What Ballmer's Exit From Microsoft Means: Analysts Weigh In
In an unexpected move, Microsoft CEO Steve Ballmer announced Friday, Aug. 23 that he was retiring within 12 months, giving up the chief executive post that he has occupied for more than 13 years. "There is never a perfect time for this type of transition, but now is the right time," said Ballmer in an Aug. 23 statement issued by the software giant.
Ballmer's sense of timing doesn't align with that of many analysts and his critics, whose calls for him to step down have grown progressively louder over the years.
According to Gartner Vice President David Cearley, "Steve had become a lightning rod for all of Microsoft’s problems—particularly with investors. Recent poor performance, weak interest in Windows 8 and the massive write-down related to Surface intensified this and activist stakeholders."
The timing of Ballmer's retirement "is going to create additional challenges for Microsoft. The shift to a 'devices and services' strategy and the recent reorganization create a level of uncertainty about Microsoft's future," Cearley told eWEEK. "This only adds to that uncertainty."
There is a silver lining. "On the positive side—bringing in a new leader provides Microsoft an opportunity to reset its relationship with many constituencies," he said.
The Ballmer years were also marked by opportunities lost. Zeus Kerravala, a ZK Research analyst, told Reuters, "Since he took over in 2000, it is fair to say he missed a number of transitions: mobile, tablets, cloud." Ballmer, he argued, is a PC guy operating in a post-PC world.
"Ballmer's strength is traditional PC computing. He was a great guy for his era but times have changed and a new leadership is needed," remarked Kerravala.
It's a lesson that Microsoft's competition, indeed the industry at large, should heed, Trip Chowdhry, managing director for Global Equities Research, wrote in an analyst note. Drawing parallels to Apple's current leadership, he wrote, "Both Microsoft and Apple had strong leaders before Ballmer and Cook—they were Bill Gates and Steve Jobs; and both Ballmer and Cook have been struggling."
Chowdhry asserted that both chief executives "seem to reward politics over performance" and have allowed complacency to take root. Damningly, they "don't understand the full Innovation Equation, which is having both Innovative products and having Demand/Market Creation perfected," he concluded after hinting that Cook may soon follow in Ballmer's footsteps.
Nonetheless, Ballmer remains in charge until a committee, which includes his predecessor Bill Gates, selects a new CEO. His reorganization and corporate realignment efforts are expected to continue apace.
"I don't see this as a repudiation of the 'one Microsoft' or the 'devices and services' strategy. Steve continues to be heavily involved in the company and in the selection of his successor. If anything I see it doubling down on the shift in Microsoft culture and business model," said Cearley at Gartner.
Cearly added, "We have to see who the successor is to see what real impact there will be on the strategy."
Vivek "Vic" Gundotra, former general manager of Platform Evangelism at Microsoft and the current senior vice president of engineering for Google, gets Chowdhry's vote.
Citing an April 17 research report from his firm, he wrote, "Vic is probably the only executive, who can bring the much-needed fresh perspective to Microsoft, while still having a deep understanding of Microsoft Culture. Vic is a perfect blend of being a Microsoft Insider and bringing a fresh perspective from Google."