A lot of the criticism of Ballmer seems to miss the point.
Did Microsoft miss key trends? Maybe a few but who doesn't.
Microsoft saw and got involved in most of those trends they "missed" and even often got there well ahead of the parties that own the markets today.
In 2000 I was hired by Microsoft. One of the big initiatives was to make tablet PCs a reality. Microsoft spent years working on marketing consumer smartphones before the iPhone. That Microsoft lost a leading position in the market for computing devices is surprising given how much effort they put into devices eventually popularized by other companies, particularly Google and Apple.
Why doesn't Microsoft own the tablet and consumer smart phone market right now? The answer must be in execution rather than understanding of where the market was headed. Why couldn't they develop (and why can't they still develop) products folks like in these areas?
When I was there the mentality was that Microsoft would be first to market, would fail for a few major releases but still beat everyone else with a quality product. Yet they spent time producing products nobody wanted while first Apple and later Google ended up walking away with the tablet and consumer smartphone markets.
As it apparently needs to be explained: Microsoft's predatory behavior in 1990s resulted in an incalculable and unrecoverable loss of trust among technologists -- which was bound to ultimately catch up to the company. You can get away with predatory behavior when you're dominant, but when you miss new markets -- as Microsoft did repeatedly in the lost decade of the 2000s -- you can be damned sure no one is going to be foolish enough to open those markets to a known monopolist. Microsoft is left with two choices: invent new markets or try to earn back the public's trust. They have no track record in either department; as the Magic 8-ball says, "outlook not so good"...
What about Apple and Google? They have repeatedly violated the trust of hackers, yet only a small minority have fully divorced themselves from these companies' products. As much as I'd love to believe in the morality of our market, I don't really think that's the case. Not that I believe MS's predatory behavior helped their cause at all, but I still think the primary reason why people don't use, or don't want to use, Microsoft products anymore is because they are inferior to others' products.
There was definitely a time where, for most people, that was not the case.
Edit: Just a little example...I don't remember continuously hearing about Microsoft employees going to fucked-up countries and running clandestine rescue missions http://pastebin.com/CuUcHM6m
From where I sit, Google and Apple have been steadily hemorrhaging enthusiasts with their creepiness and arrogance, respectively. They're still the least worst options in their fields, but they no longer seem like the golden saviors they did in the early 2000s.
The difference is that Google had the trust of hackers when it launched Android. Apple is a different demographic, it's almost the "luxury" line of tech products.
I'm 26; I wasn't around to see Microsoft's monopolistic behavior. I've only read about it from the history books. So people my age don't have the same emotional reaction to this. I'm pretty sure that engineers' perception of Microsoft will change back to neutral as my generation enters the industry.
Don't worry you guys will have your own version of Microsoft, perhaps Facebook. In 5-10 years time when there are good enough alternatives to whatever feature of Facebook you require today you will never go back and actively encourage others to switch.
But my point is still this. All of the new computing areas are ones that were big areas of development when I was there. Yet Microsoft still can't produce a product in these areas that people want to buy.
I think you are right that it goes to predatory behavior, but I think there is another aspect too. There is very little groundbreaking work in UI paradigms to come out of Microsoft. They didn't invent the WIMP approach. They did manage to invent Bob.... But it means that they had no expertise in the things that were needed to catch the trends they were trying to ride.
It took Apple to develop a really good touchscreen interface.
So I keep coming back to problems of execution. Yeah. Outlook(TM) not so good ;-)
One of the things that I remember from 1996 Gate's book "The Road Ahead" is him calling the day when everyone will walk around with his smart phone.
"You'll be able to carry the wallet PC in your pocket or purse. It will display messages and schedules and also let you read or send electronic mail and faxes, monitor weather and stock reports, play both simple and sophisticated games, browse information if you're bored, or choose from among thousands of easy-to-call up photos of your kids."
In a mad dash to achieve checklist-style feature parity with RIM, features were bolted-on with little thought given towards achieving real cohesion amongst what was being built.
The culture was stifling because the strategy was to fast-follow rather than to take risks innovating.
EDIT: Apple and Google simply changed who Microsoft was following, rather than the overall execution strategy.
