Steve Ballmer should step up, or ship out

Fifteen days using Surface Pro as my primary PC, I must say that I really, really like the tablet. Windows 8, the same. Ditto for Bing and Internet Explorer. I'm no stranger to using Microsoft products or services. But I am new to them being presented and consumed the way the company intends. The experience is refreshing and exhilarating, yet depressing. Who will know, with so much attention going to Android and iOS devices, or nimbler competitors offering more compelling products or services at faster pace?

Microsoft's problems aren't new, and that is the problem. This morning I reread my December 2009 post: "Microsoft isn't losing its consumer edge, it was game over long ago". I'm disturbed how little has changed, so much that, except for the lead paragraph, I could repost with new headline and the content would still be relevant. I will lift some parts here, as I offer, for the umpteenth time, remedies to Microsoft's woes.

Microsoft in Context

I sympathize with Microsoft CEO Steve Ballmer's plight. He assumed duties during two antitrust investigations, ran operations during two major recessions and had the misfortune of inheriting a company at the pinnacle of dominance, when the major business was reselling to existing customers rather than rapidly expanding. During his tenure, Microsoft tried to open new categories, like HailStorm web services or Tablet PC early in the century, only to fail but see competitors like Apple and Google succeed.

Meanwhile the stock is stuck at 2000 levels and there is perception that Microsoft is a has-been incapable of competing in the so-called post-PC era. Perception can be fixed by marketing, and post-PC is a lie -- a fiction created by analysts, Apple and Apple apologists. We are at the start of the contextual cloud computing era. Rather than be the central hub, the PC becomes one of many devices connected to the cloud. The PC doesn't disappear.

Microsoft execs and product managers understand context very well. For example, the company made defining work and home usage a product development and marketing priority more than a decade ago. How you use the tech changes based on context and role.

Something is lost in all the PC Armageddon chatter: Microsoft is still one of the most-profitable companies in the world, and products like Azure, hosted server software and Office 365 are rightly primed for delivering meaningful contextual and cloud solutions. Microsoft's big problem is mobile, where competing operating systems rack up share and cut out the company's platform. Ballmer should never have let it come to this. He needs to stop living in La La Land and act, or step aside and find someone who will. I still believe in him.

Sadly, much of the advice that follows, I've offered before. Many times. Will someone finally pay attention?

Microsoft Must...

1. Make influencing standards top priority. Microsoft has abandoned the fundamental principles that made it the most successful software company of the last two decades and ensured its software would be the most widely used everywhere. The company established Windows as a technology platform that became the standard around which developers and other partners supported products. In the early days, the approach was one of necessity: Maintaining standards compatibility with the IBM PC.

Microsoft cofounder Bill Gates understood early on the importance of controlling standards and also file formats. In the early 1980s, Gates put Charles Simonyi in charge of productivity applications development. Early work done by the father of Microsoft Office achieved two important goals by the mid 1990s:

  • Established format standards that resolved problems sharing documents created by disparate products
  • Ensured that Microsoft file formats would become the adopted desktop productivity standards

Format lock-in helped drive Office sales throughout the late 1990s and early 2000s -- and Windows along with it. Businesses needed Office to share documents and to maintain backwards compatibility with a growing amount of their valuable information being stored in Microsoft file formats.

In a surprisingly short span of time, Microsoft has lost control of standards and formats outside the enterprise. The company has reached a critical juncture that executives seem unable to comprehend. Under Ballmer, standards aren't high-enough priority. Microsoft has lost leverage, while rivals like Google dictate web standards that favor its products and services.

2. Become THE middleware company. Microsoft should shift some, even a large amount of its focus, from platforms to glue -- products and services that bind any platform to its server and datacenter software and services and major applications, principally from Office System. That's how Microsoft solves the mobile problem.

Middleware dominance can help preserve Microsoft products that are adopted standards and establish new ones. The company should start by ramping up mobile app development for competing platforms -- meeting Google feature for feature and go beyond. Google successfully pursues such strategy now, and with tight integration across products. The best mobile apps on Android or iOS should be from Microsoft, not Apple or Google, and leverage the established enterprise stack. Microsoft already offers some existing excellent mobile apps. They need to be exceptional, like those for Windows 8 Modern UI, on Android and iOS.

At the same time, Microsoft should seek to make its software the defacto standard for managing BYOD. The company already owns the enterprise. Leverage that by providing the best applications and tools for managing devices, like smartphones and tablets, that employees bring to work or IT deploys. If Microsoft doesn't, competitors will. Google's decision to stop licensing Exchange ActiveSync is all about influencing synchronization standards and inserting its services into BYOD middleware management.

3. Redefine search. Microsoft's failure in search should be a CEO-sacking offense. The Yahoo deal didn't dent Google's overwhelming search share lead. Now that a Googler runs Yahoo, early termination of the Microsoft agreement is nearly certain. Divorce will cut Bing's effective search share nearly in half. Ballmer and team must act to preserve Yahoo or go beyond it.

Engage Bing search deals everywhere, and pay to get them. Wherever Google goes, like Firefox or iOS, Bing should be instead. The Facebook relationship is hugely important. Bing should be the glue for all search on the social network.

Meanwhile, Microsoft, which was a pioneer in so-called New User Interface technologies, let Google leap ahead. Google Now and voice search are killer apps. Microsoft has talked about search as answers to questions for a decade, but Google gives them instead and where they are needed most -- mobile. Microsoft needs a "Bing Me" service pronto that is available for all operating systems, using NUI.

4. Cut deal with Apple for Office, but cut out Google. Microsoft and Apple have a long history. Word started out on Macintosh, for example. Office 2013/14 -- or optimized-Office 365 -- for iPad is a must. But not for Android. Microsoft should get something in return: Bing replacing Google as iOS search engine.

Apple needs Office to get iPad into the enterprise, so there is mutual need to make search part of the deal. Microsoft is better off with iPad encroachment than Android tablets. Google has fierce enterprise ambitions, while Apple is more ambivalent (interest is more selling devices). Office app and/or cloud would give more enterprises reason to choose iOS over Android, acting as floodgate to adoption of the latter.

5. Encourage internal startups. Microsoft product development cycles are too long and they feel even longer with Google cranking out new stuff every day. Look how far and fast Android, Chrome and Chrome OS have come since Windows 7 started beta testing four years ago. Meanwhile Apple and Google create new categories, while Microsoft has none.

But look back. Many of Microsoft's best, mid- to-late-Noughties products or services came from incubation projects. Some are mainstream today, like SkyDrive. But Microsoft killed off most internal startups following the September 2008 stock market crash.

Microsoft must bring them back and focused on mobile and the cloud. Incubation groups should operate like mini-startups, free to develop unfettered by any requirement to connect any of their work to any other Microsoft product, particularly Office or Windows. Let them run free, run wild, wildly innovate. Reward innovation, with pay incentives and other goodies. Appoint a chief startup officer, to whom employees can submit their projects, getting them outside stifling bureaucracy and mid-managers' self-preserving priorities. Empowered employees will produce. Microsoft just needs to let them.

Microsoft needs someone internally responsible for encouraging internal incubation projects and bringing them to market -- outside the normal management structure.

There needs to be a fairly free-flowing process allowing employees to bring ideas to the CSO and get funding for proof of concepts, at the least. The CSO, answering to Ballmer, should have authority to spin-off new product groups as well. But more immediately he or she needs authority to create small product groups within Microsoft, focused on getting new innovations to market faster and without obligatory ties to core products like Office or Windows.

However, Microsoft should encourage, and reward, innovative middleware projects that make existing applications stack, cloud, datacenter and server software more valuable and those that are contextually relevant.

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