) announced this morning that Steve Ballmer, CEO since 2000, will
retire within 12 months after the completion of a search for his
Despite the enormous growth in revenues and earnings under his
watch, Ballmer has been an increasingly controversial leader.
Critics say that Microsoft missed the Internet and mobile computing
booms, which are fields now dominated by rivals like
In fact, typing the phrase "Steve Ballmer is" into Google shows the
following autocomplete results:
Ouch! Though interestingly enough, what pops up for deceased Apple
visionary Steve Jobs is actually much worse.
Nonetheless, while many people, myself included, tend to excuse
Jobs's misdeeds because of how revolutionary Apple's products have
been, Ballmer is unlikely to receive the same treatment.
In public, Jobs had uncanny personal charisma, one underappreciated
example of which is the iMac introduction way back in 1998:
Ballmer, on the other hand, was not exactly operating on the same
level of cool:
On a personality level, Steve Jobs comparisons are never, ever
fair. But Ballmer had been running the company that was Apple's
number one rival (I would argue that Google and
(OTCMKTS:SSNLF) are now Apple's biggest rivals), so it's fair to
talk about the underlying businesses.
Apple essentially created the modern mobile gadget industry with
2001's iPod, and then it catalyzed the death of the modern PC with
2007's iPhone and 2010's iPad.
Microsoft's rival products under Ballmer, each of which followed's
Apple's innovations -- the
Zune mp3 player
operating system, and
Surface Tablet line
-- all failed to make meaningful marks within their respected
Investors cheered Ballmer's retirement announcement today, sending
the stock as high as $35.20, a 9% gain from yesterday's close, this
That's an obvious indication that there's optimism that new blood
can reinvigorate Microsoft.
However, serious challenges remain.
The traditional PC industry is collapsing
due to cannibalization from emerging markets like tablets and
Google Chromebooks. According to Gartner, worldwide PC shipments
dropped 10.9% in the second quarter of 2013, marking a record five
consecutive quarters of decline.
Microsoft remains heavily reliant on the PC market; last year, its
Windows and Business (90% of Business is MS Office) divisions
accounted for 56% of revenues and a whopping 97% of operating
income. Meanwhile, the online services division, which includes the
Bing search service, lost $1.3 billion. The year before, it lost
$8.1 billion, including a $6.2 billion writedown related to the
2007 acquisition of digital marketing company aQuantive, which
failed to live up to expectations.
These losses come in stark contrast to Internet-centric
) and the aforementioned Google, which generate enormous profits
So whoever steps in has a lot of existing holes to plug while
catapulting Microsoft ahead in competitive new markets.
That's a pretty tall order. In fact, I'm curious to see who has the
nerve to take the job.