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Updated: February 4, 2014 21:45 IST

More bugs in the Microsoft code

Anuj Srivas
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Steve Ballmer
Steve Ballmer

Steve Ballmer leaves behind a Byzantine bureaucracy and an outdated vision the company can ill-afford

There is an old corporate joke, which, in the light of Steve Ballmer’s recent resignation as CEO of Microsoft Corporation, deserves a replug.

It goes like this: the outgoing CEO of a company met with his replacement for an exit interview. Before leaving, the departing CEO told the incoming one he had left three very important letters for him, just as his predecessor had done. He explained that the new CEO would find opening the letters, in order, most useful when faced with a grave crisis.

Several months passed before a major, company-threatening event came up. The new CEO remembered the letters and opened the first. It said: “Blame it on your predecessor and start new product lines.” The new CEO did so, and to his surprise, the problem was averted.

The next crisis was even more serious, the shareholders had started calling for the CEO’s resignation. Rushing to his drawer, the new CEO opened the second letter carefully to read the word “restructure.” He did so, and was even able to keep his job as business went back to usual.

When the next serious event, the worst of the lot, took place, the CEO knew he had a last lifeline. With a smile he opened the last letter, to read: “Write three letters.”

The joke reflects , with startling clarity, the 13-year tenure of Mr. Ballmer — a man who blamed Bill Gates during the transition, tried new Operating Systems, introduced new devices and even brought about a restructuring exercise before the times caught up with him.

Mr. Ballmer’s surprise but long overdue retirement announcement on Friday came after years of criticism over the waning growth and stock price of Microsoft, a behemoth whose monopolistic power was once so great that American regulators sought to break it up.

Handed the reins by Mr. Gates in 2000, Mr. Ballmer never really got ahead of the curve in turning his company into a maker of devices and a provider of services rather than a peddler of software.

Whether it was the introduction of MP3 player Zune in 2005 (an unmitigated marketing failure), the launch of Windows Vista in 2007 (a botched operation from the start), or the Windows Phone-Nokia tie-up in 2011 (a partnership that was too little, too late), Mr. Ballmer’s Microsoft acquired a reputation for merely bringing in flashier models of its rivals.

Living to tell the tale

Take for instance, Microsoft’s foray into the tablet market with Surface. Some would argue Microsoft had absolutely no business entering a hardware market dominated by a free, open-source platform that can be adapted to nearly any hardware.

Indeed, Mr. Ballmer may go down as the only CEO who lived to tell the tale after the company took a near $1-billion write-off for an oversupply of the struggling Surface RT tablet.

How he survived for so long is anyone’s guess. Despite claims that he was an abject failure or the theory that he only got the job due to his friendship with Mr. Gates and Paul Allen during their college days, Mr. Ballmer was adept at extracting profits out of successful, existing product lines.

For all his faults, Mr. Ballmer has a firm grasp of the enterprise market — and Microsoft’s revenue and profitability reflect this. However, the more telling fact is that booming sales from the company’s flagship enterprise software notwithstanding, Microsoft’s stock has functioned like a thermostat set to $30.

Frankly, what matters is not whether Microsoft is profitable today, but whether it can remain profitable and relevant over the next 10 years. After all, a large company with entrenched profits can cruise for a long-time before it sinks. BlackBerry is a perfect example.

A glimpse of where Microsoft will be in 10 years will be seen shortly, when the company chooses its next CEO. Though there are numerous choices, two candidates with different visions of the future are the most viable — one being India-born Satya Nadella who looks after the company’s cloud offerings. The other is Qi Lu, a true “insider man” who has been in charge of the company’s loss-making Bing division. The pick of Mr. Lu or others like Tony Bates over Mr. Nadella will signal the return of the old guard; but the situation clearly requires a “wartime” CEO like Mr. Nadella or Ben Horowitz of Opsware fame.

Whoever is in the hot seat will have his work cut out. The staffing and corporate culture issues that have plagued Microsoft have to be sorted out. Microsoft, under Mr. Ballmer’s reign, has slowly become a public sector bureaucracy that could put the Indian government to shame. The company’s stack-ranking system, in particular, does little to boost employee morale and, in fact, has driven down performance wherever it was used. Indeed this is a problem some of the bigger Indian IT firms such as TCS and Infosys are experiencing as well.

