Steve Ballmer has been a major presence and employee at Microsoft for more than 30 years, but his time with the software giant is drawing to a close. Microsoft announced this morning that Ballmer, who has been CEO of the company since 2000, will step down within the next 12 months, once a successor is found to head the business. The news has been well received by the investment community, with shares of MS up 7% in the past 12 hours.
Ballmer has always been an interesting figure. He lacks Bill Gates' cool brilliance and was often tapped as the jester or to rouse the crowd at a developer conference. His temper, when roused, could be formidable. Criticizing him has become fashionable of late, with some claiming that he was one of the worst CEOs of modern America. The debacle of Windows 8 makes Ballmer more difficult to defend, to be sure, but it's easy to forget that Steve took the reins of a company with $25 billion in yearly revenue and departs from a company earning nearly $80 billion a year. While that's not Apple-sized, MS has delivered extremely consistent year-on-year gains.
Chart by Statista. MS Revenue FY2002 - FY2013
Have there been failures? Absolutely. Zune, most of the Internet division, Windows Vista, and Windows 8 have done poorly. But there have also been successes, including Windows XP (launched in 2001), Windows 7, the entire Xbox division, and Windows Phone (by all accounts a strong technical OS, even if its sales volume has been disappointing). Unfortunately, while Ballmer has delivered a string of notable triumphs, most of Microsoft's launches in the past year have been explosive failures. Surface sank, Windows 8 is weak, and the Xbox One unveil, well, sucked. In the face of repeated failures, Microsoft has been forced to fire key players -- Steven Sinofsky and Don Mattrick -- who greenlit projects that risked turning into boondoggles.
Who can save Microsoft?
I think Ballmer's legacy at Microsoft is better and more nuanced than some have suggested, but there's no denying that the company's core vision for the future of computing is under strain. The final snap may have come this summer, with the full-scale Microsoft reorganization that Steve announced in an open letter. The problem with that effort wasn't in the details of the missive, which laid out a new plan for a more cooperative company, but in the fact that outside a few paragraphs of concrete information, Ballmer penned nearly 5,500 words of absolutely nothing. The entire letter was shot through with meaningless marketing-speak about leveraging cooperative synergies, dominant positions, and existing product lines with no data on what kind of concrete improvements or product changes would be made to boost revenue or improve the company's position.
That letter was an excellent example of the fundamental problems at Microsoft. Windows Phone, Windows 8, and the Xbox One were supposed to embody the Holy Trinity of Microsoft's efforts in the PC, tablet, and living room and lead the way to a convergence of form and function. Instead, we got a tablet OS with miserable Metro-Desktop integration, a console concept so disliked that Microsoft has revamped almost every aspect of the design (and created a far better product), and a mobile operating system that wins review accolades and has virtually no market share.
It was a worthy effort. It failed. Now, someone else has to pick up the pieces. That's not going to be easy with tablets continuing to chew into Microsoft's PC business. After 30 years, Ballmer has decided to turn the job over to someone with different ideas and something to prove. Microsoft specifically needs someone who can keep the company's historically strong focus on enterprise products and developer software running smoothly on one hand, while reinventing the company's consumer-facing business on the other. It's hard to understate the difficulty of that task.
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