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Steve Ballmer Will Retire Within A Year's Time

Updated on August 26, 2013
Microsoft CEO Steve Ballmer at the Windows 8 Launch on October 25, 2012
Microsoft CEO Steve Ballmer at the Windows 8 Launch on October 25, 2012 | Source

This day in tech history

At Microsoft, the day Steve Ballmer became the CEO there was a sort of changing of the guard. It seemed apparent that sales and marketing prowess had triumphed over pure technological innovation and acumen. This may have been nice for the sales and marketing guys and their careers, but not so for the Redmond, WA based firm and its stock price.

Ballmer himself has been a relentless salesman and even managed to treble revenues at Microsoft while he was at the helm - profits doubled too. Microsoft steered ship even as AOL fell dramatically and HP faltered. Furthermore, Sun Microsystems and Novell are a shadow of their former selves. But even as he dodged crisis after crisis that caused other tech firms to falter, he was not immune to constant criticism about his management techniques.

A case of bad timing

Tech genius Bill Gates left the top job at Microsoft and was followed by Steve Ballmer. And so Ballmer is going to be remembered as the CEO during whose time Microsoft ended its period of explosive growth and was outsmarted by a revamped Apple Inc. that was led by the charismatic Steve Jobs.

Microsoft's share price has not recovered from its pre dot-com stock burst levels. Ballmer tried hard, but shareholders often were concerned about a software company that increasingly looked outmoded.

Technological Short-sightedness

During Ballmer's time in charge, the tech world witnessed the emergence of Google and Apple Inc that became major players in the exploding area of tablets and smartphones.

Some technology watchers might excuse Ballmer as it is always tough to go against the likes of Google and Apple. But more astute tech analysts may not be all that generous. We'd like our readers to go back to 2007 to a TV interview that Ballmer did just after the iPhone was launched. Ballmer was amused about the iPhone's chances saying, "That is the most expensive phone in the world and it doesn't appeal to business customers".

When looking at both companies' recent 10-K's, it is revealed that iPhone sales alone have exceeded Microsoft's total revenue. Talk about eating humble pie (and being made to eat your words)!

Steve Jobs was even quoted in his official biography by Walter Isaacson as saying that the quality of the product becomes less important when great salesman are valued. Additionally, smart money agreed. David Einhorn, the founder of Greenlight Capital, said in 2011 that Ballmer's continued presence was the biggest overhang on MSFT's stock price.

Even Microsoft's dominance in internet search was taken apart forcing the firm to try and buy Yahoo Inc for $47B- a move that didn't fall through and in hindsight was a good thing for Ballmer's legacy. The $47B price tag that MSFT was hoping to pay would have been far too pricey for an internet company that is worth much less now (even though Yahoo actually seems promising now). And it must be mentioned here that if Microsoft did succeed in its bid, it is highly doubtful they would have made the big moves that Yahoo is currently making.

Ballmer was no technological visionary and he sure had a problem with execution. Something that has been apparent time and again. This summer Ballmer got on the offensive with a huge makeover of Microsoft in order to make it a 'devices and services' firm. But with this retirement plan announcement, (ahead of schedule he admitted) he may be there to see it through. Nonetheless, investors aren't all that pleased about it. It does seem like the stock price will continue to rise in the short term and also the long term. It will be interesting to see who the successor will be.

There is already a committee being formed to address the issue and Ballmer's old pal Gates is also going to be on it. It was Gates that brought him to the dance.

Gates and Ballmer's Harvard ties

Ballmer was the math whiz from Detroit, Michigan and Gates was the computer whiz from Seattle, Washington. In 1980, Gates talked to Ballmer about becoming Microsoft's first commercial manager and gave him an 8% stake in the company. What came was a personal computer revolution and a company that rose to dominance in such a way that was unprecedented.

Tech giant matures

Many feel that Ballmer will be hard to replace. This comes even as Microsoft completely missed the move to mobile. Ballmer was also known to undercut and even fire executives who could undermine his clout. Still, as he makes his way out there are numerous supporters who think he was actually underrated.

Microsoft's monopoly still exists, but other players have increasingly been able to compete. At the same time, almost 40 years in the tech world is something that is truly unheard of.

After all is said and done, Ballmer will go down as one of the more iconic CEOs in the history of the Fortune 500. Ballmer was Scottie Pippen to Bill Gates and the two of them transformed Microsoft from a dorm room dream to the largest software maker in the world.


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