Microsoft became almost irrelevant under Ballmer or was at least trending that way. Nadella’s turn around is almost miraculous and is itself probably an interesting story. I wouldn’t bet on that as the norm. I’d expect the norm to be more like IBM, RIM, or Nokia.
I agree with most of the article, but one line stuck out to me as particularly wrong:
>”After the acquisition, we have an extremely long project that consumed many of our best engineers to align our data retention policies and tools to Google. I am not saying this is not important BUT this had zero value to our users.”
Good retention policy does provide value to users.
--
> "When COVID hit and we moved to work from home - a huge amount of complaints began around why cant employees expense food since they are not in the office. While most "real" people were worried about keeping their jobs or finding one, many employees were complaining about expensing their food on top of their salaries/stocks/bonuses."
+1 on this - I find this behavior really irritating, it makes me roll my eyes to see some of the most coddled employees in human history whining about this kind of thing. The most charitable interpretation is its just a normal way for people to bond over some shared thing by complaining about it, but a lot of the complaining feels like more than that.
> "We had lunch in the cafeteria and a Googler online ahead of us was overheard saying “What? Sushi again???” which became our inside joke around entitlement."
> Microsoft became almost irrelevant under Ballmer or was at least trending that way
I'm not Ballmer's biggest fan, but I think he's often sold short (to Nadella's benefit), you'd almost believe Microsoft was tanking, but it grew a lot under Ballmer (mobile failures notwithstanding).
As far as I can tell, Nadella just reprioritized projects that Ballmer launched or shepherded in his boring-but-efficient way: what new tech or project did Satya launch that you can attribute MS's "turnaround" to? IMHO, it's mostly PR/hearts-and-minds stuff, but I quit MS tech a long time ago and haven't been following closely.
In retrospect, I think the Win mobile failures were overblown, the zeitgeist then was mobile would replace desktop/laptop computers, therefore failing on mobile could be fatal to Microsoft, and remained as a stain on Ballmers name. The "post-pc" world suggested by Apple/Jobs never materialized.
In a company the size of Microsoft, reprioritizing projects correctly is how you create a turnaround. He made Azure and Office 365 the central focus of the company just as software revenue growth was shifting to cloud hosting and SaaS, he stopped lighting money on fire trying to resurrect Windows Phone, he pushed Linux and OSS compatibility/development, and he put Phil Spencer in charge of Xbox which has saved the gaming division. He's also made some really nice acquisitions, IMO.
Yep. You looked at the revenues and it was Windows and Office which were clearly not continuing growth areas. Azure was floundering and only targeting .Net. Xbox wasn't doing great. They were flaming out on mobile. They had most of the pieces. They just weren't arranged and prioritized properly.
I think that article gets most of it. There's some MSFT narrative that comes up here a lot where people say Ballmer was doing great and Nadella just continued his plans, I don't buy it.
MSFT had a lot of strategic failures as well as product failures under Ballmer. Nadella shifted strategy and made them a serious competitor again.
I'm open to being wrong here and I'd agree that my initial comment was stated in a provocative way, but let me clarify a bit.
Revenue growth isn't the whole story. If you're extracting rents from legacy locked-in products or enterprise deals that doesn't necessarily mean you're a competitor on the new paradigms (phone, cloud, web).
At the time Windows phone was a failure and they missed that entire platform because of Ballmer (there's hints of your argument in this video, "we're making money with windows mobile"): https://www.youtube.com/watch?v=eywi0h_Y5_U
MSFT cloud wasn't doing well and was overly focused on .NET
Today I'd make a similar argument for Intel. Intel doubled down on old style fabs and is not competitive with TSMC. They failed to compete on mobile. They're ignoring the end of x86 and mocking Apple: https://hardware.slashdot.org/story/21/02/08/2221233/intel-b...
Increasing revenue is a good sign, but it matters how. If you're making short-term decisions to extract money from legacy stuff at the expense of new products - that's bad for your long-term future. It can take a while to catch up to you, but it eventually will. Then you'll just limp a long as a dinosaur that makes enough money to survive but nobody really wants to work there and you're done doing interesting projects. That's basically what I mean by irrelevant.
