Hey! Ho! Time for Ballmer to Go?
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By Betsy Schiffman
- April 29, 2008 |
- 9:18 am |
- Categories: Uncategorized
But Wall Street loves a winner, and what happens when one of the most-feared companies in the world becomes a limp, lame underdog? Nothing good. And it usually starts with the CEO’s ouster.
"This is a company that screwed up a real important product transition, and you’ve got to lay the majority of the blame at the foot of the CEO," says Paul Kedrosky, a venture capitalist and blogger.
To be fair, there is nothing in Microsoft’s financial results that suggests turmoil — third-quarter earnings topped Wall Street estimates, and the outlook was decent — but we’d still venture to guess that Steve Ballmer’s days as CEO are numbered, thanks to a potentially botched Yahoo takeover, the abysmal Windows Vista release and a floundering web strategy.
It was on Ballmer’s watch that Microsoft developed the Windows Vista operating system, arguably one of the most disastrous product releases in the company’s history. From a financial standpoint, Vista has generated billions of dollars in free cash flow, but the product was very late, sales have been disappointing and it’s unpopular.
"If [Microsoft] put out a great product it might improve their branding, but financially you get diminishing returns on improving Vista since it already sells so well," says Toan Tran, an equity strategist at Morningstar, an investment research firm.
The operating system took five years to roll out, during which time PC sales growth stalled. And now, nobody really wants Vista, as evidenced by throngs of Windows users’ decision to downgrade to Windows XP.
"I saw an early preview release [of Vista] in October 2003, and it was strategically brilliant, but it was too ambitious," says Brent Williams, an analyst with Benchmark Co. "It would have obliterated competition once and for all, but they never would have been able to ship it. Almost at once they started throwing features out."
The Vista release is just the tip of the iceberg. Ballmer’s handling of the $40-plus billion Yahoo takeover was also mismanaged from the very beginning.
"Ballmer has gone way above the call of duty to screw this up," Kedrosky says. "There was lots of chatter about how Microsoft had offered a deal closer to the $40 [per share] mark, so Microsoft made the mistake of prematurely indicating what [it] wanted to do, and now Yahoo feels like they’re getting screwed. [Microsoft] is sending out all these mixed messages — it’s crazy. Especially if you’re dealing with a passive-aggressive like [Yahoo CEO] Jerry Yang, who is essentially hiding in his fortress in Sunnyvale."
But it’s not just how Microsoft has handled the takeover attempt that has drawn criticism, the reasoning behind the acquisition is equally questionable.
"It’s pretty much the worst idea ever," says Tran. "MSN basically died on a vine under Microsoft’s bureaucracy. If Microsoft swallows Yahoo, it’s going to die on the vine, too."
There are two major reasons for keeping Ballmer around: 1) There isn’t an obvious replacement, and 2) It’s not clear that anyone could get Microsoft out of its current strategic mess. But if we were talking about any other company, Ballmer would have been kicked to the curb already — other CEOs have gotten canned for lesser crimes.
Photo: Flickr/Erwin Boogert
Fantastic article! I have a feeling there is talk up in Redmond about how best to get rid of Ballmer, expect to see a serious strategy shift come out of Microsoft in the next year or so.
They have been screwing up much more. MS Support for example, once something to be proud of, now a quivering joke. For some of their frontline systems like XP, Vista, and more suprisingly, SharePoint server 2007, the folks manning the phones are so unqualified to do so, it is frequently more damaging to talk to them then to muck through it yourself. It is apparent that they have really lost their customer focus. They need to get it back quick!
I couldn’t agree more. Microsoft’s forced pursuit of Yahoo makes me sad. I’ve always liked Yahoo and would hate to see them get the “kiss of death” from Microsoft. I was reading an article the other day about how Microsoft should buy SAP instead. Makes more sense. Stick to the enterprise. Stick to what they know best. By waging war on countless fronts they are starting to crumble.
you must be shorting microsoft stock,it on the rise again,i dont know why they want to buy yahoo,they could improve their,search engine put in a news section video section spell checker like google then i would use it,they have no compatition with os,when they bring out virtual os for home use they will be king,i own the stock and tech has been doing notthing for years but its starting to go up they have a lot of spare cash and sales are not all in dollars
Please. The man is nothing less than a disaster.
On the plus side, I would pay (not much, but something) to see him dance in Vegas.
