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So Now Steve Ballmer's Resigned - Why Was He Pushed, How Did He Do? (The Report Card)


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Steve Ballmer resigning
[See parts 1 to 3]

4 The report card - how did he do..?

The comparisons here are against the surprising grade scores awarded by Gigaom

First in our list, is a topic often considered quite significant when CEOs are judged, but one that Gigaom don't award a grade for.

Subject

Grade

Teacher's notes

Finance / The Bottom Line

Fenestra

 

Gigaom

B

 

Not rated

The actual money flows have looked quite good over the years. Annual sales have risen from $23 billion to $78 billion and profits have more than doubled from $9.4 billion to $21.9 billion. [ZDNet]

Surely that can't be bad - "Why only a B?", I hear you ask.

Well - in a nutshell...

He's milked the cash cow, but starved the calf.

PC / Mobile

Fenestra

 

Gigaom

D-

 

C-

Microsoft Surface RT with stylusNowhere was Microsoft's dominance so total at the start of Ballmer's reign than in PCs. Now everything in the PC garden is turning to dust. The licencing model, the code footprint for the Windows operating system or for the Office suite of applications, the handling of viruses or spam emails, customer perception, energy efficiency... The list is endless, and each case the story is the same. The real customers' needs have been overlooked and now those customers are punishing Microsoft - not out of spite, but because there are now other products that will do the job more cheaply - and offer a more rounded user experience.

Steve Jobs at Apple but the bullet and ordered a complete rewrite of the company's core MacOS operating system and in doing that, he more or less saved the company and re-enforced Apple staff skills ready for work on the mobile and tablets that are now their mainstay.
Microsoft's old code is all still there. Yes, there are systems that will run my legacy software, but that's just not enough.

Xbox / Gaming

Fenestra

 

Gigaom

B+

 

B+

Easily the best performing sector at Microsoft over the last decade and now quite important to the company. In short, after investing a shed-load of cash, the Xbox has done well. It holds its own in a competitive market against Sony's PlayStation and the Nintendo Wii.

Gigaom does pose the question as to whether this success was achieved primarily because Ballmer stood back and let others do their best work. Maybe that's so, but things have still gone well.

Recently, there have been a couple of mis-steps with a suggestion that the new Xbox should contact Microsoft every day to keep playing games and that it would require its Kinect cameras to be always on. These plans have now been withdrawn, but some damage has been done. May we'll never know who is really responsible for this.

Cloud / Enterprise apps

Fenestra

 

Gigaom

C-

 

B/C+

Really, the jury's still out on this one with offerings still evolving, but Microsoft are generally considered to be late to the market in this area. Considering that Gigaom themselves said here that

"AWS [Amazon Web Services] is the uncontested leader in public cloud infrastructure."

it seems generous to award Steve a B.

To be honest, it seems a little strange to rate this area at all as it still only represents around 1% of revenue.

Bing / Research

Fenestra

 

Gigaom

C-

 

B

Microsoft have here turned a search engine plus a research fund into a sink hole - a magnificent burner of cash. Compare this to Google who started with about the same thing and have grown that to a company bigger than the whole of Microsoft.

Add to this to the fact that nothing particular is known about that's currently in the pipeline from Microsoft's research, and again compare that to Google.

Spending money on research is not a good thing of itself, something ought to be achieved. In the light of this, C- looks quite generous. B looks ridiculous.

Legal

Fenestra

 


Gigaom

Not rated

 

B

If you can't innovate, litigate.

Perhaps this says it all, really. Litigation is the refuge of the defeated creator. Yes, up to a point, it is justified to defend your own past innovations so as to feel good about being able to earn from your newest ones. But if litigation takes up any significant proportion of time, that's clearly a very bad sign.

Microsoft have done quite well in earning a small amount of revenue from each Android device sold by a number of mainstream manufacturers. But seen from the viewpoint of the tech industry as a whole, Microsoft have channelled money from this century's innovators and passed that money to lawyers.

Is "success in legal" for a tech company of any value to anybody but lawyers? My feeling is that the answer to that question is no - hence we've awarded no rating.

Strategy / Vision

Fenestra

 

Gigaom

D-

 

C

This is surely what the job of CEO is meant to be all about, and for someone who has cost Microsoft, all told, in excess of $15 billion personally, we should be expecting something pretty much superhuman, but his performance has been anything but that. He's transformed a position of what seemed to be unassailable market dominance and poor public perception, to one of being second or third in their market - and playing catch-up on a number of fronts... But still retaining the poor public perception.

And more than that, the shift in market focus to smaller devices, like tablets and phablets is very real and he is not up with that market at all.

Perhaps worst of all, his sayings and actions exhibit a systematic bias - repeatedly missing changes in consumer wants and needs - not just in mobile but with the general industry shift to open source and ad -funded products. In all these areas Microsoft is now passing catch-up. Ballmer has always put the short term bottom line as a higher priority so that now - a decade on - the company's loss of focus is starting to impact its long term prospects and... the bottom line itself is beginning to suffer.

These guys at Gigaom certainly are generous.

I kind of wish they'd been on the staff when I was at school.

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(© Richard Fieldhouse, 2013)

 






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