Ballmer is Retiring. A Look Back and A Look Ahead for Microsoft

Tim Bajarin / August 23rd, 2013

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.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.
  • FalKirk

    Very nice retrospective and perspective.

    Almost every company starts from where they are and tries to make things better. But starting from where you are may be the wrong starting place. Very few successful companies can accept that, abandon what their doing and start anew.

    I don’t blame Ballmer for the mistakes he made. They were all too human. But I can’t afford him much credit either.

    • peter

      Ballmer’s mistakes were entirely predictable; the Innovator’s Dilemma is still the guide to this kind of stuff. The real risk is that people think that replacing Ballmer will solve anything in itself, the real issue is to get Microsoft the organisation to appreciate and embrace anything other than Windows.

      The same issue obviously also exists over at Intel. Perhaps a fruitful topic for another article.

      • FalKirk

        “Ballmer’s mistakes were entirely predictable” – peter

        My experience has been that EVERYBODY’s mistakes were entirely predictable…

        …after the fact.

        • peter

          Keep in mind that most decisions at Microsoft are driven by a desire to protect and not harm Windows / Office, that means that many sensible courses of action were never fully explored.

          Ballmer’s mistakes are therefore different and not random at all. Had he not been in charge of the Windows/Office monopoly business, he would most likely have made very different decisions.

          • FalKirk

            Peter, I agree with your analysis. I’m just trying to give the guy a break and not judge him using 20/20 hindsight.

  • Defendor

    This might be one of the most watched hiring processes in tech history.

    I wasn’t that critical of Ballmer until the Win8/RT debacle. But really there is no excuse for that (predictable) mess and the buck stops with him.

    Still there is no easy fixes no matter who takes over. Win8/RT has generated a lot of ill will, and the mobile position is going to be a fight just to solidify their distant 3rd place position.

    • benbajarin

      Yes, and realistically it is a very short list. Unless they go outside tech and try to get like the CEO of Nike or some one who gets consumer markets from another industry.

      • Defendor

        I really haven’t paid close attention, but has such a tech outsider CEO worked for anyone?

        I agree that it will be a short list. You need someone with the CV and gravitas to steer one of worlds most powerful companies through some big transitions.

        • steve_wildstrom

          Louis Gerstner at IBM. Unlike John Sculley at Apple, who seemed to believe tat being CEO of a tech company transformed him into a technologist, Gerstner knew what he didn’t know. What he did know what how to make the hard decisions–getting rid of about half of IBM’s employees in the process–needed to transform a company that had lost its way. More important than technical knowledge, he brought strategic vision.

  • FrostyLoop

    Someone who did know how to develop mobile? How about Scott Forstall? Timing could not be better than this. He is much better than Elop in understanding the mobile landscape which is Microsoft lack of so much.

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