Ballmer on Ballmer: His Exit From Microsoft
online.wsj.com
online.wsj.com
Microsoft has tripled its revenue in 10 years. Its profits have been tripled as well. As much as people hate on Microsoft, it is at its core... an extremely profitable buisiness.
* Sun Microsystems / Java is basically dying at this point. Oracle screwed the pooch on this one. C#/.NET are big, and the biggest users of Java don't even use Java anymore. (See Android and Dalvik)
* Internet Explorer has actually survived past Netscape Communicator, Mozilla (the original), and is making inroads into Firefox. Its a bit weird that Firefox was able to capture IE's marketshare, but IE has remained consistently in the top browsers for far longer than any other web browser right now.
* Some products, like Microsoft SQL Server and MS Office, have been repackaged into new forms. Office 365 is price-competitive against Google's line of "cloud" products, and Azure is profitable.
New business ventures have also begun * XBox / Gaming has been generally considered successful (despite mostly losing money so far) * Purchases, such as Skype, have brought Microsoft into other markets, like VOIP.
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Most of Microsoft's "business ventures" are very successful. Windows Phone was the dominant Smartphone of 2007, with 42% marketshare. That is hardly a failure by any stretch of the imagination. I'm talking about Windows Mobile platform and older btw. (Future of Windows Phones, such as Windows Phone 8 / Lumia devices seems relatively positive, especially in India)
Again, why are businesses... in business? To make money. PERIOD. And Microsoft is by all accounts extremely successful at it.
Microsoft was supposed to be in a position to offset the decline from Windows/Office by being a leader in the SmartPhone/Tablets/Online game. Instead, they kept losing money big time and constantly readjusting to no avail in those areas and there is still no sign of them picking up steam at a rate they need to.
Sure, it would take a long time to make a dent but reduced consumer side influence of Windows and office cannot possibly be good for Microsoft's Enterprise business in the long run.
Microsoft has a lot of time and a lot of money to help figure out what comes next for them. Though the money can be kind of a curse. It enabled them to overspend on projects until they became permanent unkillable money losers.
Mostly they need to get rid of dogmas and let their people rip and make something that isn't Windows, and has no Windows legacy tail to drag around (I did not say no migration path or protocol-level compatibility).
It is true that Windows and Office grew over the past ten years. On the other hand, the Server & Tools division grew from 12% of Microsoft's operating income in fiscal year 2003, to 31% of operating income in fiscal year 2013.
Also, there is no decline in "Windows and Office." There is a decline in Windows -- but not in Office. Maybe you think that Office will decline, but the analysts don't. So it's certainly not true that "everyone agrees" it is "set to decline."
It did a good job at that, but I agree that it glossed over some truly bad things that happened under his command.
So when people talk about the 'lost billions' they create a hypothetical Microsoft, the one of today which made billions of dollars but also dominated in new markets and made billions more. There is absolutely no evidence that Microsoft could have done both, regardless of who was at the helm. It would have been epic, but it isn't clear that it was possible.
So this article was Ballmer's take on his reign, he's not going to say "I didn't capture the smartphone market" he is going to remember that he made a lot of money off enterprises for his employees and his shareholders. I would happy to be that successful.
Google has never made serious money off their hardware products or operating system products, Apple has never made serious money off their operating system products or their network products, and Microsoft has never made significant money on either network products or hardware products. All three have a space where they are really good, all three are so so in the other two spaces. Why is Ballmer presented as an idiot and Page and Cook not?
Is it any less a managerial failure to repeatedly fail to execute like this than it is to push a company from profitable to unprofitable (or run it into bankruptcy)?
And that's ignoring the cultural morass that failed policies like stacked ranking promote - that could likely have poisoned Microsoft's productivity well.
You see how that works? In lots and lots of ways MacOS is much better than Windows 8, and yet Apple won't sell it to Dell or Lenovo to pre-install on their laptops, they won't even talk to them about it. But it would be cool (and we know its possible with all the Hackintoshes out there). Everyone agrees that Microsoft fumbled on the phone business and Apple executed very well. Apple so far has totally fumbled their network products offering, social music network? icloud? not stellar.
I'm not arguing that Microsoft should have abandoned their cash cows and say "put office on the web" as a target.
Instead they should have, for example, actually stove to make money from their Xbox division (it's still in the red from it's inception).
Or made phones that didn't suck back in the early 00s - I had a colleague doing testing for mobile enterprise software for WinCE and each weekend he'd show me his return list - a half dozen or more OQO, HP, Dell, or Compaq handsets that just up and died during his testing - every week.
Ultimately, Microsoft could be making so much more than what they are. Apple's 1st and second most profitable areas didn't even exist 8 years ago. Microsoft's have existed for 20+, they simply can't make a new profitable venture. That's a failure of management.
I'm not apologizing for Microsoft executing poorly, what I am saying is that there success is a matter of positive degree rather than one of success or failure. We can productively discuss if they may have been more successful had they invested differently but there shouldn't be any discussion that they are not successful.
I don't know where you are in your career or life, but I know that everyone gets a chance to look back and see some things that look obviously stupid in the future looking toward the past. If you are like me, and you see some things that would have really made things different (I turned Bill Gates down when he offered me a job in 1978, I held my tech stocks in 2000 hoping there would be a recovery, Etc.) don't dwell on them. Figure out whether or not you made the right decision with the information that was available, and if so let those past decisions lay in peace and not haunt your dreams.
I have found that this statement : "Ultimately, Microsoft could be making so much more than what they are." is nearly always true. When looking back in time, a path can be plotted which would have made you more money (I could have bought 1000 BTC for $250 for example, I didn't) but that exercise is useless unless it helps to learn something about how to make better decisions right?
Do you have any examples where accumulation of cash corresponded with lack of innovation. No challenge, just curious.