I see where you want to go with that, but I'm not sure you made the argument you're trying to make.
Ballmer didn't 'make money from extracting rents and screw everything else up'.
Ballmer entrenched and expanded MS core products i.e. Office to the Cloud and along with that massively expanded revenues, which continue to this day, long after his departure, with no signs of slowing down.
He completely screwed up Search and Mobile, but those were risky new things, that's to be expected. Frankly he should have had 1 of 2 ...
But he also established XBox and Cloud; the former is a very successful play into a very difficult space (though maybe not as nice in terms of profits) - remember, Google just completely failed at this. The later, is now a hugely successful and growing business, and frankly, over the long haul has a shot at actually going toe-to-toe with Amazon.
Microsoft has 10's of thousands of sales people and direct access to every single CTO in the world if companies with > 1000 emoloyees. Much the same way they are going to stomp Slack, they have that kind of advantage (though not the same leverage) against AWS. Point being - he started a massive business.
Azure now has revenues of more than Windows did when Ballmer started, and it's growing by 40% YoY.
So yes 'revenue' is not the 'whole story' if someone is bilking a cache cow and running everything else into the ground ... but that's now what happened.
Ballmer 'grew and entrenched the cash cows' and made some other huge bets, some of them working out to the point where they are now also, big growing foundational aspects of the business.
'The Market' took a long time to recognize this, but all the historical sales numbers are there for everyone to see.
I believe that once Analysts realized that 1) Windows and Office is 'here to stay' and 2) due to AWS, Azure is going to be huge ... that they revised their view on MSFT from a 'old company' to a 'well run growth company'.
Satya seems great and has made some good moves, but nothing of the magnitude that Ballmer did. At least not yet.
Nadella I think brought focus on ideas and prioritization that complimented Ballmer's ideas. He doesn't need to launch new projects, but ensure they are managed into a place of relevance. In that regard, it really showcases the excellent people MSFT has in the chain and how they can help each other get to where they collectively want to go.
>The "post-pc" world suggested by Apple/Jobs never materialized.
Clearly, it was in Apple's interest to emphasize the ascendance of mobile where they were strong vs. the PC where Microsoft was. I doubt Jobs thought desktops/laptops were going away, just that they'd become a less important part of the landscape--and that's almost certainly true among consumers as a whole.
"The "post-pc" world suggested by Apple/Jobs never materialized."
I think if you could measure the man hours spent using iDevices and Android devices, as a percentage of general computing hours, you'd find that it would dwarf anything. Everyone has a smartphone now. And tablet sales alone outnumber PCs.
You may be right, but the implied threat to Microsoft was that most/all Windows user's interactions would be mediated by iOS/Android apps, which would displace Windows apps and the browser. Fortunately for Microsoft, the latter didn't happen, and what at first appeared to be exponential app downloads turned out to be an S-Curve. It turns out people have a maximum number of apps they are willing to install and put up with, but this was not yet known at the height of the mobile wars when Microsoft was fighting to be #3.
I am sure someone inside Microsoft saw this early, and figured that Azure could be a platform-agnostic backend to mobile apps and browser-based apps, without having to completing with Apple since they lack core-competences there. Pivotally, tablets failed to replace desktops in the enterprise market, as was initially predicted (and feared by Microsoft).
From my point of view, the things I've most "noticed" coming from MS that are great seem to all have been launched/started during Ballmer's days (2000-2014). For me those are:
Office/Word Online (2010)
Azure (2008/2010)
WSL (Can't find info. Looks like it started before 2014 under Project Astoria)
.Net Core (Happened in 2014 - not sure who "started it")
That stratechery piece confirms that a number of Satya's "quick wins" were projects mostly developed under Ballmer but credited to Nadella... Which is exactly my point - that Ballmer doesn't always get the credit he deserves, for the sake of magnifying the contrasts between the 2 leaders.
I somewhat sympathize with those living in a small apartment who used to walk, take a shuttle bus, take the subway, etc. to work where they were fed 5 days a week or more--and now they're stuck in their small apartments with most restaurants closed and facing the prospect of maybe having to move to a bigger place. So one can choose to interpret complaints about meal expensing in that vein.