I really like Wired, but I get bored of the need to always pick the negative in any story about Microsoft (and never talk about some of the new products, the innovation, the improvements)
It’s getting to the point where Wired becomes indistinguishable from /. and even my wife (who’s not a techie) comments that the magazine really hates the folks in Redmond
I’m not saying this post is invalid or that the commenters are wrong - there is a lot the Borg need to sharpen up on - but I can’t remember a neutral to positive MS reference in Wired. and that makes me wonder if I want to renew the subscription … my reminder card turned up today…
Great article. I’ve been a very strong supporter of MS for years, and I’m glad to finally see in print what has become clear to me: Balmer must go! Almost everything at Microsoft has become sloppy and chaotic (comparatively) on his watch. And they’ve gone from being just *accused* of all kinds of nefarious motives, to being actually *guilty* of all kinds of nefarious motives. Vista is spyware. THE reason for making it was DRM. Balmer must go.
I’m confused. They should can him, because:
Microsoft is “ridiculously profitable”
OR
Vista has generated “billions in free cash flow”???
wait, maybe it’s because 3Q earnings topped Wall Street estimates?
Or because Yang denied a bid that most of his stockholders wanted?
No, Ballmer might not be the best. But his numbers don’t warrant firing.
@offbeat
what innovations and improvements have there been?
coffee, you obviously didn’t read the entire article, and you definitely didn’t read the user comments before posting (something I adhere to religiously). I think the real key line here is “other CEO’s have been canned for lesser crimes”. Another good one is “Vista is unpopular and too ambitious” [not verbatim, but poignant]. And the reason that MS has generated billions of dollars from Vista [the ONLY reason] is that once again, MS has FORCED this OS upon OEM’s. They’ve slowly taken XP out of the picture, and slid Vista into the hands of everyone that will take it(what choice is there when XP continually becomes less and less available?). Look, I’m not a MS hater, alright? I use WindowsXP, I love WindowsXP. I’ve even signed the SAVE XP petition and chain mailed it around (something I NEVER do, but this warranted such action). I’m not a hater at all, but if a company comes out with crappy products, then we as consumers ‘do’ have the ability and the power to talk back, fight back, and resist the purchase until the company adheres to our demands[as consumers], because that is really what it is about; making a product that is internationally viable for mass consumption and long term usage, is it not? So yes, they are making an incredible amount of money off of Vista because they aren’t really giving us a choice (yet. there are already talks to extend XP’s shelf life in leu of the SAVE XP petition! woohoo! Consumer awareness in action!). Yes, their stocks are up. Good for them. Seriously! I love when a company is doing well, because that translates into the products they market. Do you produce the best product possible when you’re depressed or aggrivated or strapped for cash and frustrated? I know I don’t. And I can only fractionally fathom what an immense ripple of frustration and demotivation some of MS’s past blunders have caused inside of their company….remember WindowsME? WindowsME, meet VistaME. I also second Dan’s thought, which was that Vista was created to push DRM. In my opinion, that’s just another monopolizing middle finger to MS’s customers. Another way to contently clasp the shackles around our balls.
So yes, in those reasons, Balmer deserves, nay, is obligated to show himself the door.
Vista was such a disappointment to me that I’m doing something I vowed I would never do.
Purchase a Mac.
I think its hilarious when people have problems with OPINION articles, and then threaten to no longer subscribe to or read a publication.
If you want to be spoonfed microshit, find zunetang from MDN. I’m sure he has some for you.
Lets see MS is in a mess, making Billions a quarter, The leader in its industry and amazing new products? Wow now if every company in my portfolio was in that sort of a mess I could retire before 40.
Now I agree the whole Yahoo deal at first look seem like a decent idea, but as it drug on and Yahoo not being interested I say let them go. There are much better ways to spend $40 Billion dollars than on a number two company (distant #2 at that). Where is it written that they have to be #1 in search considering their market position. Spend that $40 Billion on new technologies and build up MSN. Hard to make the call to fire a CEO when the company made over $14 Billion last quarter.
“Hard to make the call to fire a CEO when the company made over $14 Billion last quarter.”
…yeah, but it makes billions every quarter just by being in existance. The truth is they aren’t innovating anymore. At least, they aren’t selling what they’ve innovated.
And the fact that they are the biggest, most dominant player SAYS they MUST be no. 1. This is America after all!
