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Apple Inc.'s clever "I'm a Mac/I'm a PC" advertisements several years back defined, and continue to define, Microsoft Corp.'s major flaws as well as any tech analyst: while Microsoft CEO Steve Ballmer sounded cocksure and arrogant in public presentations, his commercial equivalent as portrayed by Apple rang true: an insecure suit-wearing nebbish who kept boasting about consistently underwhelming mass-market digital offerings that failed to connect with consumers the way Apple did. Beyond his strength in serving corporate customers, the PC character was contemptuous and distrustful of a consumer market he failed to understand and which didn't love him back.
With Mr. Ballmer announcing his long-overdue exit after 13 years as CEO and 33 years with the company, the challenge for Microsoft is to define itself more successfully than its competitors define it. The company's central problem, which everyone can see perhaps more clearly than Mr. Ballmer, remains that at its core Microsoft is a successful enterprise-focused market behemoth (Windows, Office) whose attempts to expand from that base have largely floundered.
While the company won the browser wars, it lost the lucrative Internet search business battle to Google. Its Zune music player and Kin smartphone were busts, and its Surface RT tablet device is quickly becoming one too, on the heels of a $900-million (U.S.) inventory writedown in its most recent quarter. The company's Windows 8 operating system that was supposed to work across multiple devices powered either by mouse or touchscreen hasn't clicked with the market. Its consumer-oriented personal computer business is under threat from Google, whose Chromebook operating system turns laptops into cheap dummy terminals able to access all the programs and storage a user could need on its own cloud servers. Who needs Windows or Office any more? A 20-per-cent decline in Microsoft's consumer PC business in its most recent quarter likely isn't the end of the bad news on that front.
One of Mr. Ballmer's chief weaknesses was an inability to articulate and execute on a strategy for growth beyond its enterprise-focused core business. Luckily, that core remains a powerful base from which the next CEO can build. Like IBM under Lou Gerstner and Apple under Steve Jobs (during his second stint at the company), Microsoft needs a bold visionary with a free hand and a supportive board who is confident enough to build on the company's past strengths and brave enough to break cleanly from its past weaknesses.
Promoting another long-time company insider isn't the answer – which is why former CEO Bill Gates might not be the best person to pick the next leader. At the moment, he's on the special search committee that will oversee the process. He's also stood behind his long-time friend and co-employee Mr. Ballmer for far too long. If the board wants to truly be bold, it can start by asking its billionaire founder to stand down from the committee – and maybe even as chairman. Nothing would send a clearer message to the market that Microsoft is truly ready to change .
Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Sean on Twitter at @seansilcoff.
Sean Silcoff