
If Steve Ballmer Ran Apple - greedo
http://stratechery.com/2013/if-steve-ballmer-ran-apple/
======
mindstab
From everything I've heard I fear Google is next up on this Ballmer path. They
are turning off R&D and looking to capitalize on what they have after a decade
of crazy growth from new things that fell out of R&D. It's bizaar to watch
them do this, but this at least explains their motivation. As to how they let
this start happening to themselves... oh well. Slippery slope

~~~
sshumaker
Definitely doesn't seem that way from the inside. We're constantly
productizing new research that comes from R&D. Self-driving cars, Glass,
DistBelief, etc.

In fact, one thing that's unusual about Google is how much R&D actually makes
it into products (unlike, say, Microsoft, whose research group turns out great
stuff but rarely does anything with it). In that sense, it's less pure blue-
sky, but more applied. I think it's more akin to the Manhattan Project, Apollo
program, etc - scientists and engineers working closely together to redefine
what's possible. (We even internally refer to the ambitious projects as moon
shots). SpaceX and Tesla are doing work in a similar vein - an virtuous cycle
of innovations and research.

~~~
seanmcdirmid
This is mostly (edit: completely -> mostly) inaccurate (edit: untrue ->
inaccurate). Just because we aren't vocal about what gets tech transferred
doesn't mean it doesn't happen (disclosure, I work for MSRA, one of the MSR
labs; I assume you work for Google).

Google differs from MSR in that almost all of their researchers work in
product teams on products. Their contributions are highly visible as a result,
but they don't really get to take the risks that we get to in a research lab
setting. Much of the work that Google capitalizes on comes out of
universities: Google then hires the researchers and allows them to continue
working on the research as a product. For example, Google did not take the big
initial risks on self driving cars (DARPA funded that), but they've bought
into it and think its product ready (which is a risk in itself, but a
different kind). And if your researchers are working on products (emitting
their experience), they don't exactly have time to do new research (collecting
new experiences for later emission). Google's 20% time was supposed to help
fix that, but its not clear that this works.

I (and many of my colleagues I think) have a lot of respect for the Google
way. At the same time, it is quite clear that the results of both systems are
very different.

~~~
taliesinb
Wasn't MSRA behind that amazing live English-to-Chinese translator [0]?

It's interesting to contrast Google's and Microsoft's approach with ours at
Wolfram Research (at 0.3% their size, of course [1]).

We've come to see that it is very fruitful to live in a murky space somewhere
between "commercial product" and "research project".

I'm thinking specifically about Wolfram|Alpha.

It's an enormous and daunting project. We've tackled a lot of very hard
problems, and obviously have a long way still to go.

It has the weird property of being a thing that ships every week, but not one
that the parent company depends on financially.

And so we kind of do our own thing, encoding domain knowledge, adding content,
curating data, and designing frameworks, even if some if it won't ever make us
any money (e.g. who will ever pay for dog vision [2]). We mostly just do
things because they're cool or fun.

But it's been incredibly useful to drive innovation elsewhere in the company.

For example:

1\. Alpha's unit system (the best in the world, the authors claim) is already
in Mathematica 9.

2\. Alpha is inspiring us to bring high-level semantic data and reasoning to
Mathematica 10.

3\. The automatic analysis in Pro is being souped up and will form part of
Mathematica's predictive interface (automatic suggestions to "perform logistic
regression", and so on).

4\. We're working on taking the natural language understanding frameworks
we've built for Alpha and using them to translate natural language queries
into structured SQL or hierarchical document queries.

5\. The domain specific languages we've invented to represent things in the
real world are going to be exposed in a soon-to-be open format we're calling
the Wolfram Data Format (which I hope will succeed where RDF is failing).

We wouldn't have though of any of this stuff without Alpha. And it wasn't
explicitly driven by either commercial or basic research, but rather some kind
of eccentric blend of the two.

[0] [http://www.youtube.com/watch?v=Nu-
nlQqFCKg](http://www.youtube.com/watch?v=Nu-nlQqFCKg) [1]
[http://www.wolframalpha.com/input/?i=600+people+%2F+%28numbe...](http://www.wolframalpha.com/input/?i=600+people+%2F+%28number+of+employees+at+microsoft+%2B+google%29)
[2]
[http://www.wolframalpha.com/input/?i=apply+dog+vision+to+ima...](http://www.wolframalpha.com/input/?i=apply+dog+vision+to+image+of+a+lady+bug)

~~~
seanmcdirmid
Yes, a semi-research project with lots of peel offs works well. It is nice
that Wolfram has a nice product with good profits that can bankroll something
like Alpha. Seemingly inefficient (not directly profitable) experimentation is
a great way of driving innovation and invention. Contrast with Apple, who has
a razor sharp focus on profitable products: they don't make many mistakes, and
they aren't taking any risks these days.