That said, in general, at least for the well-paid workers at these companies, complaints about insufficient expense reimbursement like that come across as pretty whiny.
My apartment in SF does not have a kitchen. Food provided by the company helped me get by! With no car, and only a handful of restaurant options within 1 mile, it's not the easiest to get by without a company cafeteria.
I can sympathize with why many people would like to be able to expense food.
What does expensing have to do with your situation though? You seem to have an issue with access to food rather than how much it costs. How does the company giving you some more money help with that?
In my mind the company provides food as a perk in part so people hang around and chat without leaving the office, it also makes it more pleasant to work there.
Sure. That's why they do it. (Along with the fact that it's an expected perk in some circles.) Which is also why paying a meal per diem doesn't make a lot of sense. But it's also somewhat understandable why there would be a bit of grumbling about a benefit being taken away, however unavoidably.
Of course, for many employees, the elimination of commuting makes remote work a significant win financially. But others never intended to do much more than sleep in their apartments and the current situation is therefore a net negative, even just financially.
"Oh no! I make hundreds of thousands of dollars a year, and I have to live in my tiny apartment, buy food, and I might have to get a bigger apartment."
vs
"Oh no! I don't have a job, and I'm about to lose my apartment because I can't pay rent."
I get pretty tired of this back and forth arguing in circles over who is more entitled than whom, who has more of a right to complain, who is the most aggrieved, who has the biggest disadvantage to brag about.
Really nobody has a right to ask for anything, ever, because there's always someone who has it worse, right? The only legitimate rung of the ladder is the bottom one, and we just keep finding lower rungs to use to shame anyone higher?
Sure, there are people who live charmed lives and just don't understand what the big deal is because nothing has ever gone wrong for them. They sure as heck aren't me. But let's all just stop with the tone policing. It's 100% unproductive, and won't change anything about anybody's situation, good or bad.
"I have an apartment and a bank account right now."
vs
"I live in a tent encampment."
vs
"I live in a shantytown in a third-world country."
vs
"I am on death row."
vs
"I am on death row for a crime I didn't commit."
vs...
It's important to try to maintain perspective about our own good fortunes. But it's also human nature to feel our own pain as relative to our previous experience. Someone's always got it worse than you but that doesn't mean it's fair to expect everyone else to wander around farting rainbows with grins plastered to their faces.
All of the Googlers I know are well aware of the many ways in which we're fortunate and privileged. But we're also, you know, human, and occasionally whining about stuff is just part of the human experience.
Lots of people at Google, including many developers, don't make "hundreds of thousands of dollars." It's also just a unilateral change in the terms of their employment (unavoidable as it is during the current times) that might increase their costs by $25K? after taxes. That other people have it much worse doesn't change the fact that a fair number of people are seeing a change from what they agreed to.
I like how living in the close proximity to the city center might seem somehow special from the perspective of suburban oriented culture even though it is usually a norm in Europe.
I don't know about that. Was MS ever not filthy profitable? They are very successful with azure, was that started by balmer or nadella?
People here give MS too little credit. Their reach is MASSIVE. No american company has the world wide reach that MS has. Practically every enterprise in the world is their customer.
Profit is a lagging indicator that often leads companies astray with short-term decision making at the expense of long-term relevance.
Look at Apple before the return of Jobs (though at that point, they were having profit issues too - but what lead to that was arguably short-term thinking).
Today, I'd argue Intel has made similar decisions that put them on a bad long term path.
MS would have stayed alive for a while, but been a shadow of their former self.
Obviously, it's hard to prove a counterfactual like this - but this is how I model it.
Enterprises are the slowest to change of all and this is MS bread and butter. I completely disagree MS was ever close to becoming irrelevant. Silicon valley is in it's own little world. The rest of the planet is firmly a MS customer.
MS can take all the good ideas, implement them and sell them worldwide before a startup can get out of silicon valley. Case in point: slack vs. teams.
Arguably that focus on O365 and Azure - the strategy that enabled Teams success was due to Nadella.
You're right though - 'irrelevant' is too provocative and strongly worded.
I'm more focused on future bets and trends. I think that trend shifted at Microsoft from trending towards future irrelevance back in the other direction, to being a competitive threat again.
