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Steve Ballmer at 11: A Microsoft power play too far?

One man, so many jobs

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From Red Dog to top dog?

There is no clear heir apparent to Muglia, a fact that should alarm both the troops and the board. If Ballmer wants a "cloud person", then there's server and cloud division senior vice president Amitabh Srivastavam, the guy who built the Red Dog compute fabric that became Azure. He's now responsible for the Windows Azure Platform Appliance that's being developed along with Dell, Fujistsu, and HP.

But Srivastava is an engineer, and he's not that experienced when in comes to running the rest of S&T: Windows Server, SQL Server, or Visual Studio. If it's a server person you want, then there's server and cloud vice president Bill Laing – but Laing reports to Srivastava.

Redmond, we have a problem.

As one ex-Microsoft employee from S&T told us this week: "People [at Microsoft] are shocked because Bob was part of the foundation of that organization. When your foundation shakes, the whole house shakes. The bench looks really weak unless they bring in somebody from outside, and it's unclear who will step into Bob's shoes... there will be a crisis of confidence in the next few months as they try to figure out who it is will replace Bob."

The loss of S&T leadership comes at a critical time in Microsoft's business cycle.

Between now and early February, Microsoft conducts its mid-year review, where it does a reality check on the goals set out at the start of the current financial year and then make changes accordingly. This is a vast, company-wide process of huge strategic and fiscal importance that spans business units and subsidiaries and that sees people working up to 20 hour days, seven days a week. This review influences Microsoft's planning for the next three years.

It's hard to see who will drive the plan for the $14bn S&T division.

Over the last 10 years, we've seen other mistakes from Ballmer. There was the decision to stop developing Internet Explorer in the early 2000s, a move that created a vacuum eventually filled by Firefox and later Chrome. There was the botched Windows Vista roll-out that cemented Windows XP and gave Mac room to spread.

Ballmer laughed off the iPhone. He said you could buy perfectly good Windows phones, but people flocked to Apple instead, and Apple grabbed a quarter of the US smartphone market in less than three years. Then there was the KIN misfire.

He also overlooked the iPad, and shareholders cried foul at last year's financial analyst meeting. He promised that Microsoft people were losing sleep as they worked to make up lost ground.

Microsoft is now in a state of triage. The company has answered the iPhone with Windows Phone 7. It promises Windows 8 for slates running ARM. And a final version of IE 9 is on the way.

Break-out or bust?

Make no mistake: the loss of Muglia is not the end of Ballmer. Microsoft remains a $62bn company that's been reporting record levels of growth. It's a good bet that Ballmer will remain CEO.

But Microsoft's board is facing a Sliding-Doors question: where would Microsoft be now if not for all those mistakes? And as the man responsible for making those mistakes prepares to assume even greater control through S&T, just how much damage will be do?

If Ballmer's decision hurts S&T, that could finally turn the tide against him. ®

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