Defensive Specialist Steve Ballmer – Resign?

Its all the news chatter in the IT trade and business trade press when Newsweek had the temerity to suggest that Steve Ballmer should be asked to resign by the directors at Microsoft. Here is the essence of the argument:

Ballmer’s 10th anniversary as CEO of Microsoft arrives in January, but it’s hard to imagine he’ll be celebrating. Microsoft stock has dropped by nearly 50 percent on his watch, lagging not just other tech companies but even the Dow Jones industrial average. Distracted by the Windows Vista fiasco, Ballmer has missed every big new tech market of the past decade. Google won the race for Internet search and keyword advertising. Apple won in MP3 players and online music sales, and now holds the high ground in mobile phones, while Windows Mobile fades away. Microsoft’s Zune music player is a dud. Bing, Microsoft’s search engine, will never catch Google. Ballmer is said to be a brilliant guy, but he got a black eye for the way he blundered and blustered and finally botched an attempted acquisition of Yahoo. He’s a screamer and a bit of a bully–not the easiest guy to work for. If Microsoft were any other company, this guy would be in trouble. But the catch is, Ballmer was put into the job by Microsoft founder Bill Gates, and the two have been pals since their undergraduate days at Harvard. If Gates wants to get rid of Ballmer, he’ll have to craft some kind of graceful exit that lets his buddy save face. Another problem: there’s no heir apparent on the management team.

And here is the reaction, very revealing, in the trade and business press:
Computerworld Preston Gralla – says Steve’s a sales guy, not an innovator in an era of hyperchange.
HBR/INSEAD Top 200 Worldwide CEOs – Steve is famously absent from this list.
Microsoft Watch – rehashes “markedly mixed results but friend of Bill and no successor” ideas.
All About Microsoft – ZDNets Mary Jo Foley – No way, expect 10 more years of Steve.
Seattle Times – just the facts, mame, just the facts on Microsoft’s fortunes under Ballmer.
theRegister - a no holds barred look at how well Steve Ballmer did in a tumultuous decade.
The consensus is that Steve missed or fumbled the ball on many new ventures during the past decade. But this misses the point – Steve has not been brought in as CEO for his offensive and innovative prowess; rather he is the master salesmen, defensive specialist and clean-up artist.

Steve Ballmer is a Defensive Specialist

Bill Gates is still the chairman of Microsoft and still the CTO and longterm Software Architect [despite Ray Ozzie or Craig Mundie or whomever]. Bill is betting in an era of hyper-change, it is better to continue using  Microsoft’s “we-clone-and grab-market-share-better-than anybody” strategy rather than to get burned with big innovation expenditures. And with Redmond’s monopolies on the desktop, browser, Exchange, and Office desktop , all the would be players have to come through us to get traction in the IT market. What Microsoft needs is a master salesmen and defensive specialist. Now look at Steve Ballmer’s record in that light.

First and foremost Steve Ballmer got the corporation through all the antitrust and legal attacks with barely  a  sweat. So Redmond have paid out $5-8 billion [depending on who is doing the counting]. But look at the benefits. Netscape and Java absolutely neutralized. Innovation and new standards on the Web  – under our thumb. The pen, gestures and  tablet market: Redmonds to define. But most important of all a pit bull patent and legal reputation such that venture capital and consulting firms have steered clients and prospective start-ups away from markets that Microsoft was in or might just want to be in.

Also, in the first 3 years of Steve’s tenure, Microsoft software was plagued with worms and virus attacks of unprecedented nature. Yet businesses stuck with the culprits like Windows, Windows Server, Exchange, and Internet Explorer. Microsoft  did not lose market share but rather gained stronger monopolies as IE went to 95% market share. Ditto for  Windows desktop. From 2001 to 2007, Microsoft made no feature improvements to IE and stalled on almost all Web standards developments from HTML through CSS to JavaScript. With Steve’s defensive skills – IE has still remained a monopoly with more than 60% market share while maintaining the idea that” software always runs best in Windows” despite the gains of Web 2.0. Great defensive play.

Need another, example? Office had nothing but cosmetic improvements from 97 through Office 2003. Since late 2002 Sun has been giving away for free Open Office which reads and writes all the latest Office file formats. Open Office  runs on 4 platforms – Windows,  Apple, LInux, Solaris.  Yet has Microsoft Office lost market share? Barely despite those Apple ads and the onslaught of freebie online tools. Talk about great defense!

Lets look at the Apple and their silly ads. Vista has been a downer with clearly bloated memory requirements, still bad security comparison with Apple, and  slower speed of operations than even Windows XP. And lets not mention the Vista kludge on ease of operation, since Windows 7   solved those problem by means of the Redmond’s  tactics of  clone, clone, clone MacOS and its UI.  And Steve got Steve Jobs to raise Apple prices while he quietly worked to lower PC prices  dramatically such that when Windows 7 launched an equivalent Apple Mac cost 2.5 to 4 times as much as a Windows 7 PC. Talk about a brilliant sales and defensive  maneuver – watch for the quarterly results for Microsoft.

Steve Ballmer on Offense

And don’t tell us Steve Ballmer has no offensive skills. Look at the bloody beating IBM and its Notes operation is taking with Exchange, Infopath and Redmonds other messaging products. And look at Sharepoint from zero to a $2 Billion a year business. And with Steve’s developers, developers, developers message Microsoft Project and Visio have wiped out all opposition. And SQL Server with it free BI add-ons continues to gain market share despite losing best SQL benchmarks and having a Windows Server-only marketplace.

Yes, Steve has seen others dominate the search and online advertising markets – but Steve has brilliantly redefined Search as Search, Problem-Solve and Decide – and with Bing, Yahoo, and other tools to define the format and layout of those steps in an arena, GUI and Styling, where Google  has no prowess or expertise. And as for gadgets, games, and mobile phones, Microsoft is best at catch up and surpass. Redmond has done it many times to Apple [think Mac versus PC in current  market share terms despite Mac’s huge early technology  lead] and is doing it now to Google in Search and Decide. Remember in a world of  hyper-change , all Steve has to do is stay close and then when a market breaks towards one technology or another [think smartphones with plugins], use the next technology trend, attach it to his mobile phone or whatever – and use Redmonds existing monopolies to leverage to a dominant market share. Watch what Steve does to Amazon, Rackspace and salesforce.com with Azure and his Cloud Computing line-up.

So think of Steve as the Salesman and  Defensive specialist while Bill remains as the Offensive Coordinator – spotting the IT trends, setting the packaging/pricing and deciding the right timing for entering and taking over  a market. Now why would Microsoft’s Board, including Warren Buffet, want to break up this dream team ? Rather, the Board might want to ask the Offensive Coordinator to carry more of his fair share of the load.