As an aside, I don't think the mostly constructed knowledge representation
approach taken by Alpha will scale in the long run. You guys might want to
look at playing around more with machine learning. On the other hand, there
are gaps in machine learning that are best filled by DSLs and explicit
construction.

~~~
taliesinb
Yes. Fewer arrows has worked well for Apple.

We _are_ taking machine learning more seriously (I claim some credit here). My
team is integrating ML into Mathematica 10 as we speak. And we've experimented
with deep learning. I think some interesting things will come out of that in
the future.

I think a hybrid approach is pragmatic. There is much computational knowledge
that can't be assembled from web scrapes, as Google's purchase of Metaweb
indicates (anyone remember Google Squared?).

~~~
seanmcdirmid
I am seriously looking forward to see what you guys come up with!

~~~
taliesinb
Thanks! Likewise, my eyes are always peeled for the latest stuff from MSR.

------
fphhotchips
I have to disagree with one of the final conclusions of the article. For me,
at least, it's far easier to imagine life without Apple or Amazon than it is
to imagine life without Microsoft.

Say Amazon goes bankrupt tomorrow. All of their products stop working over
night. Many people are upset because you can't get things as cheap, but for
the most part they go to other online retailers, of which there are many. The
Kindle is pretty easy to imagine life without, as are most of the other
services. AWS going black would frustrate much of the web, but most of that
could be taken up by the litany of providers in that space.

Apple is a little trickier, but to my knowledge (take with a whole shaker of
salt) they don't have a huge ongoing set of services, and most Apple skills
are pretty transferable to other *nix style services. If anything, I could
imagine that Linux might get a whole lot of extra designers. The iPhone would
be missed, and there would be some havoc as people rush to alternatives, but
it doesn't do anything truly special that an S4 or equivalent doesn't do. The
iPad would be missed also, but it's the same story.

Microsoft though has its fingers in so many pies that if it disappears over
night it would basically stop much of the planet. There are a lot of devices
running Windows Mobile still. There are loads of applications in use that
simply won't run on anything but Windows. Millions of people that don't have
the skills to use anything but Office/Windows. Earth without Microsoft would
be drastically different. Outlook/Exchange is huge also. There are masses of
IT staff that would simply not know how to use anything else.

Now, that's not to say that they haven't done a lot of work to take themselves
out of that position. Windows 8 was, as I think everyone here would know, a
train wreck. There are developers developing for the web, Android and iPhone
that 5-10 years ago would have been developing applications that would only
have run on Windows. I just don't think either Apple or Amazon have the
irreplaceability in so many fields that MS does.

~~~
enraged_camel
Why would you think that Microsoft's overnight disappearance would cause the
sudden failure of things like Outlook/Exchange?

They are deployed software. Sure, they would stop being updated, but I reckon
that for most organizations they would become legacy software over the years.

~~~
fphhotchips
The thought experiment was that the companies went bankrupt _and_ their
products stopped working. A world without the company or its products. That
probably should have been clearer, since if Amazon went bankrupt most of its
products probably _would_ go dark (unlike Apple/MS).

------
puma1
Let's see where Microsoft is vs where Apple is in 3 years. Apple has 0
innovation going on. OS X and IOS are stale as anything. They are riding on
earlier success and eventually will fizzle out.

~~~
czr80
Indeed, Apple is doomed.

~~~
greedo
Beleaguered is the preferred term.

------
bztzt
Microsoft, infamously, has been willing to lose billions year after year on
new products in the hope of future success. They spend as much as anyone on
basic research and incubations with no certainty of productization. For better
or worse they've also taken on major redesigns of existing products focused on
future scenarios at the risk of damaging short-term success (e.g., Windows 8,
office 2007). None of those things fit his narrative about narrow short-term
profit maximization.

(The example of the above he does mention - Xbox - he dismisses because it's
not that profitable! So when something is profitable it's a sign of narrow
short-term profit focus, but if it's not it's irrelevant because profit is
what matters. Huh?)

Microsoft does seem to have trouble turning its R&D activity into breakthrough
products, but his attempt at a narrative explaining why just doesn't fit the
facts and doesn't make sense.

------
cnahr
The premise is wrong. Ballmer grew Microsoft profits but he did not maximize
profits for Microsoft shareholders. In fact MS share price was famously flat
for far too long, and jumped 8% when Ballmer announced his resignation. It's
Apple and not Microsoft which delivered amazing shareholder profits. Some
basic fact checking before writing an article would be nice.

