Steve Ballmer, the CEO of Microsoft since Bill Gates retired in 2000, surprised the industry by announcing that he was going to follow Gates into retirement. Whilst Microsoft has continued to turn over vast amounts of profits in the 15 years that he was at the helm, many commentators have suggested that he missed out on a number of key trends, enabling the likes of Apple and Google to set the pace of change.
There are already a number of people in the frame to replace Steve Ballmer, including the Nokia CEO and a number of high-profile Google execs. What will be important is that they find someone who is not only capable of running a multi-billion dollar business but also of changing one.
One analyst recently observed that Apple would probably be even more profitable if Ballmer had been running it, but they also probably wouldn’t have invented the iPad or iPhone. As they thank Ballmer for his long years of service, Microsoft should probably be looking for someone who is a bit more Apple-y than their past two leaders.
Challenges ahead for Ballmer’s successor
There can be no denying that Ballmer was a phenomenally successful CEO, or that he will be hard to replace. Revenues tripled under his leadership but he also launched a bid to buy Yahoo (which he’s probably glad failed), mocked the launch of the iPhone (iPhone sales now outstrip Microsoft’s entire revenues) and has poured billions of dollars into Bing in an effort to compete with Google, but still has minimal share in most markets outside the US; interestingly, Microsoft’s share price rose 7 per cent after he announced his departure.
Whoever replaces Ballmer will have a number of urgent tasks on his or her plate. Ballmer had recently reorganised the company to focus on ‘devices and services’ and there is a lot of work still to be done in that space. The new Xbox One launches at the end of the year, and it has a real opportunity to shape the living room of the next few years, though it will face fierce competition from a new Playstation.
Windows for Mobile is still better in theory than in practice; the most recent attempt to disrupt the Apple/Android duopoly, the Surface tablet, hasn’t had much of an impact and has now seen its price slashed; the recent demise of BlackBerry, and the slow decline of Nokia, the company Microsoft chose to align with, shows that the smartphone business is becoming an increasingly difficult one to survive in, though one that Microsoft has to get some traction in if it wishes to remain relevant.
Most importantly, the new CEO will need to decide how a business that still makes the vast majority of its money from paid software in a world where software is increasingly free, and where people simply don’t use ‘traditional’ PCs and laptops other than at work, can remain relevant. Microsoft’s fortunes were built on a product called Office, and increasingly offices are the only places it still makes money.
The author, Ciaran Norris, is the Chief Digital Officer at Mindshare Australia