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Tuesday, 31 July 2012 11:52

Ballmer and the downward spiral of Microsoft

By

Two months ago, Steve Ballmer was described as the worst chief executive of a public company in the US. That compliment came from Forbes.

Now we have Vanity Fair describing the man, who has come to be known as Monkey Boy, as being responsible for a "lost decade" at the company, one in which it has progressively gone downhill due to policies adopted during that period.

The article is an interesting six-page (yes, you need patience) read; Microsoft is one of the most important companies worldwide given that its demise, rather than that of any other technology company, would impact on more people. It still controls most of the world's desktop PCs even though its fortunes are on a downward slide.

Thus we all have to bother about Microsoft, even us non-Windows users, those who are aware that company is a marketing unit first, and a technology firm second.

There are many reasons cited by the Vanity Fair writer Kurt Eichenwald for the current state of the company. The most telling fact in his story is this: the iPhone brings in more money than the whole of Microsoft. In the March quarter, the iPhone recorded sales of $US22.7 billion. For Microsoft Corporation, the figure was $17.4 billion.

In essence, Microsoft was unwilling over the last 12 years, since Ballmer took over as CEO, to give new technologies a gestation period without demanding that they prove their worth in dollar terms. Technology companies come up with a great many ideas, 90 per cent of which prove to be ghosts in the dark. The 10 per cent that do succeed make the big bucks.

But it all takes time. And, from Eichenwald's article, it looks like Ballmer is always in a big hurry - though he does not appear to have a clue about his destination.

Microsoft co-founder Bill Gates himself was more of a marketing man than a technology person; he was interested in the money and did not mind selling mediocre products that he convinced himself were the best. None of his minions ever dared to contradict him.

That culture has been taken to its logical extension by Ballmer. Some technologies like the e-book were looked at by Microsoft in 1998, well before other companies did; yet Gates did not have the patience to give developers their head to go off and create the right kind of hardware for such a product. No time was given for consolidation of the product because it did not look like a Windows product. It had to immediately have a business plan, a projected profit and loss statement.

This is a surprising development because it indicates that Microsoft did not learn from its own history of never getting anything right except on the third try.

And then, Eichenwald writes, there was the stack ranking system for evaluating its workers. When a given group was evaluated, there was a predetermined outcome. Some people had to get lower rankings than others, the evaluation wasn't objective. Which meant that some people just could not progress in career terms.

People, in short, became dispensable. If you were in good with your manager, you got ahead. The incompetent were encouraged by this, the competent (read less mainstream types) were discouraged.

Incompetent managers rank people based on input; competent managers look at output. The former class will deem the lack of a polite "good morning" as a negative; the latter does not object to being ignored if the employee who walks by ignoring them is one of the more productive ones in the department.

And as the ranks of incompetent ballooned, the bureaucracy got worse. Getting a product off a plan and into production took longer and longer. This would kill any technology company.

CONTINUED


In Ballmer's first year as CEO, the company lost half its value. It was the time of the tech wreck so one, perhaps, cannot lay all the blame at Monkey Boy's feet. Perhaps Gates saw the writing on the wall and decided to vacate the post.

Eichenwald writes of crazy initiatives at Microsoft to save money - like removing towels from the bathrooms where employees showered. There were worse things - a cut-down health insurance plan, a lack of office supplies.

Even though Microsoft was never first to market with many things in its first two decades, it was always able to catch up and pass the ones who were first to market. Marketshare helped to pull back the leaders in any field.

But in the noughties, that didn't happen because the company was far too late to react. In the case of the iPod, it took five years for a Microsoft product (with the dumb name Zune) to hit the market after Apple made its debut. By then the market had voted with its dollars and moved on.

It has been the same with music, mobiles and tablets. Ballmer laughed at the iPhone and the iPad when they launched. This is but the latest indication of how out of touch the man is with the industry he is in.

When tech companies fall behind in one field, they try to catch up with the rest by buying technology. Microsoft has bought numerous companies in its 37 years. At least one of its buys has proved costly - last quarter it took a loss for the first time since it went public in 1986 due to the writedown of Aquantive, an online advertising company that it bought in order to compete with Google.

But buying technology does not always work out. Sometimes plans go awry due to the mismatch of cultures in the buyer and the bought. At others, the business plan fails - Oracle bought Sun to make money off Java but its bid to do so, by suing Google over Android's virtual machine, claiming it was a ripoff from Java, failed. Another Microsoft buy, Skype, is yet to turn a profit.

For Microsoft, one final fling is now on the cards. The meal on the table is Windows 8, Windows 7 phones, Windows Server 2012, Windows Surface, and Xbox 720. Ballmer has made his final bets.

If he fails, the air will go slowly out of Microsoft. IBM was once the big noise in technology; today it still makes billions but is hardly spoken of. Ballmer plans to stay on until 2018 but that is doubtful; he will be out in a few years unless there is a dramatic improvement in the company's fortunes.


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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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