~~~
gentlegiant
Are you thinking of capital gain? That's not profit per se.

~~~
cnahr
I'm thinking of what the article said, "doing a good job for Microsoft's
shareholders" as Ballmer claimed. He did in fact not do that. Please look up
the share price, it has been flat below $40 during his entire reign. And MS
isn't issuing some amazing dividend either.

~~~
gentlegiant
I think the article does a pretty good job of elucidating why the traditional
view that a manager's job is to generate the maximum profit for shareholders
(narrow view or the Milton Friedman mantra) no longer works - yet the
contemporary holy grail as taught in management schools that advancing a broad
range of stakeholder interests and also pursuing corporate social
responsibility agenda (broad view) does seem to work.

------
dustinupdyke
This is the most intelligent summary of Ballmer's tenure I've seen. It falls
back on more facts and numbers than I think all of the others I've read
combined.

As technology people, we look at companies through a different lens than
investors, shareholders and the like. We want to be impressed, we want to be
given a new toy that disrupts existing markets and allows us to develop
software in some new way, but that isn't the only way to make money and create
value.

------
ZeroGravitas
Looks like someone's noticed that Apple no longer makes the most profit in
smart phones and started planning the next era of Apple myth-making.

Time to revisit this piece now that Samsung (and therefore Android) profit
share has caught up with market share enough to overtake Apple:

[http://daringfireball.net/2011/09/winning](http://daringfireball.net/2011/09/winning)

"The iPhone, on the other hand, currently accounts for two-thirds of the
mobile phone industry’s total profit. Mobile carriers need the iPhone today.
Computer stores did not need the Mac.

It’s easy to pick and choose the numbers you want to back up the theory you
prefer. So if you’re rooting for Android to dominate the industry, it is
tempting to focus on unit sale market share, and to attribute Windows’s
historical dominance to its massive unit sale market share. But you can flip
that around, and argue that because I am rooting for the iPhone, I cherry pick
the data to fit the story I want to see unfold — and so I say profit share is
what matters, not unit sales, only because that’s the figure that puts Apple’s
position in the best light.

But I like the odds that I’ll be proven right. Money is how you keep score,
because it’s the one thing whose value everyone agrees upon. That’s what money
is."

~~~
engrenage
Samsung profit share has nowhere near caught up with Apple.

[http://appleinsider.com/articles/13/07/27/samsung-has-not-
de...](http://appleinsider.com/articles/13/07/27/samsung-has-not-dethroned-
apple-in-mobile-profits)

Looks like you've been taken in by misinformation.

~~~
ZeroGravitas
Strange, _my_ Appleinsider link, from a few days after yours, shows that
Samsung have closed the gap massively over the last year or so and was within
3 percentage points at the end of last quarter, a whole two months ago and
just before the new iPhone announcement. Not generally a big sales period for
Apple.

[http://appleinsider.com/articles/13/07/31/apple-
takes-53-of-...](http://appleinsider.com/articles/13/07/31/apple-takes-53-of-
smartphone-profits-samsung-at-50-remainder-lose-money)

They've been publishing that data for years and never once questioned it
before. I wonder what happened that got one of their staff so riled up about
the issue? Oh yes, probably Samsung overtaking Apple in smartphone profit
share.

~~~
mwfunk
Are you emotionally invested in Samsung's success (or Apple's failure)?
Because if so, Gizmodo's right over there dude. I come to HN to read
insightful analysis, not to read a bunch of people Grubering about whatever
imaginary tribe they think they belong to.

~~~
engrenage
The linked article is pretty Gruberish. If you don't like analysis of an
opinion piece, perhaps this was the wrong comment section to read.

~~~
mwfunk
Yeah, very true. My grumpiness gets the best of me sometimes.:(

I guess I wish the HN response to a Gruberish article would be people
analyzing it for what it is, not people gloating about how they think their
team is, uh, winning or whatever, then arguing about the numbers that they
think proves it. Maybe the post I was responding to was some sort of pro-
Android Gruber parody or something. If that's the case, then it was awesome,
because it really captured some very subtle nuances about how that brand of
commentary operates.