Ballmer's biggest mistake was killing Windows Mobile 7. Microsoft had a huge lead with Windows Mobile 5 in 2005; a decent OS with decent hardware and a huge app ecosystem. Leaked WM7 screenshots show that it would have been competitive with the iPhone if it had been released in 2007-08 as originally planned (http://pocketnow.com/smartphone-news/windows-mobile-7-exclus...). But they inexplicably killed the project and let Apple conquer the world. Microsoft didn't respond until 2011 with Windows Phone, which was a new OS written from scratch.
The post you linked to is from October 2009. By that time, it was far too late for Microsoft to "fix" Windows Mobile by simply updating the UI of the built-in applications to be more iPhone-like, which is what the screenshots show.
This approach would have left most of the OS and third-party applications stuck in the stylus-oriented 2002 look and feel. I don't think anyone would have been happy with the resulting compromise of an operating system. The Windows Phone 7 reset was unavoidable.
For comparison, Nokia tried doing what you advocate: instead of starting over, they updated Symbian to be modestly touch-friendly and proceeded to improve the apps and libraries piecewise over several OS iterations. It didn't work out, the resulting products were a mess (even though they eventually managed to get it to a pretty good state with the 2011/12 releases, it was far too late). Nokia ended up throwing away the entire Symbian OS -- a project whose R&D costs had accumulated to tens of billions of dollars by then.
What went wrong? The corporate culture degraded until it was poison to both retaining good employees and taking on challenging projects.
What went wrong? Ballmer expended a lot of effort to remove any potential challengers to the throne during his tenure, ridding the company of many talented and ambitious high-level managers, having an obvious impact on the company.
What went wrong? Microsoft reacted to the economic downturn in '08 by treating its employees like shit for a few years in order to pinch pennies even while it kept tens of billions of dollars of cash on hand.
What went wrong? Instead of making each part of the company more autonomous and independent, or even spinning off parts of the company into separate ventures, the whole company remained one giant, bloated empire while the industry changed dramatically around it. Most parts of the company aren't "hungry" the way they would be if they were spun off as startups.
What went wrong? The strategy tax got shoved down everyone's throats in every way imaginable. Microsoft wanted to own every market out there instead of concentrating on its core strengths and executing well on what it could. It dumped a lot of money into trying to catch google et al with the "live" rebrand and then "bing". It dumped a lot of money and opportunity cost through strategy tax in trying to catch flash through silverlight, which is now virtually defunct.
What went wrong? At nearly every step MS is capable of executing on engineering ground well but failing to make things that people actually want. The Xbox One is by far the most impressive console of the next generation but it's marketed so poorly that few people are aware of its actual capabilities and advantages though many are aware of its downsides and limitations. Windows phone and surface are solid products but they're not the products they need to be to actually compete against samsung and apple. And the list just continues.
What went wrong? The company made a lot of key mistakes over the last half decade, many of them at a strategic level. Who exactly is most responsible for that?
As someone that spends a lot of time reading about games, gaming culture and gaming hardware, I can assert that the Xbox One is not the most impressive console of the next (soon to be launched) gen.
In terms of GPU hardware it is a reduced version of the PS4 GPU (50% fewer compute units).
As a package XBox One + Kinect 2 might be quite impressive, but in which markets? None of the TV integration technology works outside of the US (as far as anyone can tell).
Between PS4 and XBox One there are many similarities and a few differences - and in terms of console hardware they're both very impressive pieces of kit.
Microsoft's messaging has been atrocious though - a case study in how not to launch a games console.
Pure hardware performance has never been the deciding factor in any console generation. Most of the things that give the xbox one an edge are not apparent by merely looking at the console in its inert state, they are built into how the system works as a whole.
I am not saying Ballmer is not to blame btw, just that the company was way ahead of the curve in understanding what the market wanted and where it was going. So it isn't a matter of "they missed opportunities" so much as "they couldn't take advantage of important opportunities no matter how hard they tried."
I work in the OS world, so I have thought about this question.
What I think 'went wrong' with Microsoft - as is happening with other "Operating Systems" developers, is that they have forgotten that they are there to serve their users, not an onboard business-model.
Seriously, think about it. Let us take the example of shared filesystems, a common 'posession' of the OS in certain terms .. OS, filesystem, network, its all right there in the kernel .. but .. Why, on gods green earth, are we relying on 'startups' and 'upstarts' to deliver us peer-to-peer networking at the front-end user interface instead of actually having it, de-branded, at the operating system level as a matter of course?
