Upon the announcement of Steve Ballmer retiring as Microsoft's CEO this afternoon, Microsoft stock jumped an enormous nine percent. While Ballmer must have made note of the increased metaphorical bulge in his wallet, it's surely a damning indictment of his 12-year reign.
In most cases, one man doesn't define a company's success (unless you're a certain other Steve - who, when he retired, caused Apple stock to drop notably - or perhaps a Mr Gates), but Ballmer's reign has certainly been one of few peaks and many troughs with Ballmer right at the centre. So, where it it go wrong, and where did Ballmer get it right?
Steve Ballmer laughed when he first heard about the iPhone. He said its lack of keyboard "makes it not a very good email machine". The iPhone, though, was a sensation. Its touch screen design defining a generation of smartphones, with the device considered the "Real McCoy" of smartphone technology. Meanwhile, Microsoft was busy producing phones with keypads running on a hobbled version of Windows Mobile.
It was only in more recent years that the firm pulled its finger out and produced what is a very fine mobile OS; Windows Phone 7 and 8 are triumphs in design. But they came along too late. By 2010, when WP7 was launched, Google's Android was making waves and the iPhone was already the de facto desirable smartphone.
One could argue that WP8 is now on an upward trend; just a few weeks ago it was recognised as the number three phone OS rather than fourth in terms of market share. How much of a triumph passing BlackBerry for a podium place in what is still a two-horse race is open to debate, however.
They're great devices, and they are beginning to be recognised, but had Microsoft made its move earlier, we could be looking at a very different smartphone world.
Microsoft had a concept of what the future of tablets was. It even designed the Microsoft Courier, a book-style tablet which many people say could have been a success had it actually existed.
Instead, Microsoft remained firmly planted in the traditional PC market, churning out Windows versions which were perfectly reasonable (brushing aside Vista - a whole separate story) for a desktop or laptop, but totally unusable with a touch screen.
In 2009, Steve Jobs introduced Apple's iPad. Again, a sensation and, again, Microsoft had to play catch-up. It wasn't until late 2012 when Microsoft launched a genuine challenger, Windows 8 coupled with the Surface tablet. But that's also gone badly - Microsoft took an $800m write-down on its Surface RT tablets which it couldn't sell to consumers.
Windows 8 went too far in the other direction; it's a perfectly reasonable tablet OS but it resulted in a compromised experience for those running on traditional desktops and laptops. You can't please everyone, but in the case of Windows 8, Microsoft pleased almost nobody.
RIGHT: Cloud computing and enterprise tools
Microsoft's Azure cloud services have gone from strength to strength in recent years, and the firm continues to win high-profile contracts with big businesses.
This area of the business is something Microsoft got very right indeed; enterprise is extremely competitive and the firm has successfully used its pre-existing might to maintain a stranglehold on the market.
Recent deals with organisations such as New York State and International Airlines Group, underline this fact. However, it is worth noting that the firm faces tougher competition than ever before from rivals, notably Google.
RIGHT: The Xbox
While the original Xbox was created under the leadership of Bill Gates, the whole Xbox saga has played out under Steve Ballmer. The second generation 360 console has done exceptionally well, selling almost 60 million units, and being the console of choice for more dedicated gamers and developers alike.
Its Xbox Live Arcade system for independently developed games proved an enormous hit, creating a vibrant indie game community well before the iPhone came onto the scene with an App Store that empowered even the tiniest of development teams.
The third generation Xbox One is due for release in November, and is as much a media consumption device as it is a gaming machine. Microsoft is making a big play to become the media hub of consumers’ homes. Only time will tell if they make that a reality.
WRONG: Email and social networks
Microsoft’s Hotmail/Live Mail/Outlook failed to keep up with the clean interface and innovative features of Google’s Gmail. Gmail passed Hotmail in October last year according to analysts, and it’s not hard to see why.
Microsoft’s MSN profile pages were a laughable attempt at a social network, and the demise of MSN Messenger gave way to the embracing of Skype, which Microsoft bought in 2011 for $8.5bn.
This is one decision Ballmer certainly did get right; Skype is the market leader in consumer VoIP services, and is a great leverage tool when selling products like Outlook and the Xbox.
While Apple had the all-conquering iPod, Microsoft had the Zune. Launched in 2006, it was noticed by almost nobody until its demise last year. The device and ecosystem were under populated, expensive and ugly and couldn’t compete with the market place Apple had created. Zune lives on in a sense as Xbox Music, but the hardware is no longer made and its services mostly involve Spotify-style streaming rather than download purchases.
The common theme throughout this piece has been that of playing catchup. And that’s exactly the problem. Microsoft was once the innovator, way back in the 80s. But since then its market dominance has caused it to become sluggish, only producing products as a reaction to other, better offerings.
Microsoft was worth over $400bn in 2000 when Ballmer took over, while Apple was only worth $15bn. Wind forward to the end of 2012, it’s Apple which is now worth $400bn while Microsoft has shrunk to $234bn.
That says it all, really. Perhaps Ballmer is a victim of circumstance, but it surely is time to go.
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