Aren't we discussing an article about Microsoft? Certainly the perception is that Microsoft has not innovated. (Whether or not you agree, that's at least the general perception.)
Microsoft has been piling up the cash, despite the fact that Microsoft has been paying a dividend for ten years. They've bought back 20% of the outstanding shares. They've bought dozens of companies. They've spent a billion dollars repairing Xboxes.
And despite all that, they just can't spend it fast enough. Their cash hoard just keeps increasing in size.
Note: Correlation does not imply causation.
Maybe because Page has not defined his company's success in terms of how many Nexus devices it sells; nor does Apple define its success in terms of how many licenses it sells to enterprises. Ballmer, on the other hand, not only has entered foreign market spaces such as Web search, hardware, and phones. He has also thumped his chest about how Microsoft is going to wallop the competition in those spaces. Google and Apple typically do not talk about how they are going to beat everybody else; instead, they talk about how good their products are. Ballmer laughs at other companies' products and enters the market late and says he will beat everybody else.
Thus, Ballmer has failed on the terms that he defined for himself. He said he would wallop other companies. He did not. Not only did he not wallop other companies, but while trying to do so, he destroyed good products and hurt Microsoft in its strong markets. See for instance Windows 8, which is useless for Microsoft's big corporate customers and gets it nowhere in the tablet space it has so desperately tried to make headway in.
So, maybe if Ballmer spent less time chasing markets that Microsoft is no good in, and more time reinforcing the company's strengths, he would not be presented as an idiot.
I don't buy this argument. Anyone can say "no" instead of saying "yes." It was Ballmer's responsibility to green-light major products for launch, and he decided wrong time and again.
One of them was the way MS responded to the economic downturn. Despite having billions in the bank MS acted scared. They put the brakes on bonuses, promotions, and hiring. They indulged in a series of layoffs, giving many the impression that their jobs were not secure. MS had the money to project strength, to acquire talent from its competitors, and so forth. Instead they project weakness and abused their own employees.
And the result was that many of the most talented people left the company. People who saw that MS no longer had their back, people who had the easiest ability to find more interesting, more rewarding, or higher paying work elsewhere. And that exodus is still ongoing. It's a process of evaporation. As so many good people leave that diminishes the goodness of the rest of the company, which causes even more people to leave.
The changes in corporate culture and Ballmer's bad strategy decisions have had their role in people leaving as well. Moreover, Ballmer has been pruning the company of high level leadership which could challenge his authority. With predictable results.
Overall the difference in the average quality of people at MS is astounding. It used to be, even in the mid '00s, that the best and brightest work there. Now only a few people at MS fit that category and the ability of the company to execute on projects has been diminished in untold ways.
Isn't it more about what Gates said (basically meaning and Microsoft being Gates' and Ballmer's big project)?
I'm sure he's a competent manager, as Balmer seemed to be, but is he a tech visionary?
Even if you say that Microsoft wants a strong future presence in hardware manufacture - building phones and tablets is a very different game than building planes and cars.
He can't possibly be worse-qualified than Ballmer.
"I arrive here, and the first day I say, 'Let's go look at the product lineup.' And they lay it out, and I said, 'Where's the Taurus?' They said, 'Well, we killed it.' I said, 'What do you mean, you killed it?' 'Well, we made a couple that looked like a football. They didn't sell very well, so we stopped it.' 'You stopped the Taurus?' I said. 'How many billions of dollars does it cost to build brand loyalty around a name?' 'Well, we thought it was so damaged that we named it the Five Hundred.' I said, 'Well, you've got until tomorrow to find a vehicle to put the Taurus name on because that's why I'm here. Then you have two years to make the coolest vehicle that you can possibly make.'?" - http://www.fastcompany.com/1573670/what-other-automakers-can...
As the driver of a sixth-generation (2011) Ford Taurus, which is in fact a pretty cool car, somehow it doesn't seem so crazy that Mulally could save Microsoft as well...
So... we gonna back FrontPage now?
The company logo needs an update too, IMO.
And they have an incredible iconic brand, "Model T", I think they would do well to use it again.
Tarnished can be polished back into good silver.
As entrepreneurs, the above is actually good news - it's why we have a decent chance of blowing past the incumbent.
If Jane owns 100 shares of ABCD that most recently traded at $10 apiece, and then the issuer issues 1,000 new shares to its employees but the shares continue to trade at the same price, the market capitalization has increased but Jane's stake hasn't changed in value.
Shareholders do care about price return and dividends. They might also care about total return, subject to some reinvestment strategy and tax regime.
Market cap is also problematic because it can't be calculated in real time. Reporting companies generally only publish a share count once a quarter. They publish two numbers: the gross count of shares outstanding on a particular day (which doesn't count in-the-money options and other live claims on a company's equity) and the fully-diluted share count averaged over the quarter (without publishing the strike price distribution of the options).
Neither one is exactly what you'd need to calculate an implied whole-company market valuation anyway, so in general any attempt to measure market cap is necessarily going to get an uncertain, out-of-date, imperfect metric. (A useful one, don't get me wrong! But not what principally matters to the shareholders.)
Just wondering...
This is pure speculation, but I don't think Elon would like a "turnaround guy" type of job. He seems to be driven to do really big things that people say can't be done. I don't think Microsoft's shareholders would appreciate the distraction, and to Musk, I'm pretty sure that even "put Windows on top of BSD and open source it" wouldn't be his idea of "big things that people say can't be done".
Why does MS insist it has to be everywhere there's any money to be made? Apple is happy being a phone/tablet company, Google is the Internet gig, but MS has to have a finger in every pie, right?
That's not really true. Google is trying to capture nearly everything, too. Enterprise (docs), phone, tablet, computer, search, advertising, social, ISP, wearable products (Glass), etc.