Things Dropbox, if Microsoft was awake, wouldn't have happened, because the peer-network shared filesystem thingy was sorted out .. in the 80's, I might add .. and then promptly forgotten about.
Because the OS vendors have lost the plot on what is an operating system (hint: its the source, stupid!) and what is a 'branded service which produces other revenues for the OS vendor', and because the anti-trust thing happened, in the first place: OS vendors have lost the plot.
Also, the very first sign that things were going awry was when someone decided that a user operating system should not ship with its own compiler(s), onboard! The separation of those tools, and the sheer bloat that results from not having a tight Build/OS binding, means that things got out of control on the developer, developer, developer(s), side of things, imho.
I think this disconnect of the User-is-the-Developer mentality from the "what service is sold -outside- the box of the OS" profit excuse, with the ease of device manufacturing these days, OS vendors have new challenges ahead, and the crux of the argument is this: Its damned easy to make a new OS, for your own device, and then serve the hell out of your customers. In a very real sense, who needs a desktop if all you have to do is turn something on, and press play, in the first place.. ? With the way things are going, cheap light computing built-for-task is the new hotness, and .. well at least imho .. There may well come a point where the new hot OS ships with everything you could possibly need, already onboard and working, to build something new for the platform, itself.
Put that ethos back, and lets talk again in a year about it ..
I think Microsoft has always been a software company, and never really intended to get into any other business. At the same time, Apple grew from being a strictly hardware company into a "platform" company. That is, they began developing the software that ran on their hardware. This put them in a much better position to begin developing devices that were not traditional computers.
Microsoft, on the other hand, has done all they can to avoid making hardware. It shows with the Surface...while it's a nice piece of hardware there are many failures with the device that perhaps a company with more experience building those kinds of things would have caught early on in development. Only recently have they began working in hardware, and developing full products. I don't believe they would have even had this capability had it not been for the extraordinary work that Microsoft Research does. But Microsoft has made a ton of money by pushing both their consumer software and their tools/infrastructure for companies to develop their own software on the .NET platform. It's widely known that Microsoft's developer support channels (if you want to pay for them) are much more developed than Apple's, whose dev environments are geared for far simpler setups. .NET shops, for example, pretty much do not need to worry about the latest and greatest tools. Microsoft can provide everything you need to get work done on their platform.
But personally, I don't think you could possibly develop as good of a business relationship between hardware manufacturer and software developer as a company which includes both facets of product development. These days, the real money is in getting people to buy your gadget, as Apple has shown. Microsoft missed out on that, because they did not invest properly in building hardware when they could have.
And that's where Microsoft went "wrong". Though they may not have...
> Only recently have they began working in hardware, and developing full products. I don't believe they would have even had this capability had it not been for the extraordinary work that Microsoft Research does.
Unless recently means after 2000, you're ignoring the xboxes/zune/etc.
The experience with Microsoft devices was not so great. I will give you one instance - They never left the keyboard from tablet and phone. Ballmer laughed off iphone when he heard it is a $500 device and have no keyboard, and he said no one is going to buy this device. He still not understood the point. While apple made the interaction with idevices very sexy. Rest is history and you very well know it.
In my first journalism class, one of the very first things drilled into our heads is to always be explicit in who or what your sources are. Even if they're confidential, how many there are and rough details about them should always be given.
Weasel words are the bane of decent journalism. It's a shame so many major news agencies don't seem to realize this, though.
> our transformation to a devices and services company
This is what I find the most worrying. Are there no more "software companies" anymore? That you know, sell software as a product and only as a side-business they sell related services? Like the kind of companies that can "shaft their customers from time to time" because they know they make enough money from their great software not to care? Will they stop making great developer tools and will they start to not give a fuck about developers just like everybody else? Will they stop funding the cool research they currently do, like in the programming languages field?
This is the saddest news imho, because it will fuel up the current trend in industry. An in "services" or "devices" companies programmers are seen more and more as just "code monkeys". And developing tools for developers or "power users" becomes less of a priority. Catering to "the needs of many" is nice and fluffy and all but we still need techno-elites somewhere, and they're not gonna truly exist outside of companies that make enough money and have the privilege of occasionally showing the finger to both the customers and the minority shareholders because they know that in the end they have real products they can leverage to milk enough money from the customers and poor into the shareholders' pockets... "service" companies can't really do this because they always need to be perceived as "good" and "devices" companies will have a hell of a time competing in the new "so-cheap-they-are-almost-disposable devices" economy.
