Ballmer Departure From Microsoft Was More Sudden Than Portrayed

As it apparently needs to be explained: Microsoft's predatory behavior in 1990s resulted in an incalculable and unrecoverable loss of trust among technologists -- which was bound to ultimately catch up to the company. You can get away with predatory behavior when you're dominant, but when you miss new markets -- as Microsoft did repeatedly in the lost decade of the 2000s -- you can be damned sure no one is going to be foolish enough to open those markets to a known monopolist. Microsoft is left with two choices: invent new markets or try to earn back the public's trust. They have no track record in either department; as the Magic 8-ball says, "outlook not so good"...

One of the things that I remember from 1996 Gate's book "The Road Ahead" is him calling the day when everyone will walk around with his smart phone.

"You'll be able to carry the wallet PC in your pocket or purse. It will display messages and schedules and also let you read or send electronic mail and faxes, monitor weather and stock reports, play both simple and sophisticated games, browse information if you're bored, or choose from among thousands of easy-to-call up photos of your kids."

http://en.wikipedia.org/wiki/The_Road_Ahead_(Bill_Gates_book...

From 2003 to 2005 I worked in Windows Mobile.

In a mad dash to achieve checklist-style feature parity with RIM, features were bolted-on with little thought given towards achieving real cohesion amongst what was being built.

The culture was stifling because the strategy was to fast-follow rather than to take risks innovating.

EDIT: Apple and Google simply changed who Microsoft was following, rather than the overall execution strategy.

Ballmer's biggest mistake was killing Windows Mobile 7. Microsoft had a huge lead with Windows Mobile 5 in 2005; a decent OS with decent hardware and a huge app ecosystem. Leaked WM7 screenshots show that it would have been competitive with the iPhone if it had been released in 2007-08 as originally planned (http://pocketnow.com/smartphone-news/windows-mobile-7-exclus...). But they inexplicably killed the project and let Apple conquer the world. Microsoft didn't respond until 2011 with Windows Phone, which was a new OS written from scratch.

What went wrong? The corporate culture degraded until it was poison to both retaining good employees and taking on challenging projects.

What went wrong? Ballmer expended a lot of effort to remove any potential challengers to the throne during his tenure, ridding the company of many talented and ambitious high-level managers, having an obvious impact on the company.

What went wrong? Microsoft reacted to the economic downturn in '08 by treating its employees like shit for a few years in order to pinch pennies even while it kept tens of billions of dollars of cash on hand.

What went wrong? Instead of making each part of the company more autonomous and independent, or even spinning off parts of the company into separate ventures, the whole company remained one giant, bloated empire while the industry changed dramatically around it. Most parts of the company aren't "hungry" the way they would be if they were spun off as startups.

What went wrong? The strategy tax got shoved down everyone's throats in every way imaginable. Microsoft wanted to own every market out there instead of concentrating on its core strengths and executing well on what it could. It dumped a lot of money into trying to catch google et al with the "live" rebrand and then "bing". It dumped a lot of money and opportunity cost through strategy tax in trying to catch flash through silverlight, which is now virtually defunct.

What went wrong? At nearly every step MS is capable of executing on engineering ground well but failing to make things that people actually want. The Xbox One is by far the most impressive console of the next generation but it's marketed so poorly that few people are aware of its actual capabilities and advantages though many are aware of its downsides and limitations. Windows phone and surface are solid products but they're not the products they need to be to actually compete against samsung and apple. And the list just continues.

What went wrong? The company made a lot of key mistakes over the last half decade, many of them at a strategic level. Who exactly is most responsible for that?

>What went wrong? That's the real question.

I work in the OS world, so I have thought about this question.

What I think 'went wrong' with Microsoft - as is happening with other "Operating Systems" developers, is that they have forgotten that they are there to serve their users, not an onboard business-model.

Seriously, think about it. Let us take the example of shared filesystems, a common 'posession' of the OS in certain terms .. OS, filesystem, network, its all right there in the kernel .. but .. Why, on gods green earth, are we relying on 'startups' and 'upstarts' to deliver us peer-to-peer networking at the front-end user interface instead of actually having it, de-branded, at the operating system level as a matter of course?

Things Dropbox, if Microsoft was awake, wouldn't have happened, because the peer-network shared filesystem thingy was sorted out .. in the 80's, I might add .. and then promptly forgotten about.

Because the OS vendors have lost the plot on what is an operating system (hint: its the source, stupid!) and what is a 'branded service which produces other revenues for the OS vendor', and because the anti-trust thing happened, in the first place: OS vendors have lost the plot.

Also, the very first sign that things were going awry was when someone decided that a user operating system should not ship with its own compiler(s), onboard! The separation of those tools, and the sheer bloat that results from not having a tight Build/OS binding, means that things got out of control on the developer, developer, developer(s), side of things, imho.

I think this disconnect of the User-is-the-Developer mentality from the "what service is sold -outside- the box of the OS" profit excuse, with the ease of device manufacturing these days, OS vendors have new challenges ahead, and the crux of the argument is this: Its damned easy to make a new OS, for your own device, and then serve the hell out of your customers. In a very real sense, who needs a desktop if all you have to do is turn something on, and press play, in the first place.. ? With the way things are going, cheap light computing built-for-task is the new hotness, and .. well at least imho .. There may well come a point where the new hot OS ships with everything you could possibly need, already onboard and working, to build something new for the platform, itself.

