The end of the Ballmer era for Microsoft

analysis

The end of the Ballmer era for Microsoft

Jennifer Scott

The CEO of Microsoft, Steve Ballmer, today announced he would be retiring from the role within a year, with no word of his future plans.

The eccentric executive was appointed leader of the software giant back in 2000 after its founder, Bill Gates, stepped down. However, after 13 years, he claimed now was the time to hand over the reins.

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“There is never a perfect time for this type of transition, but now is the right time,” said Ballmer. “We have embarked on a new strategy with a new organisation and we have an amazing senior leadership team.”

“My original thoughts on timing would have had my retirement happen in the middle of our company’s transformation to a devices and services company. We need a CEO who will be here longer term for this new direction.”

Ballmer will stay on as CEO until his successor is appointed – a job which will fall to a special committee set up by Microsoft’s board of directors, which includes Bill Gates.

“As a member of the succession planning committee, I’ll work closely with the other members of the board to identify a great new CEO,” said Gates. “We’re fortunate to have Steve in his role until the new CEO assumes these duties.”

There is never a perfect time for this type of transition, but now is the right time

Steve Ballmer, CEO, Microsoft

 

Ballmer has been an employee at Microsoft since 1980 – he was the 30th person hired at the firm – and was the first business manager that Gates took on. He headed up a number of divisions in his 33 years, including operations, operating systems development, and sales and support, as well as leading the development of the .NET Framework.

“[Ballmer was] the right person at the time to take over for [Gates] and a steady hand in what was then a huge change,” said Rob Bamforth, principal analyst at Quocirca. “But he was too 'old school' IT and stayed too long, meaning Microsoft missed out on certain pivotal moments in the industry.”

The company is indeed very different now, facing very different challenges and getting a mixed bag of positive and negative reactions to its products.

“They were lucky and switched on to the internet before it was too late, but have not been so well organised with mobile or tablets,” continued Bamforth. “Overall, Microsoft has become a bulldozer; slow, steady, able to roll over the slower competition, but not quick to innovate or turn.”

But what does the future hold for a company who has only had two bosses in its close to 40 year history?

First off it is unclear what Ballmer plans to do after he steps down. Many exiting CEOs remain on the board or in some executive position – something Gates himself did in 2000 – but when we asked Microsoft spokespeople whether would stay on as a member of the board, they would not comment.

As Ballmer himself experienced with Gates’ continued presence, it can be quite hard to take a company in a new direction if the old guard is still watching over you, but the in-depth knowledge of a 30 year veteran to the firm must have its benefits as well. Ballmer and the board’s decision then of his continued involvement or lack thereof will have a huge effect.

 

Then the business itself must adjust to the changing market place, where its traditional sales are shrinking.

“Like other suppliers, it will have to get beyond its traditional dependence on the PC market and role as a horizontal market player,” said Martin Hingley of ITCandor research.

“A lot of its partners will find it competing with them - so the ecosystem is going to change as well.”

Silicon Valley stalwart Robert Scoble has written an open letter to the company begging for it to consider splitting up the business as well.

“Microsoft has something like a dozen billion-dollar businesses,” he wrote. “That's too much for one person to focus on. At least split it up into enterprise and consumer. Enterprise needs a far different leader than consumer does.”

“As Larry Ellison said on Charlie Rose a week ago, enterprise sales cycles are hyper long. They won't switch to the newest hotness immediately, so you need someone who can crunch along the products and keep them relevant and interesting long term. Consumer tech… is far more faddish.”

How Microsoft will change in a post-Ballmer era remains to be seen, but it is clear the personality at the top will have a big role to play.

So who will take up the mantle and become the third ever CEO of Microsoft?

Scoble is hoping for a fresh face who can win over the industry.

“A CEO shouldn't just need to be a builder… but also needs to stand up in front of the world and get everyone to believe,” he wrote. “Ballmer never did that for me.”

“[It] needs to be someone who understands contextual systems (mobile, local, social, sensors, wearables), at least for the consumer side of the fence. That's where the future is going (not just devices and services).”

Bamforth agrees but also added he hoped the new boss would come from outside of Microsoft, rather than someone already engrained in the firm.

“I'd like to see an external candidate,” he added. “Right now a shot in the arm or a kick in the pants would be better [for the company] than a steady hand.”

Ballmer has up to a year before his successor is placed on the throne and who knows what the future will hold. But, for us observers, we will always have the memories.


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