

Ballmer forced out after $900M Surface RT debacle, analyst says - psibi
http://www.computerworld.com/s/article/9241867/Ballmer_forced_out_after_900M_Surface_RT_debacle?source=cwfb

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hga
This strikes me as likely; as noted, announcing a departure along with a
search for a replacement is telling.

Was the Surface RT the trigger? Well, one does wonder how many billion dollar
write offs can occur under a CEO's watch before the board says enough. E.g.
the KIN
([http://en.wikipedia.org/wiki/Microsoft_KIN](http://en.wikipedia.org/wiki/Microsoft_KIN)),
even if that wasn't to my knowledge formally written off.

~~~
dhughes
I thought the Courier was a great idea not just for the dual screens but the
software as well the scraps and notes seemed like a great idea.

[https://www.youtube.com/watch?v=UmIgNfp-
MdI](https://www.youtube.com/watch?v=UmIgNfp-MdI)

~~~
joshavant
It was!

There's also lots of gloriously amazing tech that the Microsoft Research
division produces. However, from what I can see, for whatever reason, much of
it doesn't see the daylight.

~~~
i386
Politics, from what I've heard. Projects like the KIN where killed off my VPs
who were afraid it would compete with their products, like Windows Mobile.

~~~
MBCook
As I remember the KIN was also screwed at the last moment when Verizon decided
to abandon it. Not only did they not push it like they had planned, they
decided it would count as a smartphone, thus your teenager's new "feature
phone+" would cost you $50-$70 a month instead of the $10 or $20 it should
have.

That put directly in the iPhone price range, and the KIN was never designed to
compete with the iPhone or any other real smartphone.

Too bad. I heard the sync software for it was actually pretty fantastic.

~~~
hga
As I recall Verizon didn't do that out of spite, they did it for a variety of
reasons that were pretty much Microsoft related, like it being late and
lacking some necessary features. I suspect the ways in which Microsoft screwed
over or tried to screw over T-Mobile didn't help,

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Dotnaught
Replace "analyst says" with "area man says" and you get a story from The
Onion. I'd be more impressed if an "unnamed Microsoft board member" was the
source.

~~~
davidgerard
That was my first thought, too. "Oh, analyst w*nk."

------
ixnu
A frustration that I don't hear mention too often is the mess that is MS
software licensing. From my perspective, there is often confusion over what is
covered and what it will cost and nobody will answer simple questions.

I have been to five TechEd's and it is becoming common that speakers start a
presentation with "do not talk to me about how to buy this" or "please talk to
the license guys". I get this same answer from my local and regional MS sales
reps.

Sometimes getting pricing on the virtualization and what is covered by SA is a
royal pain. Perhaps I have it bad because I work in higher ed, but it was that
way when I worked in private enterprise.

~~~
bane
The licensing cluster that was just plain consumer Windows 7 licensing was a
disaster. The complete opposite of "focused".

------
thucydides
The credulous initial stories about his "retirement" were funny. Ballmer was
100% fired. In the long term, the company seriously failed on many fronts. In
the short term, Ballmer posted poor quarterly results and sent out a rambling
1400-page email about reorganizing the company, a last ditch effort to show
the board he was trying to right the ship. How often does a CEO announce a
major reorganization and then quit? And MSFT's official statement says Ballmer
is out as soon as they find a successor.

It was kind of the board not to cap him execution-style, since he'd put in 30
years of loyal service, but let's be honest about what this "retirement"
really is.

~~~
jlgreco
> _sent out a rambling 1400-page email about reorganizing the company_

I _really_ hope you mean 1400-word, but the fact that I can't say that for
sure says a lot itself. ;)

------
devanti
Definitely seems true. You can almost feel it in his internal retirement
letter to employees where he writes "My original thoughts on timing would have
had my retirement happen in the middle of our transformation to a devices and
services company" and "I take this step in the best interests of the company I
love"

------
chubot
Pretty surprised nobody mentioned the $6 billion writedown of AQuantive. MS
bought them as a (crazily impulsive) reaction to Google's DoubleClick
purchase. That was also under Ballmer's watch.

You could argue $900M isn't much, but $6B has got to be one of the bigger
failed acquisitions in business history.

[http://www.bloomberg.com/news/2012-07-02/microsoft-will-
writ...](http://www.bloomberg.com/news/2012-07-02/microsoft-will-write-
down-6-2-billion-related-to-aquantive-deal.html)

~~~
hga
If the board signed off on the acquisition, which strikes me as very likely,
they might not score the resulting failure the way they'd score sharp and more
quick failures to execute like the Surface RT and KIN.

Reading the article, its a bit less clear cut---e.g. failure over a 5 year
period intertwingled with their on-line efforts---than warehouses and a supply
chain stuffed with devices they can't sell, vs. so many others having wild
success at selling roughly the same sorts of devices. A forward looking
failure, seeing as they're missing out on the hottest categories of "new
things" while e.g. old competitor Apple is succeeding despite also having the
drag of a legacy PC system.

But, yeah, as I note below, " _A billion here, a billion there, pretty soon,
you 're talking real money._"
([http://en.wikipedia.org/wiki/Everett_Dirksen](http://en.wikipedia.org/wiki/Everett_Dirksen)).

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mratzloff
I doubt it was any one thing, but it might have been the final straw.
Microsoft has suffered embarrassing setbacks on its entire line of products
and services, except Office. And with the PC market dwindling and Surface DOA,
they're having to put Office in new places like iOS which they wouldn't have
seriously considered a few years ago.

