Microsoft does produce a valuable good: its operating system (2). But with the decline of the PC and the rise of the web, mobile devices, and cloud services, the company failed to anticipate or effectively dominate these alternate—and in many cases superior—means of getting computing done. We have reached out to Microsoft for comment and are awaiting response.
Pulling back the curtain on the rot in Redmond
Everything that follows is, necessarily, from anonymous sources, all of them veterans of Microsoft. Synthesizing their feedback with other publicly reported accounts yielded some valuable insights about what ails the company and how to address it.
All the reasons Steve Ballmer never should have become CEO in the first place
The timing of the handover of Microsoft from founder and technical genius Bill Gates to employee no. 30 and MBA dropout Steve Ballmer could hardly have been worse for Ballmer. On December 29, 1999, Microsoft’s stock price was at an all time high, and Microsoft was the most valuable company on earth. Then the stock began to fall. Seventeen days later, Steve Ballmer took over, the stock market crashed soon after, and Microsoft has never returned to its pre-bubble valuation.
In 1999, when Microsoft was a blue-chip company wringing a steady stream of income from the Windows monopoly, it might have made sense to put Ballmer, who was initially the company’s first business manager, in charge. But Microsoft remained a technology company, and having a non-technical CEO meant that Ballmer was ill-equipped to oversee the increasingly large and unwieldy development project that Windows had become.
There is copious evidence of Microsoft’s broken product pipeline, which stretches back a decade, at least: In 2004, Steve Jobs unveiled a version of Mac OS X that incorporated many of the features that Microsoft had promised in its “Longhorn” reboot of Windows, a project that became so snarled that Ballmer eventually had to decide to throw out all the work his engineers had done and start again, delaying the release of Windows Vista (which succeeded Longhorn) by at least two years.
More recently, Microsoft’s disastrous attempt to copy the iPad, the Surface RT, led to a $900 million write-down, and the company’s cloud services simply aren’t functioning as the “glue” that should connect the company’s online software together, says one veteran. That contrasts sharply with Google, which has made inroads against Microsoft by offering a tightly-integrated suite of “Google Apps” that include replacements for Office and Microsoft’s email system, as well as cloud storage for data.
But perhaps the most concrete demonstration of Ballmer’s failure to be a “product guy” as a CEO is the way the company has pushed touch-screen PCs and a touch-centric Windows interface onto a public that has been trained for decades not to leave smudges on our PC screens (in contrast to tablets and phones) by touching them. (Granted, Google has made the same mistake with its Chromebook Pixel.) Touch screen PCs and “convertibles”—heavy laptop/tablet hybrids—have both failed to sell as manufacturers had hoped, contributing to the overall slump in the PC industry.