seeing growth in that area, and one part that's not reflected is the added value in each platform in terms of revenue for each network (PSN, Xbox Live) as well as the growing list of peripherals (Kinect, Move) that are part of each platform.
Not only that, but PS3 and X360 had higher prices on their consoles, some even coming close to doubling the price (a top of the line PS3 at launch was $600 vs a $300 PS2).
I would say that gaming over all is becoming more mainstream to the point that the consoles are no longer the realm of hardcore gamers, because they wouldn't have kept those numbers up while people were buying iPads, iPhones and DS3's in such massive quantities if they were really a complete gaming replacement.
For one man, he sure has a lot of failures on his plate.
The only reason people use it at all isn't because it's fantastic, but because it's incrementally better than Windows XP without all the garbage Vista foisted on the user.
After having used it for an extended period of time, the only real improvements I've seen are in the explorer shell, which are minor at best, and the theme.
So last I heard there were 630 million licenses of Windows 7 sold. Even at OEM prices, that's 63 billion dollars of revenue. If that's not success, you're probably setting the bar too high.
>"The only reason people use it at all isn't because it's fantastic, but because it's incrementally better than Windows XP without all the garbage Vista foisted on the user."
That's a pretty broad brush you're using there. Really, that's the ONLY reason?
And what's wrong with incrementally better? The iPhone has only been incrementally better since the first version, and that's even more true of the 4s to 5. The iPhone 5 is still a fantastic phone! Amount of change from prior versions is a poor measure of quality.
A failure would've been a steep decline in Windows license sales. That they managed to not screw this up is not something they should be bragging about. With Windows 8 being very poorly received, this might happen yet. When people go out of their way to get an older version of your software, you know you've done something wrong.
Look at the sales curve (http://thenextweb.com/microsoft/2013/05/07/six-months-in-win...) and you'll see that Microsoft has a near literal cash cow. That curve tracks very closely with PC sales in general, following the usual upgrade cycles.
The iPhone, and the software behind it, have been improving significantly with each annual iteration. In 2007 the iPhone did not exist. Now it's iOS7, Apple's "Windows 8" moment, which so far looks to be a hit.
Microsoft should make a version of Windows specifically for enterprise on a slow release, long support cycle, and branch off a consumer one that's on a much more aggressive schedule.
A lot of the improvements under the hood the consumer didn't see or notice. One that they might have noticed is the ability for the OS to find proper drivers for pretty much any consumer device from a major manufacturer.
Other than that, there are other features that put W7 was ahead of XP in terms of management ease.
The registry is still there and even more crammed with crap than ever. Uninstaller applications are still a necessity.
Finding things in the control panel is both easier (search) and way harder than before (more tabs, more drop-downs, more everything). The simple mode is almost useless, which leaves you with the ridiculous "Advanced" mode.
Drive letters? Still there. Task manager? Still essential. Programs menu? Still filled with nonsense injected there by the vendors.
This doesn't even touch on the fact that the Windows software ecosystem is full of literal junk, programs that either overtly or covertly install adware, malware, or sneaky debris on your machine, and this includes major vendors like Oracle (Java) and Adobe (Flash). It takes discipline to keep your machine clean, everyone wants to set up shop.
The only thing I'm happy about is that Windows 7 does have much better resilience against virus type programs and application level exploits than Windows XP ever did.
Take Amazon and Apple for example. Amazon barely makes profit while Apple made huge profit, and yet when they released their financial reports (last quarter or 2 quarters ago), AAPL got hit yet AMZN upped.
But inertia fades: Exchange servers are being decommissioned. SQL Server instances are being replaced. People are supplanting an enormous amount of computing time that they did on desktops with non-Microsoft tablets and smartphone devices, which is a migration that makes Windows dramatically less entrenched (Office was once the lynchpin of Microsoft's maintenance of a captive market, however the need to use a mix of devices has made Office much less palatable than it once was). In other markets, such as online and Home and Entertainment, it has been a decade of losses, and the xbox is being usurped right as Microsoft was supposed to start profiting off of their moves.
And as this happens, Microsoft has responded by essentially tapping their existing business customer base to make up for lost market. The prices of some of the new versions are extraordinary (e.g. a Sharepoint 2013 deploy), leading to more departures. It is unsustainable.
Microsoft today feels very similar to RIM of 2010 -- the profits are still there, but the industry has moved on. In no way does that mean that they're doomed, and they can still pivot, but things don't look good.
Many younger people on HN have no knowledge of just how much Microsoft dominated technology at the turn of the millennium. I remember eagerly waiting for betas of far off Microsoft products, because every shift of Microsoft had a profound impact on the entire industry.