~~~
adventured
Overall the Windows Server and Tools division has been extremely successful
and maintained solid product momentum. It has six billion dollar businesses
inside of it (server, sql, systems center, visual studio, virtualization,
enterprise services). This division is the crown jewel these days, it's worth
more going forward than consumer Windows is.

------
jlgreco
I would have bought one of those damn things too, if only they didn't lock
them down.

Why the hell did they even do that? Were they really concerned that people
like me would buy them and then not use windows on them? I don't see that
being much of a threat to their business.

~~~
fnordfnordfnord
I always thought that their angle was going to be that they would sell (the
product ecosystem) to content providers as a trusted platform, same to
businesses; who might want that to some degree. If they could do that, and get
the trust of the copyright mafia, then they might have been able to sort of
monopolize distribution of movies and music. Maybe even keep their monopoly on
office productivity apps (I hear that people use those on their tablets?).

I agree that there can't be enough geeks willing to buy one just to install
Linux on it for MS to worry.

~~~
jlgreco
Eh, maybe. My impression is that only the ARM ones were locked down though. I
think the Surface Pro lets you install Linux or whatever.. I haven't really
looked into that since that device doesn't really seem interesting to me.

If their angle was that they needed to keep it locked down to secure slick
media contracts, I would expect both to be locked down so that they could keep
some semblance of feature parity between the two.

~~~
fnordfnordfnord
Yeah, well, I'm no Steve Ballmer, so I couldn't pretend to fully understand
their business strategy for the last decade.

~~~
jlgreco
Ha! True. Trying to figure out _why_ they do things the way they do is likely
an exercise in futility.

------
SkyMarshal
The most interesting question now to me is, not why is Ballmer stepping down,
but who could run Microsoft well and succeed him?

MS has only ever had two CEO's - the founder, and the founder's right-hand-
man. This will be quite a transition for them.

What does the board want, what are that person's areas of expertise,
background, and experience, man or woman, etc.

------
cududa
Bullshit. $900mm is a small mistake for Microsoft. They're too big for them to
fire Steve over a billion dollar mistake. They still have multiple billion+
business. Im not saying they dont have massive problems, but that's absurd.

~~~
AmVess
MS has been making a litany of $bil mistakes. Keep in mind, the $900m is just
the write down from slashing the price by $150. The real downer will come when
they realize that those warehouses full of tablets with now outdated hardware
will cost them 3 billion.

In 2009, MS had OSes on 70%+ of hardware. Now, it's 21%. All that is from them
missing mobile. They missed mobile in the same way IBM missed the PC market.
If he truly was ousted, this is why.

The untold billions of lost profit from missing out on mobile, not to mention
the billions the lost on product failures, and I'm shocked the guy wasn't
thrown out by security long ago.

------
rtpg
maybe a bit off topic but the failure of the surface is really depressing,
it's really nice hardware (a lot better than other laptops people are being
pushed onto at least), and it also happens to be a tablet. I'm not sure what
the messaging is on that though (tablet with windows/ultrabook with
touchscreen)

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michaelpinto
The first Surface was always going to have issues. But I think the real
problem was that it should have come to market much sooner. And yet the idea
of Microsoft getting into hardware must have been a difficult move given the
culture and alliances they've worked so hard to build over the years.

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untog
Of course it's plausible, that's why they wrote this article citing a nameless
"analyst". It also happens to be fantastic clickbait but I'm sure that has
nothing to do with it...

~~~
jdcryans
Not sure about the nameless part:

"'He was definitely pushed out by the board,' said Patrick Moorhead, principal
analyst with Moor Insights & Strategy, in an interview Friday"

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brudgers
As the second largest shareholder, Ballmer is more of "the board" than anyone
except Gates. He owns more stock than any institutional investor.

Th3 $900 million writedown was less than the fine Microsoft paid to the EU for
not offering browser choice with Windows 8 - probably the precipitating cause
of Sinofsky's departure last year.

What is happening is a the generational shift from pre IPO leadership to post
IPO leadership. The heirs have been identified and it's time to let them
reshape the company. (My money is on Larson-Green with Reller running the
numbers).

~~~
corresation
Ballmer owns about 4% of the outstanding shares. While that is an enormous
holding, by no measure does that protect him if the board decides to punt him
(the board doesn't speak on behalf of shareholders in descending unit order.
They speak to the majority of shares).

------
arbuge
Shame that forcing him out cost $768m - almost as much as the debacle in
question...

~~~
adventured
How did forcing him out cost $768m?

------
snowwrestler
Analysts say lots of things.

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Zigurd
My theory is that it hasn't quite hit the fan yet.

Microsoft and mobile handsets hangs by a thread at Nokia. If Nokia fails, and
it probably will, that's it for Microsoft and "devices" as in a "devices and
services company."

That means Microsoft can wait a decade or two for the Next Big Thing, while it
watches Android take 50% or more of enterprise endpoints. And that is enough
to make a dent in revenue.