~~~
ZeroGravitas
I'm just fascinated by the myth-making that surrounds Apple.

How could anyone read an Apple pundit claim that profit is the only metric
that matters and not nearly die of cognitive dissonance after so many years of
excuses/reasons why beleaguered Apple's Mac OS 9 and X was better. And yet
it's par for the course.

And now here's an article which claims to be about Ballmer (a figure of fun
for the Apple crowd) but is really about how Apple is morally superior for not
being capitalist!?

It's hilarious, fascinating and a bit sad. And strange to be at the inflexion
point where they go back to all the stories from the Windows vs Mac OS days
e.g. they've already cast both Google and Samsung, to play Microsoft's role as
the evil villain who copied all their good ideas and didn't deserve success.

And have you read the Appleinsider piece that gets trotted out to defend
Apple's profit share lead? It's a very, very odd read. But you mention that
Apple have not got the profit lead anymore and you get several links to it,
and several repetitions of the "Samsung numbers are dodgy" talking point. It's
a very organised media bubble.

~~~
hga
And the "Google copied Apple" trope is such garbage. _Danger, Inc._ was the
innovator here, releasing their first Hiptop/T-Mobile Sidekick 5 years minus 3
months before the iPhone. Danger co-founder Andy Rubin left them a year later
(let's hear it for non-compete unenforceablity in California!) to co-found
Android, Inc., which was bought by Google in another couple of years, still 2
years prior to the iPhone's release.

There's no way in hell the first Android phone could have been released 5
quarters after the iPhone without it being long in gestation.

~~~
engrenage
You can't expect anyone to take this seriously. The hiptop was nothing like
the iPhone.

And in 2007 before the iPhone was released Android looked like a blackberry
clone:
[http://blog.steventroughtonsmith.com/2012/05/2007s-pre-m3-ve...](http://blog.steventroughtonsmith.com/2012/05/2007s-pre-m3-version-
of-android-google.html?m=1)

~~~
ZeroGravitas
Well the Hiptop had an app store, which the first iPhone didn't, so there's
certainly differences, but they're both basically PDAs.

~~~
engrenage
You're forgetting the Sharp Zaurus, why are you being such a Danger fanboy? /s

------
asperous
> "Ballmer did exactly what our capitalist system dictate he do: he maximized
> profits to the benefit of Microsoft’s shareholders. The implications of
> suggesting he was a failure are far more profound than most of his many
> critics likely realize."

I'm not sure I get this point. Are Apple and Amazon not also running
successfully under a Capitalist Marketplace?

~~~
hyperbovine
Apple of course prints money, far more of it than Microsoft, so I don't really
see where this author is coming from. Amazon is more interesting; Amazon
famously posts loss after loss, preferring to reinvest it all in R&D an
infrastructure. It's on open question as to why their stock retains such a
high valuation (see e.g.
[http://www.slate.com/blogs/moneybox/2012/12/12/amazon_s_zero...](http://www.slate.com/blogs/moneybox/2012/12/12/amazon_s_zero_profit_business_strategy_it_s_amazing_but_someday_we_may_all.html)).
I think the answer for most people (including myself) is that a) I don't want
my Prime going anywhere and b) Jeff Bezos is a genius.

~~~
kalininalex
Amazon has been operating at near breakeven point for a long time. Most of the
years the make some money, sometimes they lose a bit.

Their stock holds up because they increase their revenue, and market share, at
a huge speed. This is reasonable. In fact, that's what most startup companies
do after raising Series A, B, C, etc. funding - they usually spend a lot more
than they make (i.e. "burn" cash) with the goal to grow the market share as
quickly as possible. Amazon is a public company with significant cashflows, so
they use internal funds to grow.

Here're the latest approximate revenue/profits number from Amazon (all in
billion):

2007: $14 / $0.5

2008: $19 / $0.6

2009: $24 / $0.9

2010: $34 / $1.1

2011: $48 / $0.6

2012: $61 / $(0.04) (loss of $40 million)

This is a very impressive growth (in revenue) for a large company. Having said
that, one day it will stop, so by then Amazon will need to show impressive
earnings, or its stock may get punished.