Secondly, Microsoft needs to sort out its communications and marketing strategy — it often has good products that trip on the marketing wires.

Just as importantly, the company needs to abandon the mindset that has it behaving as if it still commands a monopoly.

Above all, Microsoft needs and deserves a technology visionary to lead it. Google has Larry Page. Amazon has Jeff Bezos. Yahoo has Marissa Mayer. Oracle has Larry Ellison. Microsoft would want a CEO that matches up to this hall of fame. Even if Mr. Gates refuses to play a second innings a la Narayana Murthy, it is up to him to find a suitable successor.

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When Ballmer took over Microsoft from Bill Gates, Microsoft had a DOJ imposed sanctions for 10 years - which lasted till 2011. His hands were tied the entire duration of his job as the CEO.

from:  Anon
Posted on: Aug 27, 2013 at 20:17 IST

Utter insanity. In any sane vertical, a CEO who has tripled a firm's
revenues and profits under his watch would be applauded, not derided.
Share prices for Apple or Google factor into account _future_ profits;
established firms like MS essentially "grow" into their share-prices. A
bit like how share prices of utility firms stays constant.

from:  Akshay
Posted on: Aug 27, 2013 at 18:28 IST

We can't blame only Ballmer. He inherited a swarm of old and
conservative colleagues with almost Indian Government like attitude.
It seems even within Microsoft, there were more than one group
pursuing the same objective; and so there were elements which worked
against each other bringing down the company. Now the first task of
the new CEO would be to infuse new blood, new thought and new vigour.
MS has all the capabilities and it should not remain a Rip van Winkle
anymore. Opportunities knock only once and this is the time Gates
should grab and bring in confidence to the share holders and American
public in general.

Posted on: Aug 27, 2013 at 13:07 IST

Dear Sir,
The article presents a retrospective criticism of the strategies
adopted by Steve Ballmer. The views being subjective in nature cannot
be debated conclusively. However, the one point regarding the
corporate culture is 'completely' incorrect.
Microsoft was my first employer and have worked there for 3 years
before making a domain switch to other companies and I must say that
the corporate culture is definitely the best among the companies that
I've either worked or have my friends working. I do not know how did
you arrive at the conclusion of MS having a bureaucratic culture, it
definitely seems to me either a self grown notion or the result of
poor research.

from:  Vijay Verma
Posted on: Aug 27, 2013 at 12:02 IST

I find it little embarrassing that the author mentions Marisa Mayer and
Jeff Bejos in the same breadth.

from:  Kasi Viswanath
Posted on: Aug 27, 2013 at 11:40 IST

So MS requires a CEO with innovation.
So MS is in need of heart not in need of brain.
So MS is in search for a creative person.

Good days are ahead for MS.

from:  praveen
Posted on: Aug 27, 2013 at 10:57 IST

May be like Mr. Narayana Murthy, Mr. Bill Gates can lead Microsoft again.

from:  Venkatesh Kalla
Posted on: Aug 27, 2013 at 08:34 IST

Well Microsoft is one helluva big computer company.The money grabbed
apart from making William Gates a splendid dwelling has made him a
philanthropist.The spread of computer technology has gone very well
in places like Japan.The people have used it well from sixty years
on in highspeed rail technology which is something which we admire
and wish to emulate.The Japanese require special mention because in
their development pursuits their military adventurism has been
clipped in a most severe way and their isolation has helped them in
development and they are a unique race by virtue of their history and
hard work.Their unending success is a wonderful lesson and to be

from:  Paul.V.John
Posted on: Aug 27, 2013 at 06:24 IST

Know it all article by Anuj, no offence but why would you compare the founders of path breaking companies(Oracle,Amazon and Google) with CEO like Marissa Mayers(...what is the connection??, is it fashionable to use personalities name which is in vogue when you write an article?), with a question if Microsoft could get one? Really??!! Please learn before writing article.

from:  vaidya
Posted on: Aug 27, 2013 at 05:19 IST

Steve Ballmer never blamed Bill Gates for anything. Get your reporting

from:  Krish
Posted on: Aug 27, 2013 at 01:37 IST
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