I find it interesting that Apple has money, hardware, OS, many apps, web presence. And now ARM CPU knowhow.
Why aren't they forcibly pushing into Corporate?
Sure, they'd have to develop corporate fleet management stuff but at this stage they could buy a few companies and be 80% of the way there. Or build it right from the start for only a handful of their hundreds of billions.
How many iphone toting CTOs in your average non-silicon valley companies would jump for Apple "Just Works" in their business?
Either they see something they don't like or a Gates/Jobs handshake said no.
Because Apple is fundamentally a consumer company. The marketing and branding that are huge drivers of their success just won’t work as well in the enterprise.
Enterprise means people in suits doing sales calls. It’s a patient, one-on-one, handholding process, and it’s just not in Apple’s DNA.
Far better for them to come up with some new consumer widget that also leverages their strength in supply chain. That’s what they’re good at, and it’s extraordinarily profitable.
While I largely agree with you, Apple can manage more than two things at once and money talks.
Microsoft obviously has large corporate presence, but also Xbox for example.
I just see so many already operational/technical/financial/branding assets in Apples favour compared to incumbents that I'm not sure how they'd fail to make money. OTOH, someone smarter than me in the company clearly thinks otherwise. I just wish I knew what they knew.
I really hate this narrative that Nadella came in and turned things around. He's absolutely made great decisions since taking the reins but most of his early success was just riding out things that Ballmer set in motion.
Not to mention most of Ballmer's misses were more Bill said no.
> "+1 on this - I find this behavior really irritating, it makes me roll my eyes to see some of the most coddled employees in human history whining about this kind of thing. The most charitable interpretation is its just a normal way for people to bond over some shared thing by complaining about it, but a lot of the complaining feels like more than that."
The charitable interpretation is that total compensation has just dropped, while the work hasn't. It's Loss Aversion[1], losing something hurts more than gaining the equivalent thing. Google isn't suffering from people staying at home using the internet more, it's not like Google cut manager salaries by 50% to keep the factory lights on and the orphans fed. Google's share price is up at least 50% since Jan 2020, and they've taken away some thousands of dollars of remuneration from staff and saved money on not having to run kitchens, and are demanding that staff feel grateful about this by handwaving at suffering people elsewhere.
> ">”After the acquisition, we have an extremely long project that consumed many of our best engineers to align our data retention policies and tools to Google. I am not saying this is not important BUT this had zero value to our users.”"
Calling legal and privacy efforts "a waste of resources" and saying they provide "zero value" /is/ saying they are not important.
These are Google cafes we're talking about, there are literally ten different main courses on offer. The whining is about there being "sushi again" at the Asian station when they wanted ramen, and they don't want to switch to curry, pizza, pasta, bouillabaisse, tacos or the salad bar, or walk across the street to another cafe.
at my old job (roughly 60 people) the company just got regular lunch ingredients (usually some meats, cheese and just normal bread) for the entire company. culturally it was expected everyone had lunch in the common area from this stockpile.
costs for this where deducted from your pay, but because it was bought at suchs a large scale it was very cheap compared to buying your own lunch or making it at home. (roughly 20€ per month I believe).
this system worked pretty nice imo, lunch wasn't anything fancy but it was healthy, cheap and having lunch with coworkers from other departments helped massively in regards to culture.
> why cant employees expense food since they are not in the office
This is surprisingly not specific to Google. I've heard of other instances of this in other bay area companies, including mine. For us, it had to be put to rest at a company-wide all-hands meeting, along with other overly entitled complaints like "comp is not competitive", when in reality levels.fyi ranks it higher than even FAANG.
"Microsoft became almost irrelevant under Ballmer or was at least trending that way. Nadella’s turn around is almost miraculous "
This is definitely not true.
Ballmer increased revenues massively, and launched a slew of new products (XBox, MS Live, cloud etc.) and realigned the company. Have a look [1]
Nadella has done nothing approaching that level of importance yet, so far, he is riding the wave that was handed to him.
Now the stock price - this is a different thing. It sagged under Ballmer even as MSFT was massively growing revenues, around Naella's time investors realized that MS 'was not fading' and all that extra EPS was like a share price slingshot.
