Steve
Ballmer, the C.E.O. of Microsoft, finally figured out a way to make
some money for himself: he quit. This morning, Ballmer announced that he
will retire within the next twelve months. The company’s stock surged;
Ballmer is now worth about a billion dollars more than he was on
Thursday.
Ballmer
is roughly the tech industry’s equivalent of Mikhail Gorbachev, without
the coup and the tanks and Red Square. When he took control, in 2000,
Microsoft was one of the most powerful and feared companies in the
world. It had a market capitalization of around five hundred billion
dollars, the highest of any company on earth. Developers referred to it
as an “evil empire.” As he leaves, it’s a sprawling shadow. It still has
cash—but that matters little.
What
has gone wrong? For starters, Ballmer proved to be the anti-Steve Jobs.
He missed every major trend in technology. His innovations alienated
people. When he tried something new, like Windows Vista, the public
lined up around the block to trade it in. Microsoft missed social
networking. It completely misjudged the iPhone and the iPad. It embraced
complexity in product design just as everyone was turning toward
simplicity. It entered growing markets too late. When was the last time
you used Bing? In 2000, Microsoft made most of its money selling
Microsoft Office and Microsoft Windows. Today, it still makes its money
that way. Ballmer’s reign has done more to defang Microsoft than the
Justice Department could ever have hoped to do.
The
company suffered from the classic innovator’s dilemma. It built
extraordinary software that you run on your desktop. And as we moved
away from our desktops and into the cloud and onto mobile devices,
Microsoft trundled slowly and tentatively. It hesitated to embrace the
cloud, and it hesitated to build anything that didn’t work with Windows.
In 2005, it brought in a legendary coder, Ray Ozzie,
to solve this problem. In 2010, he left. The company has built a
technically brilliant gaming system, and the recently launched Xbox One is fully cloud-based—and almost totally separate from the parts of the company that bring in cash.
Ballmer, manic and sweat-stained once too often, failed to be a great manager, or even a tolerable one. As Kurt Eichenwald wrote, devastatingly, in Vanity Fair,
the company long utilized a system called “stack rating,” whereby every
member of the company was judged relative to his peers. If you worked
on a team of ten, you knew that two of your colleagues would get great
ratings, seven would pass, and one would fail. “Every current and former
Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft,” Eichenwald wrote.
What
comes next for Ballmer? He’s just fifty-seven, a couple years younger
than Gorbachev was when he left. But I think he’ll be quiet: doing good
deeds, giving away his fortune, and popping up his head from time to
time. The more important question is what comes next for Microsoft—an
American company, founded by a skinny nerd, that provides software used
around the world. Reversing the company’s decline, in an industry that
transforms itself by the day, won’t be easy; Microsoft needs someone who
can attract brilliant developers as well as she anticipates trends.
They need someone very different from Ballmer. In his memo to Microsoft
employees, he wrote, “I cherish my Microsoft ownership, and look forward
to continuing as one of Microsoft’s largest owners.” Given the size of
his financial stake in the company, there’s almost no one who should
want a better C.E.O. for Microsoft than Ballmer himself.
Photograph: Lee Jae-Won/Reuters
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