Sunday 29 June 2008

Is Ballmer Right for Microsoft -- for 10 More Years?

As the dynamic duo steering Microsoft Corp. together for the past 28 years, Bill Gates and Steve Ballmer have been a near-unstoppable team, combining Gates' technical vision and will to power with Ballmer's salesmanship and rousing, if polarizing, personality.
Dorm mates at college, best man at each other's wedding, their partnership changed in January 2000, when Ballmer took over as CEO from Gates, who became the company's chairman and chief software architect. And it will change again at the end of this month, when Gates retires from his day-to-day role at Microsoft, completing a transition process announced two years ago.
Gates will continue as Microsoft's chairman, and he told reporters at The Wall Street Journal's All Things Digital conference last month that he plans to spend 20 percent of his time working on Microsoft projects.
But once Gates leaves as a full-time employee, "I'm not going to need him for anything. That's the principle," Ballmer told the Journal earlier this month (subscription required to read full story). "Use him, yes, need him, no."
Meanwhile, Ballmer said in a speech earlier this month that he plans to run Microsoft for another nine or 10 years. He will be 62 years old in 2018, and if he's still running Microsoft then, he will have been atop the company for 18 years - an extremely long run compared to most Fortune 500 CEOs.
Some observers think Ballmer is up to the task.
"He's still got the energy -- I wish I still had that -- and the vision," said Tim Bajarin, an analyst at Creative Strategies Inc.
"Ballmer is a competition addict," noted journalist Fredric Alan Maxwell, author of the 2002 unauthorized biography Bad Boy Ballmer. "I see him giving up the helm akin to Charlton Heston giving up his gun -- 'from my cold, dead hands.'"
But other Microsoft watchers have increasing doubts about whether Ballmer, as a solo act, is the right person to steer the software vendor through the many competitive perils it faces in the Web era.
"He's still doing a sales job and not focusing enough on the rest of the business," said Enderle Group analyst Rob Enderle. Ballmer has neglected Microsoft's operations and failed to make tough decisions, such as firing underperforming executives, Enderle said.
George Colony, CEO of Forrester Research Inc., sees a subtle slippage in Microsoft's standing vs. rivals such as Google Inc. and Apple Inc. as Gates has disengaged himself from the company - and implies that the slippage could accelerate once Gates is even more out of the picture.
"Why hasn't Microsoft caught Google? Why has Steve Jobs clawed his way out of his grave to be adored once again?" Colony wrote in a June 16 blog post। "It's because Gates over the last five years has moved on to philanthropy - and taken his formidable legacy with him."

Fire and Ice, or 'Ballmer and . . .'
The fire to Gates' ice, Ballmer emerged long ago from Gates' shadow - and more recently became a YouTube star, thanks to stunts such as jumping out of an oversized birthday cake on Microsoft's 25th anniversary, dancing and shrieking frenetically at a Microsoft employee meeting to earn himself the nickname "Monkeyboy," and almost rupturing his vocal cords while shouting "Developers!" 14 times at another Microsoft meeting.
Former Sun Microsystems Inc. CEO Scott McNealy derisively called the Microsoft brain trust "Ballmer and Butt-Head." Ray Noorda, the late Novell Inc. CEO, had a perhaps even less flattering nickname: "The Pearly Gates and the Em-Ballmer: One sets you up for heaven and the other prepares you for death."
But critics say that the only embalming work Ballmer has done lately is on Microsoft itself. The company's revenue growth and profit margins may remain the envy of the industry, but its stock price is up just 7% over the last five years. Apple's stock, by comparison, has risen 1,500% in the same period, while Google's is up nearly 500% since that company's 2004 IPO. Even IBM, the ultimate blue chip, has seen its stock price rise 47% since 2003.
Thus far, Microsoft has failed to duplicate the success of its certified hits - Windows, Office and its server software (think Exchange and SQL Server) and development tools (Visual Studio) - on any of the many bets it has made in recent years: search, Web advertising, mobile phones, video games and others.
Moreover, even with ongoing technical face-lifts, Microsoft's stars are starting to show their age. Office is under heavy siege from online competitors led by Google Docs, while Windows Vista has become a PR debacle for Microsoft, in part because of the company's passive response to Apple's "PC and Mac" ads.
"Vista is not that bad, but Apple's disparaging has made it so Microsoft doesn't own its own image anymore," Enderle said.
At 6'1" and 225 pounds, and having a voice louder than a high school gym teacher, Ballmer is known for his fearsome tirades, such as the time in 2004 when he allegedly threw a chair across a room and launched into an expletive-filled rant about Google CEO Eric Schmidt after being told by a key Microsoft developer that he was leaving to join Google.
Nonetheless, Ballmer may lack Gates' competitive ruthlessness. According to an anecdote in Bad Boy Ballmer, a computer industry CEO once told Gates and Ballmer, "You shouldn't kill the competition, you should leave the companies wounded. ... Corpses look bad and attract attention." Gates "couldn't understand that," Maxwell wrote in the book. "He wanted 100% of any market he could get. Ballmer was quiet."
And in its recent story, the Journal quoted Microsoft executives saying that Ballmer, by working to settle many of the lawsuits filed against the company, has taken a more conciliatory approach toward legal opponents than Gates usually did.
Management-wise, Ballmer is also turning out to be a bit of a Micro-softie, in Enderle's eyes। Many of the executives reporting to Ballmer are "just not doing well," Enderle said. He added that while Ballmer continues to exhort his team to do better, a CEO like Hewlett-Packard Co.'s Mark Hurd "would've already changed the players."

