Steve Ballmer, the
C.E.O. of Microsoft, finally figured out a way to make some money for himself:
he quit. This morning, Ballmer announced that he will retire within the next
twelve months. The company’s stock surged; Ballmer is now worth about a billion
dollars more than he was on Thursday.
Ballmer is roughly
the tech industry’s equivalent of Mikhail Gorbachev, without the coup and the
tanks and Red Square. When he took control, in 2000, Microsoft was one of the
most powerful and feared companies in the world. It had a market capitalization
of around five hundred billion dollars, the highest of any company on earth.
Developers referred to it as an “evil empire.” As he leaves, it’s a sprawling
shadow. It still has cash—but that matters little.
What has gone
wrong? For starters, Ballmer proved to be the anti-Steve Jobs. He missed every
major trend in technology. His innovations alienated people. When he tried
something new, like Windows Vista, the public lined up around the block to
trade it in. Microsoft missed social networking. It completely misjudged the
iPhone and the iPad. It embraced complexity in product design just as everyone
was turning toward simplicity. It entered growing markets too late. When was
the last time you used Bing? In 2000, Microsoft made most of its money selling
Microsoft Office and Microsoft Windows. Today, it still makes its money that
way. Ballmer’s reign has done more to defang Microsoft than the Justice
Department could ever have hoped to do.
The company
suffered from the classic innovator’s dilemma. It built extraordinary software
that you run on your desktop. And as we moved away from our desktops and into
the cloud and onto mobile devices, Microsoft trundled slowly and tentatively.
It hesitated to embrace the cloud, and it hesitated to build anything that
didn’t work with Windows. In 2005, it brought in a legendary coder, Ray Ozzie, to solve this problem. In 2010, he left. The
company has built a technically brilliant gaming system, and the recently
launched Xbox
One is fully cloud-based—and almost totally separate from the parts of the
company that bring in cash.
Ballmer, manic and
sweat-stained once too
often, failed to be a great manager, or even a tolerable one. As Kurt
Eichenwald wrote, devastatingly, in Vanity Fair, the company long
utilized a system called “stack rating,” whereby every member of the company
was judged relative to his peers. If you worked on a team of ten, you knew that
two of your colleagues would get great ratings, seven would pass, and one would
fail. “Every current and former Microsoft employee I interviewed—every one—cited
stack ranking as the most destructive process inside of Microsoft,” Eichenwald wrote.
What comes next
for Ballmer? He’s just fifty-seven, a couple years younger than Gorbachev was
when he left. But I think he’ll be quiet: doing good deeds, giving away his
fortune, and popping up his head from time to time. The more important question
is what comes next for Microsoft—an American company, founded by a skinny nerd,
that provides software used around the world. Reversing the company’s decline,
in an industry that transforms itself by the day, won’t be easy; Microsoft
needs someone who can attract brilliant developers as well as she anticipates
trends. They need someone very different from Ballmer. In his memo to Microsoft
employees, he wrote, “I cherish my Microsoft ownership, and look forward to
continuing as one of Microsoft’s largest owners.” Given the size of his
financial stake in the company, there’s almost no one who should want a better
C.E.O. for Microsoft than Ballmer himself.
Photograph:
Lee Jae-Won/Reuters
This article is originally published in The New Yorker on August 23, 2013.
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