------
MarcScott
I think you could probably replace "Steve Ballmer" with "Tim Cook" here. From
my perspective, Apple seems to be all about the profits. Wasn't it under Tim
Cook that the first dividend in decades was paid out to share holders?

~~~
MikeCapone
The money belongs to the shareholders. Piling it up and doing nothing with it
isn't the best use, so returning some via buybacks and dividends makes perfect
sense.

------
robg
Hard for me to follow his argument when he dismisses Xbox in a footnote for
the exact reason he lauds others (relevance, not profits).

~~~
programminggeek
Yes, but Xbox did well in spite of Ballmer. I believe Ballmer and Gates were
pushing for Xbox to run Windows XP on launch (like actual Windows with Office)
and the Xbox team had to fight hard for it to be a game console.

The only reason Xbox even happened is that Microsoft management was terrified
that the PS2 was effectively a computer being sold by the millions - a real
threat to Windows and Microsoft. If the Xbox team didn't stick to their guns,
the original Xbox would have been a monstrosity.

You could say the Surface was a poorly executed version of the same idea. iPad
is killing PC sales, so try and jump in and take market share. Too bad
Microsoft doesn't have people who really "get" the iPad building and selling
the Surface. They eliminated the Courier team.

------
bjhoops1
Emphasizing "shareholder value" as a corporate strategy has always seemed
self-evidently short-sighted and foolish to me. I find that it is frequently
embraced by the sort of people who look for quick answers to complicated
problems; who prefer their answers simple and free of nuance. The same bunch
who hold a near-religious faith in the ability of Free Markets to solve all of
man's problems in the most efficient way possible. If only things were so
simple. You'd think that 2008 would have been enough to put neoliberalism
behind, but sadly it is not so.

------
andrewflnr
So you want someone like Ballmer running a corporation's existing businesses,
while you have a more "visionary" CEO who works on entering new businesses. Is
that a lesson here?

~~~
mwfunk
If there's a lesson, and there may not be, I think that it's that a company
shouldn't get 100% into either mode of operation.

A company that's totally focused on breaking into (or creating) new markets
can get so wrapped up in chasing the next big thing that they neglect their
existing customers, or they don't know what to do when a couple of years go by
without some big huge new innovation.

On the other hand, a company that's totally focused on maximizing profits from
its existing products can eventually become a dead end too. It becomes very
risk averse, and unwilling to cannibalize any of its existing products with
newer, more innovative products. It becomes obsessed with the idea of using
every product to sell every other product, such as the ubiquitous Windows
branding that has pretty much killed every Microsoft product that wasn't
Windows.

Maybe there's a middle ground, but I fear there isn't. I think there's just a
natural boom and bust cycle for tech companies, and the best they can hope for
is to survive the next bust and get to the next boom.

At the heart of a lot of this is are the forces that drive the stock market-
in the tech industry at least, you can't just carve out a niche for yourself
and constantly improve in that one area. You may make a ton of money, but tech
investors only care about growth. It's like publicly owned companies have
forces acting on them that make them grow and grow and grow until it kills
them. It's not sustainable and it kind of sucks that it has to be that way.

------
systems
there is a french proverb that goes like "with if, you can put paris in
bottles"

you can make anything happen in your imaginary 'if' world in this imaginary
world, steve ballmer changed apple in my imaginary world, apple will change
steve ballmer and ... well, you know how the rest of the story goes

------
bridgeland
An insightful and balanced article about Steve Ballmer. But the author goes
seriously awry in the last paragraph:

"Ballmer did exactly what our capitalist system dictate he do: he maximized
profits to the benefit of Microsoft’s shareholders. The implications of
suggesting he was a failure are far more profound than most of his many
critics likely realize."

Actually not at all. The best way to serve shareholders is to not focus on
profits more than you absolutely must, and instead to focus on doing things
insanely great.

And there is a personal lesson as well. I like money as much as the next guy,
maybe more. But I know from experience that my best work is when I don't think
about money at all, when I think about pleasing clients, and creating great
stuff, and changing the world.

------
programminggeek
Microsoft Research is actually more about scoring government contracts than it
is about making amazing products. Microsoft has worked on smart houses,
wireless sensors, iptv, all kinds of things and they end up with products like
the Kin...

And to the point of maximizing profits as the goal of capitalism... well if
you care about only having rich shareholders and think investors should be the
only meaningful winners in the equation, well then short term capitalism will
continue to wreak havoc every few years.

------
Thiz
AAPL stock would stay at $400 for the next ten years?

Fuck Ballmer.

