Microsoft, Ballmer, and the end of the PC era

So Steve Ballmer is leaving Microsoft a year from now: what kind of schedule is that? It’s one thing, I suppose, for a company to point out that it has a retirement policy or a succession plan, or even to just give the universe of potential Microsoft CEOs a heads-up that the job is coming open, but I don’t think that’s what this is about at all. It’s about the stock.

Like in baseball, when all else fails to get the team out of a slump, fire the manager. And sure enough, Microsoft shares are up eight percent as I write. Ballmer himself is $1 billion richer than he was yesterday. I wonder if he had cleaned out his desk this afternoon whether it would have been $2 billion?

You’ll read a lot of stories today and tomorrow about how Ballmer as CEO missed big product trends like smart phones and tablets -- the very trends that Steve Jobs and Apple did so well. But that’s not so. Windows CE phones existed long before the iPhone. Windows tablets predated the iPad by more than a decade and date from the pen-based computing fiasco of the early 1990s. So it’s not that Microsoft missed these opportunities -- it just blew them. Windows CE sucked and Windows for Pen Computing was close to useless.

Apple was successful in these niches mainly because it did a more thoughtful job of them at a time when hardware was finally coming available with enough power at the right price to get the job done. Earlier simply wasn’t an option.

Microsoft has always been good at embracing enormous opportunities -- opportunities big enough to drive a truckload of money through -- but hasn’t been very good at the small stuff. Microsoft saw that IBM-compatible PCs were going to be a huge business and so it bought an operating system to be a part of that. Microsoft saw that network computing was going to be big so it "borrowed" some tech from 3Com. Microsoft saw that graphical computing would be the next trend so it licensed Windows 1 from Apple. Microsoft recognized almost too late that the Internet was going to be huge so it started giving away Internet Explorer. All of these were simply doors that needed to be walked through into new rooms filled with money. The most truly innovative move that Microsoft may have made as a business was simply bundling most of its apps together into Office and using that to destroy the rest of the PC software industry -- now that was smart.

But smart phones and tablets, those were tactical moves, not strategies, and the revenue potential was never there to get those efforts the top talent it would have required to succeed if the hardware had been ready to support it.

It’s good that Ballmer is moving on and I’ll be intrigued to see what he does with his money. As for Microsoft, the future there is even more uncertain. There’s lots of money still to be made, of course, but the PC era is coming to a close and Redmond appears not to even be a player in whatever this new era comes to be called. That has to be tough for a fighter like Ballmer. I’d be eager to move on, too, if I were him.

Reprinted with permission