No seriously, it’s Microsoft. They have to be no. 1 to keep their testicals from ascending back up inside.
I’m Sorry…
yes.
yes.
It’s quite ridiculous article. There were even more Vista users than MacOS users and Linux users in the first 100 days of sales.
Open your eyes, or your ears… if we live in an english spoken country, it doesn’t mean the whole world speak it (well, only Hollywood believes that). So, if you don’t like MS products, good for you; but if you want to be productive, don’t tell me you use OpenOffice.
Yes! Yes! Please! Please! Let the bald headed LOONEY, GO (..looney when he is not running one of the economies most important companies!) !
It matters not. M$ is done for. That business model doesn’t make any sense any more. They were never that good. They figured out something that IBM was too slow to figure out. They cashed in. They used their monopoly to increase their power. Now they’ve lost the one thing they used to own, the desktop. The desktop doesn’t even matter that much anymore.
Steve Ballmer looks like a Sith Lord in that picture. He could use a makeover. Maybe then people would like him more.
If a magazine or newspaper publishes an article they should do at least some very basic fact checking:
“Microsoft has sold 140,000,000 (140 million) Windows Vista licenses as of the end of the first quarter of 2008. Thus, Microsoft sold about 40 million copies of Vista in the quarter, a rate of about 13-14 million copies of the OS per month. If this monthly rate doesn’t improve–and it will, of course, as XP leaves the market mid-year–Microsoft will have no trouble reaching its publicly-stated goal of 200 million licenses sold in the first 24 months on the market (which occurs at the end of November 2008).
So.
I suspect I’m not going to see eye-to-eye with many on this. But from where I sit, Vista is doing fine. However, I would like to investigate one fact which would do much to settle the issue: I’ve noted that Vista’s 100 million sales in its first year on the market means that Vista essentially outsold XP during identical periods of time on the market when compared against the installed base at the time.”
http://community.winsupersite.com/blogs/paul/archive/2008/04/28/vista-s-11-pillars-of-failure-and-its-140-million-pillars-of-success.aspx
Definitely Dancing in Vegas for Ballmer.
-Or at the very least, assembling athletic shoes in Asia for the rest of his life.
+Or…: SNL still has the John Belushi/Chris Farley/Horatio Sanz spot still open and they haven’t hired Will Sasso.
> “but if you want to be productive, don’t tell me you use OpenOffice.”
I am productive, and I use NO Microsoft products. Most people who’ve switched see an increase in productivity after they’ve dumped Microsoft nag/spy ware.
OpenOffice works for me.
Somewhere in Sweden, a well-funded team of physicists and munitions experts are crafting a chair with Betsy Schiffman’s name on it.
Vista and Zune are objects of derision and symbols of failure. Ballmer jumping around on stage like a raving idiot will live forever.
I am glad.
hmm, i think it’s too late for them also. getting rid of and replacing the CEO doesn’t mean that M$ will actually start making innovative and user-friendly products; at most it will make another inferior offspring to XP.
i don’t know how some of the people on here claim to like, love, or use Vista really. i tried fixing a computer at work with Virus installed and received a headache and 80,000 security messages about changing basic settings. wahoo for designing around the engineers and not the consumers you r-tards at M$.
I think Bill Gates will make a huge out of the blue return like Steve Jobs did and take the company sky high. You need a marketing genius and an innovative thinker at the helm of the worlds greatest software company. Anything else just doesn’t seem fitting.
Wow. Talk about flame bait.
Still it’s an interesting concept, that Steve Ballmer has overstayed as CEO. And it’s an argument that has merit. Sure, Microsoft is still making lots of money. Does this mean Microsoft is a success, and that no changes are needed?
Every company that has been on top, and crashed, has gone through a period where they were still making lots of cash, and looked strong, but had significant internal weaknesses.
Is Microsoft at that point? I don’t know for sure. I personally think that it is. I’m one of those who “defected” to the Mac camp, after using Windows daily since 3.0 was introduced.
And if it is, well the man at the top is responsible for the problems. If you are the CEO, you run the company, and if the company is in trouble, so are you. That’s why John Sculley is gone from Apple, and Jack Tramiel from Commodore.
Now I’ve never meet Steve Ballmer, but based on reports in the media, I suspect it will take a crowbar to get him out of there.
Steve is on my OS X desktop
Steve Ballmer that is
Oh he delivered a great operating system
Thanks to Steve Jobs at Apple
I love my Macintosh!
capable of running windoze if I’m a desperate fool!
