When I first went to visit Microsoft, the company had only 28 people. In the early days of the PC industry there were no official PC analysts. I happened to be one of the first by default since I was covering mini-computers for Creative Strategies and was asked to cover the IBM PC introduction as well. This put me at the center of the PC industry from the beginning and after a trip to visit IBM I was asked to go see Microsoft too since their OS was on the IBM PC.
From the start, Gates hammered home that Microsoft was a software company. That was the core of his vision and it is what drove him during his tenure as CEO. This helped Microsoft become the dominant player in PC operating systems, server software and PC applications. While the PC was the major tool for all things digital for most of their existence, by the mid 2000’s the market began shifting to new platforms like smartphones and tablets. The irony is that Microsoft got involved with tablets in 1991 and smartphones as early as 1995. In fact in the late 1990’s Gates even predicted that the tablet would be the next major computing device for the masses.
But with the PC market booming, these other platforms turned out to be more hobbies for them than products that they would bet the company on. From my viewpoint their tablet and smartphone projects not only got low priority but also were really mismanaged during those days. With the world moving to mobile, and PC sales slowing down dramatically, Microsoft is at a crossroads and it is clear that Ballmer and Gates truly understand it. More importantly, they and the board now realize that it is now time for a new leader to grab the reigns and take them back to their roots and only concentrate on software but this time with a focus on mobile.
Business schools will do dozens of cases studies over the next few years on what went wrong at Microsoft under Ballmer’s leadership, but at the heart of it I suspect that they will discover that Microsoft’s dismissal of Apple as a competitor early on will be top of the list, along with their lack of proper priorities and management of their mobile projects over the years. Also, their deviation into hardware, outside of XBOX, has been disastrous. Microsoft recently wrote off over $800 million on the Windows RT project and their decision to do software has wounded their partners with all vendors.
Finding a new leader to take Microsoft into what my friend Chetan Sharma calls the “Golden Age of Mobile” will be difficult. Demand in PCs will stabilize as it continues to be a key tool in business, education, and even in homes, but it will never grow again. Instead, smartphones and tablets will continue to drive this golden age of mobile and become the dominant platforms for innovation, commerce and what Chetan Sharma calls “the connected intelligence era.” We are entering an age where devices are not only connected but will also be highly intelligent and manage contextual information and even have what I call anticipation engines that perceive what we need in context and provide intelligent links before we can even ask for them.
A new leader for Microsoft not only has to forcefully manage their past but intelligently manage their mobile future with an understanding that mobile software must be at the center of their future. That means that the new CEO they bring in to be their next leader has to be driven by a powerful mobile vision for Microsoft and make this the focus of their next generation of R&D.
Ballmer managed with an eye on the PC. That was the past. A new CEO has to manage Microsoft with an eye on mobile. This is their future. Let’s hope that Microsoft’s board understands this and it is not too late for Microsoft to still be a major player in this golden age of mobile.