Winter is coming here. But there is hope for more summery weather for companies in the fields of AI/ML/BigData.
One of Microsoft's big problems is that software and hardware lifecycles are slowly extending to the point where Windows' primary competitor is Windows. In other words, older versions are good enough, people don't upgrade until they get new computers and they do that less often. Microsoft has been trying to transform themselves into a services business since at least 1999. I am not holding my breath.
...because this is like the only viable business model in open source. And this model does here the same thing it does anywhere else: it makes it so that developers are undervalued and underpaid or paid nothing at all.
Don't get me wrong, I support open source and I believe most "infrastructure software", like OSs, compilers etc. should be open source. But I'm kind of split since the best viable option when it comes to OSs is still some flavor or *nix/BSD (after 40 freakin years and tons of cool ideas, nothing else turned into a "usable product"!) and nothing better and usable seems to come from the open source community. Microsoft had some very cool ideas in their research department (see Singularity OS for example: http://en.wikipedia.org/wiki/Singularity_(operating_system)), and I'm afraid lots of them will go to the trashcan if Microsoft stops seeing software as a "product". If I weren't talking about Microsoft, we could at least hope they would open source the cool new research projects they loose interest in but I don't have high hopes for this, or for the open source community's ability to innovate and do really new and cool stuff.
But Microsoft Research has always been largely experimental and ships few products. It would ship more if Windows was open source of course as much is Windows based...
"recent pressure from activist investor ValueAct — which has a large stake in the company — had a good chance of succeeding in its efforts to obtain a seat on the board of Microsoft, especially if Ballmer stayed in place.
...
In talks, said sources, it has asked for an aggressive stock buyback and also a dividend increase, which might assuage its efforts to garner a board seat."
I agree that Microsoft has too much money, but would much rather see them investing much more heavily into bolstering their devices strategy. But then again, Microsoft was never good at acquisitions.
edit-
Appears that ValueAct is against the entire devices strategy, but I see no way for Microsoft to compete on the level it needs to without a strong devices play-
A while back, someone in response to my critique of Windows 8, said something like "Microsoft can never be destroyed!Their monopoly give them free money". Funny how little people understand capitalism.
No, that's not free money to play your BS "Metro interface" games with. It's the stock holder's money and they'll be wanting it back if it looks like you're flushing it down the toilet.
Microsoft's "device strategy" (Window 8) was the most crassly opportunistic and generally despicable hi-tech corporate maneuver we've seen in a while (and that's saying something). It's infinitely satisfying to see it go down in flames. If we could toss more careers and people on this pyre, it would be even coolers.
While I'm sorry for people for pursue poor strategies as dictated by the market, this was like the final spraying of Microsoft's true evil poison. Yes, we are intended to destroy the whole platform we created just for a chance to steal someone else's platform. Yeah, but that chance came and went. The organizers of Windows 8 are just left with the poison.
If Microsoft rests on the laurels of their enterprise business then activist shareholder sue them and kick up general shit storms for letting mobile and changing markets pass them by.
If Microsoft tries a lot of different things, even possibly cannibalizing existing business in the process, to try and stay in step with the market activist shareholder sue them and kick up general shit storms for "losing sight of core competencies" (the enterprise).
Public companies are damned if they do and damned if they don't if either strategy doesn't play out.
That being said. How is Windows 8 a "despicable hi-tech corporate maneuver"? Shaking down Android OEMs, that falls in my despicable bucket, but taking a stab at a touch optimized interface, not so much, it's just a run of the mill failure.
I use Win 8 (because suddenly noone wanted to sell Linux machines anymore... And I don't figured yet how to install a Linux using USB here, I just cannot disable the godamn secure boot) with Classic Shell Start Menu.
The Start Menu from Classic Shell is awesome, and I only look at Metro interface when really forced into...
Too bad the "desktop" app of Win 8 is still hell buggy (ie: sometimes it even crash and don't relaunch, leaving you with no desktop, just desktop mode windows, but no icons, no taskbar, no clock...)