Put that ethos back, and lets talk again in a year about it ..

I think Microsoft has always been a software company, and never really intended to get into any other business. At the same time, Apple grew from being a strictly hardware company into a "platform" company. That is, they began developing the software that ran on their hardware. This put them in a much better position to begin developing devices that were not traditional computers.

Microsoft, on the other hand, has done all they can to avoid making hardware. It shows with the Surface...while it's a nice piece of hardware there are many failures with the device that perhaps a company with more experience building those kinds of things would have caught early on in development. Only recently have they began working in hardware, and developing full products. I don't believe they would have even had this capability had it not been for the extraordinary work that Microsoft Research does. But Microsoft has made a ton of money by pushing both their consumer software and their tools/infrastructure for companies to develop their own software on the .NET platform. It's widely known that Microsoft's developer support channels (if you want to pay for them) are much more developed than Apple's, whose dev environments are geared for far simpler setups. .NET shops, for example, pretty much do not need to worry about the latest and greatest tools. Microsoft can provide everything you need to get work done on their platform.

But personally, I don't think you could possibly develop as good of a business relationship between hardware manufacturer and software developer as a company which includes both facets of product development. These days, the real money is in getting people to buy your gadget, as Apple has shown. Microsoft missed out on that, because they did not invest properly in building hardware when they could have.

And that's where Microsoft went "wrong". Though they may not have...

The experience with Microsoft devices was not so great. I will give you one instance - They never left the keyboard from tablet and phone. Ballmer laughed off iphone when he heard it is a $500 device and have no keyboard, and he said no one is going to buy this device. He still not understood the point. While apple made the interaction with idevices very sexy. Rest is history and you very well know it.

In my first journalism class, one of the very first things drilled into our heads is to always be explicit in who or what your sources are. Even if they're confidential, how many there are and rough details about them should always be given.

Weasel words are the bane of decent journalism. It's a shame so many major news agencies don't seem to realize this, though.

Swisher consistently called a lot of industry moves right ahead of time. She's like the wikileaks of the tech world.

See the unauthorized bio of Marissa Mayer the other day for some nice samples of how she gets her info.

You might not like how it was written, but Kara Swisher has credibility and I don't doubt it's true.

One of Microsoft's big problems is that software and hardware lifecycles are slowly extending to the point where Windows' primary competitor is Windows. In other words, older versions are good enough, people don't upgrade until they get new computers and they do that less often. Microsoft has been trying to transform themselves into a services business since at least 1999. I am not holding my breath.

Well, I think a lot of open source business models involves selling services relating to the software instead.

A while back, someone in response to my critique of Windows 8, said something like "Microsoft can never be destroyed!Their monopoly give them free money". Funny how little people understand capitalism.

No, that's not free money to play your BS "Metro interface" games with. It's the stock holder's money and they'll be wanting it back if it looks like you're flushing it down the toilet.

Microsoft's "device strategy" (Window 8) was the most crassly opportunistic and generally despicable hi-tech corporate maneuver we've seen in a while (and that's saying something). It's infinitely satisfying to see it go down in flames. If we could toss more careers and people on this pyre, it would be even coolers.

While I'm sorry for people for pursue poor strategies as dictated by the market, this was like the final spraying of Microsoft's true evil poison. Yes, we are intended to destroy the whole platform we created just for a chance to steal someone else's platform. Yeah, but that chance came and went. The organizers of Windows 8 are just left with the poison.

ValueAct wants to make short to medium term money. That sounds reasonable, but investors like that are the death of a technology company.

If a technology company starts paying dividends or share buybacks it means it believes the field they are in is so mature they cannot invest the same money in trying to grow the company.

For a company like Microsoft - where the field should be anything to do with technology - the fact they can't invest that money in themselves is something of an indictment of how they have lost technological leadership.

I clicked that link, and the webpage started with a woman voice speaking too much like a whiny entitled gal wanting something when you arrive home, and I don't figured how to shut it down, and closed the tab :/

Why people leave these whatever with automatic sound that cannot be shut off?

If Bing closes, Google will find it much harder to fight anti-trust suits.

Even when you compare post-bubble market cap, say from 2002 to now, it's shockingly bad performance for Microsoft:

AAPL: $5 billion -> $465 billion

GOOG: $16 billion -> $288 billion

MSFT: $217 billion -> $291 billion

I know now you might nitpick that AAPL and GOOG were very small in 2002 and not comparable to saturated markets Microsoft operates in. In that case, take example of even non-tech well established companies:

AT&T: $72 billion -> $203 billion

StarBucks: $7 billion -> $53 billion

However you can still argue that Microsoft increased its revenue 3 folds and profit 2 folds under Ballmer. That might be good metric to measure Ballmer's performance but this does not discount for inflation (36%) and auto-accumulating multi-year enterprise contracts that have been pilling up since Gates era (unknown value).

Agreed, it fails to take into account the Clinton DOJ anti-trust lawsuit against Microsoft which basically popped the dotcom stock bubble. The stock has remained flat then grown steadily since. The article also fails to mention the growth of annual revenue which has raised steadily and has tripled under Balmer's watch.

At the moment, Microsoft stock pays a 3% stock dividend which is a pretty good investment return, so it's less important for the stock to appreciate.