Maybe Steve can woo Jerry into a Canadian same sex union. That’s one way to get into Yahoo’s pants!
We are buy virtual currency gold. If you want sell it. you can choose us. we will give you a suitable price. Welcome to http://www.mmofly.com
Fire him out of a cannon!
Not so much for the Vista disaster, but for his business practices.
One could say that windows vista could have been better, and that the NSAKEY could have been removed as well. I’m not Microsoft, but and if I were, I would have took windows 2000 and worked on it. But seeing Vista is derived from the NT kernel, it could have been better. One does not make an OS just for $ alone, it should be for the users as well. I read something the other day that vista was install on these power house computers and runs slow, seeing that it should have run very fast. lets look at it like this, it’s what you add to it that make it this way.. lets say you install windows XP right.. and you add an Anti-Virus then an anti-spyware then an anti-malware.. phewww see what I’m saying?
But Microsoft has one more shot I think to pull this off.. I read in beta news I think it was the other day about microsoft taking vista and doing an over hual. When I set down to use a PC, I want to see some OS system fast and very powerful, one with a PUNCH! I have found this in PC-BSD.. I do so wished that microsft would make something like when it made windows 2000.. yeah yeah~ I’m a windows 2000 fan.. and I see that it’s still being used today as some servers are running it.
Simon Geoge HUH…. Really man last time I checked Windows was 90+% of the desktop market. As for “My mac can run windows” Yes and there is a leaked copy of osX for the pc.. Sry it runs just fine tobad OSX sucks.
As for this “The bussness model is broken” If I asked 100 of my customers what they thought of Linux they 98 would stare blankly and the other 2 would just make a sour face.
December 2007 I not only purchased my first Mac, after years of putting up with Windows lockups, BSOD, and bloatware since Windows 3.0 came out, I purchased 3 Macs, and encouraged others to purchase 7 new Macs this year so far. For those who can’t afford to replace their Wintel PCs with a Mac I have moved them to Ubuntu Linux. The point of no return was when Microscoff started forcing of Vista down the throats of consumers, and then claimed Vista is so popular because it is so great (forced pre-installs did that trick, idiots). I can’t get a refund for non-used Windows from Dell, so Microscoff did get paid for Vista from me, but not by choice.
No, Microscoff, the 2000 Pro/Server platforms were great, and XP became really great after years of improvements (until WGA). WGA, & Vista with all the distrust you have for my ethics is what pushed me away, and I am taking anyone along with me that will listen. Gee, did I forget to mention how much I hate the Vista interface where I must set it up to run in administrator mode just to get any work done? You blew it with me, folks. Mac rocks, as does Linux. No more money thrown away protecting my PC from attacks that come in due to the inherently poor Windows security (despite claims to the contrary). Bye bye…
Wired should just start printing up “I hate Vista because it’s cool” bumper stickers. At least it would give the “opinion” writers a little credibility.
Hmmm. I wonder if the problem is simply that Microsoft is a monopoly and so it makes money no matter what it does.
I mean I could sell crap. I mean real absolute crap to someone. Just call it manure and now it’s a product.
However, even though Vista is selling well the PC market is much bigger than it was when XP was released. Something like double. Once you adjust for that, percentage wise, Vista sales weren’t as good as XP. Good, but it depends how you look at it. Then you have to consider one more thing.
I didn’t want Vista on my computer. However, since I got my system on sale it was cheaper to buy it with Vista. So, even though I didn’t want Vista it was simply easier to do so. I figured I would at least try it anyway, but I didn’t like it. So, I dual boot XP/Linux.
To Microsoft they made a sale and it looks like they have a new Vista customer, but they don’t. The OEM disk just sits in the closet and collects dust.
So Microsoft is a monopoly and is going to make money no matter what. That doesn’t mean they couldn’t find someone better than Ballmer. Just because you don’t have to listen to your customers doesn’t mean you shouldn’t.
I think the article is spot on. People are buying Vista because they are being forced to. I would love to be able to see its sales numbers if it had to compete with XP head-to-head.
The Yahoo thing was a non-starter from the beginning, and everyone with the least bit of intuition knew that. They wanted it to compensate for their lack of direction in web services. I get the feeling that they’re blindly following a script they don’t understand. Web services are the future; we need web services. We just don’t know what or why.
