Microsoft CEO Steve Ballmer is a polarizing figure, with some outsiders claiming he should step down for the good of the company after well-publicized missteps.
Should Microsoft CEO Steve Ballmer be shown the door?
Greenlight Capital hedge-fund manager David Einhorn thinks
so. "His continued presence is the biggest overhang on Microsoft's stock," he
told a recent New York investment-research conference, according
. He also suggested it was time to "give someone else a chance"
at the technology giant's helm.
Ballmer himself shows few signs of wanting to step down. "I've
got a lot of energy and passion for what I'm doing," he told the audience at
the Gartner Symposium/ITxpo 2010 in Orlando, Fla. "If I ever thought there was
a day when the company would be better off without me, I'd leave that day."
Nonetheless, Microsoft's board seems to back Ballmer. "If
there was any reason to believe the board was not with Steve, it would be a
different situation," McAdams Wright Ragen analyst Sid Parakh told Reuters May
. "But the board seems to be behind Steve."
Analysts and financial managers have their own reasons for
advocating management changes. But Einhorn's comments neatly illustrate a
schism among those in the technology and financial communities: those who think
Microsoft would be better without Ballmer, and those who think he should stay
at the helm despite a stagnant stock price and some missteps in emerging
Those wanting Ballmer to depart point to the company's
more-publicized stumbles, including its failure to capitalize early on the
smartphone trend. Despite its now-antiquated Windows Mobile franchise at one
point holding a substantial portion of the mobile-software market, Microsoft
has found itself outpaced in recent years by the Apple iPhone and Google
Android. Microsoft's Kin phones, meant to capture the youth market, died an
ignoble death soon after their release in the summer of 2010.
Microsoft has also failed to anticipate and blunt the
substantial consumer and business interest in tablet PCs sparked by the Apple
iPad. While a handful of tablets run Windows 7, it seems as if Microsoft might
wait until Windows 8-rumored to make its debut in the latter half of 2012-to
make some sort of concerted push into that market.
Dropping the ball in smartphones and tablets would be enough
to doom most executives, but Ballmer seems
to have persevered. Moreover, he's taken aggressive steps to change Microsoft's
course: throughout 2010, a series of executive shakeups climaxed with the
naming of three new presidents to key divisions within the company.
In October 2010, Ballmer split responsibilities for
Microsoft's mobile and entertainment concerns into two divisions, each with
their own presidents: Andy Lees took the top spot of the Mobile Communications
Business, while Don Mattrick did the same for the Interactive Entertainment
Business. That seemed a signal that Microsoft was giving those product lines
new focus-an unsurprising move, considering how important smartphones and the
Xbox remain to Microsoft's overall strategy.
Ballmer also seems intent on an "all in" cloud strategy that
will push Microsoft's products off the desktop and into the
online-subscriptions arena. Windows Azure, Office 365 and other cloud platforms
represent the vanguard of this effort, which Microsoft doubtlessly hopes will
blunt similar efforts from the likes of Google and Oracle.
Microsoft under his watch is pushing hundreds of millions of
dollars into its renewed smartphone platform, Windows Phone. Sometime this
fall, the company will push its "Mango" software update to the platform. Among
the update's 500 new elements: multitasking, a redesigned Xbox Live Hub, visual
voicemail, the ability to consolidate friends and colleagues into groups within
the "People" Hub, and Local Scout, which offers a view of everything to see and
do in a particular neighborhood.
In addition to HTC and Nokia, Samsung and LG Electronics
have apparently committed to building new Windows Phone devices preloaded with Mango.
Acer, Fujitsu and ZTE are also planning to produce Windows Phone devices for
the first time. "We have some Windows Mango phones," HTC CEO Peter Chou
reportedly told Reuters
. "We are very committed to Windows phone products."
But Microsoft also faces the steepest of uphill climbs in
convincing consumers to adopt its Windows Phone platform over rivals such as the
iPhone and Droid. Research firm Gartner estimated that Windows Phone sold 1.6
million units in the first quarter of 2011, and recent data from comScore
suggests that Microsoft's share of the overall
smartphone market continues to erode
despite all-new Windows Phone devices
and a heavy marketing push.
Microsoft has scored some key partnerships with the likes of
Nokia, Yahoo and Research In Motion-deals that will allow the company to expand
its footprint in search engines (via Microsoft's Bing powering Yahoo's backend
search) and smartphone software (with Nokia soon to run Windows Phone on its
hardware, and Research In Motion providing cross-platform support). Ballmer
also arranged for Microsoft to acquire Skype for a hefty $8.5 billion-but the
jury's still out as to whether that was the deal of the century, or merely a
massive overpayment for a VOIP (voice over IP) platform that's had trouble monetizing.
Meanwhile, Microsoft's traditional software lines-including
Windows 7 and Office 2010-continue to sell in stupendous quantity. Revenues
from those offerings have managed to cushion Microsoft somewhat from its
missteps in mobile and other areas. But with rising interest in the cloud, the
question is how long desktop software will remain at the center of the tech
universe. Considering the increasing ubiquity of smartphones, the answer to
that question could be, "not much." And in that case, the onus is on Windows 8
to effectively walk the tightrope between the local-drive and cloud worlds.
In other words, Ballmer seems to be trying everything he
can-pouring tons of money and effort into smartphones, signing massive deals
and reorganizing the company-to keep Microsoft a relevant force in this new
century. That might not be enough to quiet calls for his resignation, but you
can't dispute that he's making decisive moves. But will they work?