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Many in the tech industry believe Microsoft’s Steve Ballmer is well past his use-by date. Now he believes it too, announcing that he will retire within the year.

Few will mourn his passing. Under his leadership Microsoft has slipped from undisputed leadership in the industry to a position where it is playing catchup in most of its product areas. Its strength was built on the PC market, which is now in decline.

It has been unable to match rivals like Google, which is surfing the Internet wave and Apple, which evolved so successfully beyond PCs that it defined entire new markets – media players, smartphones, tablets.

Microsoft has tried to match its competition in all these areas, but it has always been too little, too late. Its core Windows operating system and Office desktop software product lines remain market leaders, almost monopolies, but that market is stagnant.

Ballmer announced a major reorganisation last month, which must now be seen as a preparation for this announcement. It was the company’s biggest ever restructure, s belated attempt to reposition it for the challenges of a very different competitive environment. But it is probably too late.

Many regard Microsoft’s problems as Ballmer’s fault, for lacking the vision to make the big decisions. But that is perhaps a little too harsh – it was Bill Gates in the 1990s who famously underestimated the impact of the Internet.

At Comdex in 1994 he said that he didn’t believe the Internet would have any commercial potential for ten years, and in his inappropriately named 1995 book The Road Ahead, Gates barely mentioned it. Microsoft was going to control the future. It’s called hubris.

Microsoft became so rich and powerful on the back of its PC software that it could afford to pursue its own path and ignore the critics. It has moved into many other areas, and is now a major enterprise software player. Its SQL Server database is a market leader along with Oracle and IBM.

But the shine has gone, and so too – soon – will be Steven Anthony Ballmer, the son of a middle level manager at Ford in Detroit. His academic field was mathematics – he is one of the few people ever to have scored a perfect 800 in maths in the standard US SAT (Scholarship Aptitude Test).

Ballmer, 57, has been CEO of Microsoft since 2000, when he replaced founder Bill Gates, who remains Chairman. He joined Microsoft in 1980 as the company’s 30th employee and first business manager. When the company was incorporated the next year, he owned 8% of the shares. He is now the 50th wealthiest person in the world, with a net worth exceeding $15 billion.

The market is happy Ballmer is going. Microsoft shares rose 7% on Friday, to $34.75. That was one of the largest rises in a single day's;strading..

Microsoft’s stock has been very stable for all of Ballmer’s tenure, trading mostly at $25 to $30. At the peak of the tech boom in December 1999 the stock briefly went above $58, which gave it a market capitalisation of over half a trillion dollars, and it slumped to $15.28 in March 2009 at the start of the GFC. Microsoft's capitalisation has basically stood still for more than ten years, while Apple's has increased twentyfold. Google wasn't even a public company when Ballmer become CEO of Microsoft, and now it has an almost identical maret capitalisation (US$289 billion).

Ballmer's Wikipedia entry, which is worth a read, talks of his “energetic and exuberant” personality. Yes, well. He is known for on-stage antics at Microsoft’s launch events, many of which have gone viral on YouTube (there are even some ‘best of’ clips). Who can forget the Monkey Boy dance?

Microsoft has not announced a successor, but has said it will start looking for one immediately. Ballmer’s replacement may well come from outside the company, which may be necessary to shake up Microsoft’s notorious tunnel vision.

Read Microsoft’s announcement on the next page


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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.