Staying in the Comfort Zone
Ballmer has held almost every management job at Microsoft, including running Windows development. But Enderle said he appears to have fallen into the common CEO trap of staying within his comfort zone -- which in his case is being a "super sales guy."
Ballmer has his defenders. "I think Ballmer is a capable manager," said Jim Prevo, CIO at Green Mountain Coffee Roasters Inc., which is a big Microsoft user. "My guess is that Microsoft has been evolving beyond the point where Bill Gates provides significant technical leadership for many years now."
Even Enderle thinks that for all of his failings, Ballmer remains a first-rate executive. "Ballmer could take Schmidt alone as a CEO any day of the week," Enderle said, describing Schmidt as "largely a babysitter at Google."
Also, if Microsoft did decide to replace Ballmer before 2018, who would take over? Apart from Rick Belluzo, who lasted less than a year as Microsoft's president and chief operating officer before leaving in 2002, there has never been a clear heir apparent to Ballmer.
Three years ago, Microsoft created a troika of divisional presidents reporting directly to Ballmer: Jeff Raikes (Microsoft business division), Kevin Johnson (platforms and services) and Robbie Bach (entertainment and devices).
Raikes, who has worked at Microsoft for 26 years, was a little more equal than the others, according to Creative Strategies' Bajarin. But in January, Microsoft announced that he would retire from the company, effective in September. Raikes said last month that he plans to become CEO of the Bill & Melinda Gates Foundation, the philanthropic organization set up by Gates and his wife.
Kevin Turner, who as chief operating officer is responsible for Microsoft's sales, marketing and service organization, joined the company three years ago from Wal-Mart Stores Inc., where he was best known as its longtime CIO. "I want to see him make some hard decisions in his current role first," before considering him as a potential CEO candidate, Enderle said. He added that Ray Ozzie, who replaced Gates as chief software architect, is "a good technology guy and a coordinator, but in an administrative role, he would hate it."
Enderle's dark horse as a possible successor to Ballmer is Bob Muglia, senior vice president of Microsoft's server and tools business unit, which is responsible for developing products such as Windows Server, SQL Server and Visual Studio. "He is doing a fabulous job," Enderle said. "If all of Microsoft's divisions were doing as well as server and tools, the stock would be up two to three times." Muglia will be 58 in 2018.
Bajarin, meanwhile, calls the 46-year-old Bach "an interesting guy. He's got a mix of marketing, tech, operations [and] charisma." But, Bajarin added, Bach's chances of one day becoming CEO "are contingent on making the consumer businesses, which are so important to Microsoft's future, a success."
If Ballmer isn't going anywhere soon, what should he do to improve Microsoft's performance?
One: cut Microsoft's marginal efforts while talking up the areas where it's excelling, Enderle said. Two: change his management style. And three: focus on product development and quality in the same way as HP's Hurd and EMC Corp. CEO Joe Tucci - two examples cited by Enderle.
John Halamka, CIO at CareGroup Healthcare System and Harvard Medical School, also pointed to product quality as a key focus area. Halamka said the length of Ballmer's tenure at Microsoft "will be dictated by revenue growth, and that does not happen long term unless the product quality is acceptable to the public."
Reference : http://www.pcworld.com/businesscenter/article/147598/is_ballmer_right_for_microsoft_for_10_more_years.html

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Nasser Hajloo
a Persian Graphic Designer , Web Designer and Web Developer
n.hajloo@gmail.com

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