Timing is everything in Steve Ballmer's departure - why Microsoft needs a new vision

The biggest disappointment in Steve Ballmer’s announcement that he is to retire as Microsoft CEO came from the absence of a suitable accompanying video.

How we would have loved to see Ballmer dad-dancing around the stage again, this time screaming, “I LEAVE THIS COMPANY! I LEAVE THIS COMPANY!”

Still, it gave us all a chance to look at his previous YouTube appearances and delight in his past performance.

Meanwhile, it’s his actual past performance as CEO that has come under the most scrutiny. Was he the calamitous incompetent who destroyed Microsoft, as portrayed by some? Or one of the great leaders of the technology age, as demonstrated by the billions of dollars he has personally earned from his lifetime’s work at Microsoft?

That’s a debate that will continue long after Ballmer is working on his golf game, and the answers will only come with the perspective of how his successor performs by comparison.

Therein lies the most important question facing the Microsoft execs charged with appointing the new CEO: to recruit externally, or promote internally? In this, the timing of Ballmer’s departure is everything.

For all the criticisms of Ballmer’s tenure, the most justified concern Microsoft’s failure to anticipate or successfully respond to the IT consumerisation trend that has seen smartphones and tablets become the dominant device for users of technology.

“There’s no chance that the iPhone is going to get any significant market share. No chance,” said Ballmer when the iPhone launched in 2007. The iPhone alone now generates more revenue than all of Microsoft.

That huge failure has been exacerbated more recently by the poorly handled launch of Windows 8 and the shambles of the Surface RT tablet, for which Microsoft has been forced to write off nearly $1bn due to unsold inventory.

By comparison, Microsoft as an enterprise technology supplier continues to succeed. In the company’s most recent financial results, its Business Division revenue grew 14% for the quarter and 3% for the full year, while Server & Tools revenue increased 9% for the quarter and 9% for the full year. There are plenty of large IT suppliers that would be delighted with that growth.

At the overlap of Microsoft’s consumer and enterprise businesses lie Windows and Office – the cash cows that make everything else possible. The right moves are underway to secure future Office sales – the emphasis on cloud-based Office 365 and the introduction of pay-as-you-go pricing show that. The future of Windows – once enterprises reduce their reliance on the PC and consumers opt for Apple or Android – is another matter.

Windows needs to be looked at as a consumer product that is also used in businesses, not the other way round as it has been for so long. And this is the crux for Microsoft, and the reason Ballmer’s timing is so interesting.

Ballmer has introduced a new strategy and a new organisation for Microsoft in the past year – it is, we are told, no longer a software firm but a “devices and services” company. The corporate reorganisation, so heavy with meaningless marketing speak that it confused many observers, will take time to bed in. It also brought a number of executives into new positions of seniority.

If Ballmer had stepped down immediately, then the chances of his successor continuing wholeheartedly with that new strategy and structure must have been small. Even an internal successor would have wanted to put their own stamp on things, and to be seen by the stock market as having the vision that Ballmer lacked.

It seems to me that Ballmer wants to be sure his strategy is fully in place before he goes, to the extent that even an external appointment will struggle to justify another upheaval at such an important time.

That in itself makes it more difficult to attract externally the visionary leader that Microsoft desperately needs. In my view Microsoft needs new blood at the very top with new ideas. This is not IBM, with a safe, mature business model and strategy that careful succession planning keeps rolling along between CEOs. This is a company that, in the consumer market and in the perceptions of many CIOs, has lost its way.

When Bill Gates stood down as CEO, Microsoft lost its vision. To that point, everyone knew what the company was about – to put a PC on every desk and in every home. It was a simple objective that under Gates was delivered with spectacular success.

Since Gates, there has been nothing to match that goal – and even in Ballmer’s latest changes, it is difficult to state as simply and clearly what Microsoft now hopes to achieve. What, exactly, is a “devices and services” company anyway?

One thing I can predict with absolute certainty is that Microsoft won’t be approaching me for the job, so I’m taking no risk in saying what I would do in the alternative universe in which I get to be CEO.

I’ve written frequently about the divergence of the technology industry, into consumer-focused device suppliers, and “traditional” IT infrastructure players. It is going to become increasingly difficult – if not impossible – to do both.

And that’s why I think that ultimately Microsoft has to split in two – whether that’s two companies or two arms-length subsidiaries, is for investors to decide – but one that focuses on users, which is where Windows and X-Box will live; and the other focusing on infrastructure products and cloud services. The requirements for each, in terms of management style, product development, corporate culture and marketing strategy, are becoming too different to maintain under one coherent structure.

I interviewed Ballmer once, back in 2004 I think – long enough ago that the article I wrote never made it online in the web-challenged print publishing environment of that time. I spent nearly an hour in the back of a car with him, travelling between meetings – thanks to London traffic, that was about twice as much time as I had been allocated by his PR minders.

I found him to be very different from the expectations gathered through his public persona. He was relaxed, chatty, friendly, charismatic and pleasantly serious. Warm, even. It felt like we could happily have sat in a bar together and talked sport.

He was open to talk about anything – not once did he dodge a question. By the end of the extended conversation I was running out of things to discuss, so threw in the sort of late curve ball that would probably have seen me thrown out if I’d started with it: “Why is it that so many people hate Microsoft?” I asked.

He gave me a look that I can remember to this day – a glimpse into his other side, the hyper-aggressive salesman, the battle-scarred ultimate fighter for the Microsoft faith.

His curt reply was something along the lines of, “I don’t see that. That’s not what any of our customers say to me.”

And perhaps that has been Ballmer’s problem all along. He has for too long only seen what he wanted to see, blinkered to the possibility that his many critics might have a point.

It seems now, as he prepares to exit the stage, that what he wants most of all is to see his latest strategy put in place for a successor to deliver. But what Microsoft really needs is a successor with a vision of their own that can recapture the imagination of technology buyers.