I’m no Mac fanboy, and Apple has its own problems in this area, but they got their web services mostly right,while MS has been trying to muscle in on markets well beyond their core competencies.
At the end of the day, Microsoft has exhibited a notable lack of innovation. They pretend to listen patiently to customers, and they hire some great minds as interns and whatnot, but they ultimately ignore everyone and stick with the same tired old game plan that’s so out of date it’s embarrassing.
I wouldn’t stop with Young Frankstein’s monster either (honestly, doesn’t he look like a younger Peter Boyle?). I’d go after a lot of the top brass.
I just bought an iMac and Time Capsule. Will be here in two days.
meh. People are such bloody alarmists these days. Exactly the same thing happened with windows XP, but we are now in the era of the blog, so it gets bandied around far more. Once all the hardware vendors catch up (which is 99% of vistas problems), Vista will be a great operating system. The copy and search functions are a huge improvement over XP, and there are plenty of incremental improvements that make it well worth the change. The only problem is you have people with less than 3GB ram thinking they can run home premium smoothly. *Hint* you can’t! You could say “oh it’s a ram hog”, but so is xp compared to 98SE, but I certainly wouldn’t go back to 98SE. Maybe we should expect all these new features to fit in 16MB of ram like win3.11.
thats my tree fiddy.
When one does not keep his/her eyes on the work they are working on, they tend to loose insight of what they are doing, and the out come of what is to be made.
I AM MICROSOFT!
http://fakesteveballmer.blogspot.com
This is something the market will handle.
It’s simply a matter of time until M$ shares fall far enough (due to ever increasing loss in marketshare to Mac and Ubuntu) that the company will stop being stubborn and admit failure.
The continuance of XP availability is the first hint at the inevitable cracking of Microsoft’s untouchable status.
Balmer will be canned, the Zune will be a relic, and Vista will be dumped for it’s follow-up in the next 20 months.
I don’t know why you m$ fanboys give up and admit that apple is the best thing ever. One day apple will even have a double digit percentage of the market. It’s only a matter of time before apple has the resources to extend Steve’s reality distortion field across the globe, and rule us all. It will be a shiny white and chrome utopia.
Only a woman (Betsey Shifftyman) could have written this article! If you are willing to totally waste 4 minutes of your life by reading this convoluted rant that is! She contradicts from one sentence to the next:
“The investment community likes Steve Ballmer. He’s competent, aggressive and occasionally crazy. ”
… I’m Good, but I’m crazy?
“Microsoft hasn’t always kept up, it has remained ridiculously profitable.”
…. How can a company do this?
“There is nothing in Microsoft’s financial results that suggests turmoil — third-quarter earnings topped Wall Street estimates, and the outlook was decent — but we’d still venture to guess that Steve Ballmer’s days as CEO are numbered”
…. NO evidence of anything wrong, but I’m gonna be canned anyway?
“From a financial standpoint, Vista has generated billions of dollars in free cash flow, but the product was very late, sales have been disappointing and it’s unpopular.”
…. Billions in sales, yet unpopular?
“financially you get diminishing returns on improving Vista since it already sells so well”
…. Selling well is bad?
“There are two major reasons for keeping Ballmer around: 1) There isn’t an obvious replacement, and 2) It’s not clear that anyone could get Microsoft out of its current strategic mess.”
…. Nobody on earth can do what I do, but I should be replaced?
Anybody get the feeling that this “Jurinalist” is having an arguement with herself? One that she is losing?
If she were not attacking me I would feel pity for her!
Instead I feel contempt for “Mired”, for being desperate enough to publish such lunatic ravings!
SHEESH!
… and they called ME crazy ….
http://fakesteveballmer.blogspot.com
Ballmer is an embarrassment and has never shown any class in any situation. Unfortunately he is like dog crap on Bill’s shoe and I doubt he is going anywhere any time soon!
I wonder what the sales figures of Vista would be if WinXP was still an option on new computer purchases….!
Ballmer must go now to prevent a total disaster because of his lack of focus in its core OS business.
We stick with the OS because of great support in the past. If it continue to sink, we will ditch the OS and that is a promise.
I called for MS to exit the consumer market and, if he didn’t agree, for the Board to fire Ballmer months ago:
Consumer markets: Time for Microsoft to exit?
http://counternotions.com/2007/10/12/microsoft-vs-consumers/