Steve Ballmer at 11: A Microsoft power play too far?
One man, so many jobs
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Steve Ballmer's anniversary as Microsoft CEO has arrived with a paradox.
In the history of Microsoft, no chief executive has wielded so much power. Ballmer is essentially responsible for $40bn in sales, running three of Microsoft's five business units: the Office business applications unit, Entertainment and Devices, and – as of last week, with the announced departure of division president Bob Muglia – Server and Tools.
Ballmer is running the Office group after group president Stephen Elop left to captain Nokia. Ballmer broke up Elop's empire, handing management of Office to Kurt DelBene and reserving Microsoft's CRM and ERP business for himself. Inside E&D, senior vice president Andy Lees and president Don Mattrick are running Windows Phone 7 and Xbox respectively and reporting into Ballmer, following the retirement of E&D group president Robbie Bach last year.
The only independents are the Windows and Online units. The Windows and Windows Live division under president Steven Sinofsky is exploding, with 43 per cent and 23 per cent quarterly and annual revenue growth thanks to Windows 7. Online is home to Bing, still the baby of the company, with sales in the half-billion range.
And with the Online unit, it's questionable how much of the business side is really being run by group president Qi Lu. As a corporate outsider poached from Yahoo! two years back to build Microsoft's answer to Google, his focus is on engineering. Microsoft doesn't give full group power to people with "just" a technology pedigree. You need more experience in product, sales, marketing, and - well - Microsoft.
The paradox? Well, despite collecting all these business units, Ballmer's authority is weakening.
Microsoft's board is starting to appreciate that there's a problem with Microsoft under Ballmer. The FT reports of "some expressions of misgiving about Mr Ballmer's leadership and [suggestions] that he is coming under greater pressure [from the board] to raise the company's game."
The FT's source isn't solid: just two people who've talked to Microsoft's directors. The paper may merely be citing hearsay, but something is in the air. Last year, the board limited Ballmer's bonus for screwing up on mobile phones and tablets, and we understand from sources inside the company that Ballmer is facing some "aggressive" targets for 2011.
Those targets might account for the decisions to, shall we say, accept the resignation of Bach and to let Elop go, as well. One man lost market share to Apple, while the other didn't exactly leave a distinguishing mark on the face of the Office franchise.
To outsiders and insiders, these were not great losses. And let's give Ballmer the salesman a break. He clearly feels he can reinvigorate sales by taking direct control.
But the board should be worried about Muglia's departure from Server and Tools.
According to sources close to senior Microsoft management inside the S&T division, Muglia was told to step down by Ballmer for "not moving Azure faster".
Battle of words
Both Ballmer's email announcing Muglia's exit and Muglia's own good-bye missive indicated there was a strong difference of opinions. According to Ballmer, he had decided a change of leadership was needed following conversations with Muglia. In what must surely win an award for one of the most beautifully written and heartfelt departure notes to the troops in corporate history, Muglia said he had to follow his convictions.
Azure is making no meaningful money for Microsoft, and the vast majority of Microsoft's cloud push is concentrated on convincing people to use hosted versions of Exchange instead of Google's Gmail or Lotus Notes. Microsoft moved Azure into Muglia's division in an effort to productize the thing and prevent Azure from cannibalizing the licensing business of products like SQL and Windows Server. The company even re-orged the division in early 2010 to make that happen. Few understood product or sales execution better than Muglia, and few could match his ability to talk technology or "the Microsoft way".
Ballmer discarded a 23-year Microsoft veteran who ran a solid $14bn business based on sales of SQL Server, Windows Server, and Visual-Studio licenses and subscriptions. The business was Microsoft's third-largest engine of growth. And what has Ballmer traded him for?
Who knows?
Next page: From Red Dog to top dog?
COMMENTS
Soap opera
A thoughtful, well researched, and insightful piece about what might have been, or how things could have been otherwise.
And you know what? I don't care. When companies get so big (and I work for another $MEGACORP) the decisions become divorced from the product, customers, and workforce. People start to see the abstract or intangible as real, and the real as mere 'detail'.
It becomes - as so eloquently reported here - about personalities. So much management effort expended on everything but the product. This is why Vista was such a dog, Phone7 is a lash-up, and security is never good enough.
Ho hum and goodnight. I don't care.
they should seriously look at splitting the company up
And frankly stop waisting money on cloud 9.
Office has taken a huge hit and ribbon and the disconnect with the earlier versions may have been the tipping point for eventual undoing of the monopoly.
development stuff is still very good
Servers have been suffering the feature creap of desktop software with complexity breeding complexity. The common practise of seperating out services into their own virtual server sandbox says volumes about software that sprays like a male cat - a bit of stink everywhere.
The OS should be gutted with the original win api seperated into a sandbox to run historic apps and the replacment jetsonning all the turgid work arounds, joints and other backwards compatibility crap.
Sack all the marketing people, they are not very good at it. rebuild the websites so that they work or outsource it. Focus on making a few things well instead of lots of things poorly.
I think MS do have a problem for the future
Talking to a lot of people 25 or under and there really is a feeling that microsoft is regarded as uncool. They resist the idea of Microsoft tablets and phones and seem to resent that unless you are technically minded enough to do linux or rich enough to do apple you have no choice. About the only thing where that doesnt seem to be the case is the xbox product line. But apart from that people of all ages no longer look to microsoft for innovation, whilst microsoft has its core markets outside of those markets people seem to resist as much as they can.
I really think for many people they see microsoft as a company that just moves boxes of windows and office ad use all sorts of stupid and annoying tricks to force people to upgrade. There is an air of inevitability about upgrading. Its just a pity that apple are so damn expensive otherwise they could maybe make a move here or even better just let people buy the OS, although that will never happen. I'd love to see linux make it big on the desktop but too many times people have declared "desktop Linux is here" and its been too complicated for most or just as unreliable as windows.
I actually think now more than ever if the right technology would come forward the grip MS has on the desktop could be loosened and its the first time really since pre windows 95 IMO. Don't get me wrong I am not anti microsoft it might not be my first choice for certain things but as a desktop OS windows 7 is pretty good in general, the xbox is a decent console and whilst openoffice is better than ever before there are still places its totally outclassed by office.
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