Ballmer was as transformative and important as Gates.
Nadella's early transformations were around culture, but that's just PR.
Arguably the stock price is a prediction of future success, not current revenue.
The fact that it sagged under Ballmer and is now up under Nadella aligns with how I'm framing things. I suppose you could argue that's entirely PR, but I don't think that's the case.
People thought MSFT under Ballmer was trending down, now they think it's trending up. I'd argue that's due to strategic shifts that happened once Ballmer left.
I've mentioned in other comments that revenue (while good) isn't the whole story.
>Arguably the stock price is a prediction of future success
Sure, the stock price is always a prediction of future success. But it can change overnight, and when it does, it's not because reality or the "facts on the ground" changed overnight (usually) it's because perception changed. Often if not always because a catalyst made people aware of something that was building for a fair amount of time.
>strategic shifts that happened once Ballmer left.
I'm not saying this is wrong, but I don't think it's appropriate to treat the stock price as evidence of it.
I think this is our core disagreement distilled down.
I think Ballmer couldn’t have done it, he was too tied up personally in windows.
Some of the examples you mention under Ballmer are more examples of strategic failure under his watch. Xbox is the easiest example, the Xbox One’s launch was awful and focus on cable boxes was bad.
I don’t think it took a while for investors to realize, I think investors had an accurate model of what was going on. When Ballmer left things improved.
We have hindsight: the changes Ballmer made to increase revenue were not 'one offs' they were substantial.
1) He reconstituted Windows and Office distribution, sales, put office on the cloud.
2) He launched XBox and more notable Azure.
So if you think 'Desktop is dying' (desktop sales were plateauing) then 1 seems like it's going away and cloud isn't a huge business then 2 doesn't matter.
But the prediction was wrong:
A) Even with flatlining desktop sales, Win + Office continued to thrive. Even to this day. It's not a 'legacy business' it's a 'healthy ongoing business.
B) XBox, in particular Azure are huge. Azure makes more money today than Windows generated in revenue when Ballmer took over Microsoft.
Ballmer's failures were mostly Search and Mobile ... both of which were sad, but also they were up against Google Search and iPhone, the best products of our era. XBox and Azure are in very difficult areas, and are doing well.
In hindsight, Ballmer did quite well, there's not a lot to debate unless someone things that Search/Mobile success should have been imminent, but I don't think that's true.
He massively grew and adapted the baseline businesses, and started a few new, huge businesses. Glorious profits all around.
Satya hasn't yet quite made the kind of decisions that will have the lasting impact Ballmer has had, in his defence, he's in an era were the 'new fields of competition' are less obvious.
Azure is huge and a really big deal - I just don't attribute that success to Ballmer. It may have started under his watch, but it was floundering - I think that's one of the things Nadella deserves credit for making successful.
Windows + Office is a legacy product line. It makes money, but it's not the future. They need it obviously, but over-focusing on that at the expense of other things was a mistake.
The Xbox launched in 2001 - was the original one even Ballmer? I think Gates left in 2000? I'm not sure that counts. Xbox One launch/strategy was bad.
I'm not trying to say he did nothing right, but I think we just disagree on his overall performance.
I agree with most of the article, but one line stuck out to me as particularly wrong:
>”After the acquisition, we have an extremely long project that consumed many of our best engineers to align our data retention policies and tools to Google. I am not saying this is not important BUT this had zero value to our users.”
Good retention policy does provide value to users.
--
> "When COVID hit and we moved to work from home - a huge amount of complaints began around why cant employees expense food since they are not in the office. While most "real" people were worried about keeping their jobs or finding one, many employees were complaining about expensing their food on top of their salaries/stocks/bonuses."
+1 on this - I find this behavior really irritating, it makes me roll my eyes to see some of the most coddled employees in human history whining about this kind of thing. The most charitable interpretation is its just a normal way for people to bond over some shared thing by complaining about it, but a lot of the complaining feels like more than that.
> "We had lunch in the cafeteria and a Googler online ahead of us was overheard saying “What? Sushi again???” which became our inside joke around entitlement."