To enter the firmware setup, use the charms bar to go to Settings, then click Change PC Settings, go to General, then scroll down and find Advanced Startup.
ValueAct wants to make short to medium term money. That sounds reasonable, but investors like that are the death of a technology company.
If a technology company starts paying dividends or share buybacks it means it believes the field they are in is so mature they cannot invest the same money in trying to grow the company.
For a company like Microsoft - where the field should be anything to do with technology - the fact they can't invest that money in themselves is something of an indictment of how they have lost technological leadership.
I thought this was common knowledge. Ballmer said a few years ago that he would be retiring in 2018. To announce that he's quitting, even "within a year", is very out of the ordinary, and it's obvious something went down, and the board got very frustrated with Ballmer.
The really interesting thing is not really Ballmers demise and who will replace him.
The really interesting thing to watch is what will happen when the new CEO has taken the helms and present the restructuring that will inevitably follow.
The board obviously want to see some pretty dramatic changes and Ballmer is deemed not fit for handling it.
I think every member of the board with kids don't need to think too much to search for a new CEO. It must be difficult for Bill Gates to see iPads and Macs on his house and I can't imagine dinner discussions around using Google Spreadsheet instead of Excel!
I clicked that link, and the webpage started with a woman voice speaking too much like a whiny entitled gal wanting something when you arrive home, and I don't figured how to shut it down, and closed the tab :/
Why people leave these whatever with automatic sound that cannot be shut off?
With the recent PRISM info leak, I can't help but think Ballmer is instituting damage control for himself, as well as distancing himself from the negativity. Most likely the smartest move he could make.
the big question, then, is what happens to bing? I remember it still not being profitable; if the next ceo cuts it, then who competes with google or does G just get handed the US and European search engine markets?
>As AllThingsD‘s John Paczkowski wrote on Friday: “Here’s one metric by which Ballmer will be judged harshly. On the last day of 1999, the day before he took over as CEO, Microsoft’s market capitalization was $600 billion
That fails to take into account, the crazy dotcom valuation days and the subsequent big crash in 2000. Not to say that Ballmer did great as a CEO but that's just poor reporting. Microsoft did have its great growth days, like Apple recently did before petering out, but it was back in the 80s.
Even when you compare post-bubble market cap, say from 2002 to now, it's shockingly bad performance for Microsoft:
AAPL: $5 billion -> $465 billion
GOOG: $16 billion -> $288 billion
MSFT: $217 billion -> $291 billion
I know now you might nitpick that AAPL and GOOG were very small in 2002 and not comparable to saturated markets Microsoft operates in. In that case, take example of even non-tech well established companies:
AT&T: $72 billion -> $203 billion
StarBucks: $7 billion -> $53 billion
However you can still argue that Microsoft increased its revenue 3 folds and profit 2 folds under Ballmer. That might be good metric to measure Ballmer's performance but this does not discount for inflation (36%) and auto-accumulating multi-year enterprise contracts that have been pilling up since Gates era (unknown value).
Agreed, it fails to take into account the Clinton DOJ anti-trust lawsuit against Microsoft which basically popped the dotcom stock bubble. The stock has remained flat then grown steadily since. The article also fails to mention the growth of annual revenue which has raised steadily and has tripled under Balmer's watch.
At the moment, Microsoft stock pays a 3% stock dividend which is a pretty good investment return, so it's less important for the stock to appreciate.
Did Microsoft miss key trends? Maybe a few but who doesn't.
Microsoft saw and got involved in most of those trends they "missed" and even often got there well ahead of the parties that own the markets today.
In 2000 I was hired by Microsoft. One of the big initiatives was to make tablet PCs a reality. Microsoft spent years working on marketing consumer smartphones before the iPhone. That Microsoft lost a leading position in the market for computing devices is surprising given how much effort they put into devices eventually popularized by other companies, particularly Google and Apple.
Why doesn't Microsoft own the tablet and consumer smart phone market right now? The answer must be in execution rather than understanding of where the market was headed. Why couldn't they develop (and why can't they still develop) products folks like in these areas?
When I was there the mentality was that Microsoft would be first to market, would fail for a few major releases but still beat everyone else with a quality product. Yet they spent time producing products nobody wanted while first Apple and later Google ended up walking away with the tablet and consumer smartphone markets.
What went wrong? That's the real question.