Why Ballmer had to go

Monday 26 August 2013 10.32
Steve Ballmer, Microsoft CEO, to leave within the next 12 months
Steve Ballmer, Microsoft CEO, to leave within the next 12 months

Microsoft needs a visionary, not an alpha male to guide it into the post-PC age, writes Niall Kitson.

Steve Ballmer has been a high profile figure in the tech world for 30 years. As the commercial face of Microsoft he drew attention for his alpha male bluster, roaring "I love this company" at a conference in 2000 and throwing a chair across his office in frustration at losing key staff to Google. Now we have only 12 months left of his tenure, possibly less depending on the progress of a committee set up to find his successor.

Life with raging Ballmer hasn't been dull but his inability to guide Microsoft into the post-PC age has done for him. This is a dignified exit. Microsoft is in rude health and it has a plan, but needs a different kind of CEO to implement it.

The market, for its part, has been lukewarm. At time of writing the share price was trading at $34.75, down on last Friday's opening value of $35.17. Where did Ballmer go wrong? You can try slow innovation, an adversarial corporate culture, a flawed cloud strategy, dud products and changing consumer expectations. Here are some of the main culprits.

Windows 8

Windows 7 was the fastest selling operating system for Microsoft. In six months it sold 100 million copies, became the highest grossing pre-order in Amazon.com history and attained a 4% global market share in three weeks. Four years on and Windows 7 is comfortably the most popular operating system on the planet.

According to figures from The Next Web, Windows 7 is found on 44.49% of PCs worldwide. The second most popular operating system, 2002's Windows XP is still found on 37.19% of PCs despite repeated warnings that it would be reaching the end of its support cycle next year. Windows 8 should be eating XP's lunch by now, yet it so far has managed a paltry 5.4% market share after 10 months.

Why has Windows 8 fared so badly? It's not all down to the software - although the alien user interface was always going to take some time for consumers to adopt. From this columnist's perspective, Windows 8 is a classic example of software for software sake. Windows 7 and XP are functional, secure (so long as you keep your anti-virus software updated) and user friendly. Windows 7 even borrows some tricks from Apple that have made for record numbers of happy customers.

Windows 8, however, was launched as a double-edged solution capable of dealing with the demands of desktop and mobile computing in one package. The problem? Few computers on the market actually had touch screens, making their addition moot. It's only now that vendors like HP, Lenovo and Dell are making touch standard on all PCs.

Manufacturers had pinned their hopes on Win 8 being a success seeing as expensive ultrabooks were failing in the market but consumers balked. In the second quarter of 2013 the PC market in Europe had declined 20%.

The exit of Windows 8 president Steve Sinofsky was an admission that change needed to be made. Add to that the emergency measure the Windows 8.1 update due in October and you have a picture of an OS that isn't terrible but isn't considered essential.

Surface RT

It's hard to write about the failure of Windows 8 without mentioning the Surface. At time of unveiling Windows 8 was trumpeted as coming in four flavours: the full fat Windows 8, Windows 8 Pro, Windows 8 Enterprise and their lighter sibling tailored for mobile devices, Windows RT. What all of them promised in mobile-style apps accessed through the 'Metro' interface (renamed Windows 8 UI after a legal squabble with a German retailer), RT lacked in its ability to use desktop apps, though it did come with a regular desktop.

The Surface tablet was to be where RT would really come into its own as a direct competitor to iOS and Android. Alas a lukewarm critical reception and poorly populated app store have left a gaping hole in the company finances, forcing a nearly $1 billion write-down. There is a Surface RT2 in the works and some severe discounting is getting the device into schools, where it may find its niche. Otherwise it has yet to trouble either Apple or Google.

Enterprise trends

The twin-phenonema of 'bring your own device' and the 'consumerisation' of IT has meant that business people not only want mobile smart devices, they want to use either their own devices or devices that are in themselves fun to use. This has been manna for smartphone and tablet manufacturers as well as companies that don't want to shell out money for premium products like iPhones that their staff already own. Companies that would have opted for Windows Mobile are being forced to adopt iOS and Android. Windows Phone 8 has more followers than Blackberry but its single digit market share makes sure people will not be demanding their bosses subsidise a Nokia Lumia handset for them any time soon.

A company based on devices and software

It was Steve Jobs who coined the term the 'post-PC world' to describe how tablets and smartphones would replace the conventional computing experience. Ballmer saw things differently, opting to call his vision 'PC plus' - a world where the same operating system could be enjoyed across all products. Ballmer's re-imagining of Microsoft is to treat it as a software and devices company attacking the market on two fronts - keeping its software open to manufacturers but also having its own devices, effectively turning partners into competitors. This is the same practice Apple stamped out in the 80s and 00s when Mac clones were just another market segment.

Tech historians would also be quick to point out Microsoft does well in peripherals and gaming but it suffered a costly failure in the Zune, Kin, Courier, wireless base stations and Actimates toys. When the focus was on software Microsoft could afford to experiment, if it is to become an Apple-style corporation matching design and function it will have to do much better. To make this vision work Microsoft needs a guru, not a gorilla. Ballmer is not that man.

Niall Kitson is editor of TechCentral.ie

Keywords: microsoft