Skip to main content

The Globe and Mail

New era for Microsoft as Ballmer announces departure

Microsoft CEO Steve Ballmer gestures during his keynote address at the Microsoft ‘Build’ conference in San Francisco in this file photo.

Robert Galbraith/Reuters

Perhaps the most significant thing about Steve Ballmer's 13-year stint as head of the world's most famous software company is what he didn't get done.

Mr. Ballmer, who announced Friday that he will be retiring from Microsoft Corp. within the next 12 months, will be remembered by many as the CEO who critically misjudged the impact of mobile devices such as smartphones and tablets.

He also tried – but never succeeded – to fix the corporate bureaucracy that earned Microsoft a reputation for being less a cohesive whole than a collection of silos.

Story continues below advertisement

But Mr. Ballmer will also be remembered as the man who saw Microsoft through some of its biggest challenges. As a senior executive at the company for more than 30 years, he became a billionaire many times over as Microsoft grew from a niche player to the biggest software company on the planet.

When he joined the Redmond, Wash.-based company in 1980, it had fewer than 50 employees; today that number is closer to 100,000.

As CEO, Mr. Ballmer helped close a painful chapter in Microsoft's history – the multibillion dollar antitrust lawsuits that plagued the company for more than a decade. He also spearheaded an aggressive push into the burgeoning sector of cloud computing, strengthening Microsoft's position as a provider of software services.

But his failures – specifically, anticipating the rise of mobile devices and turning Microsoft into a less unwieldy company – always attracted more attention.

"He had four major tasks to accomplish as CEO," said Enderle Group technology analyst Rob Enderle. "He got two of them done."

Microsoft shares jumped 7 per cent on Friday after news of Mr. Ballmer's retirement.

In a letter to Microsoft employees, Mr. Ballmer said it was in the company's best interests to have a CEO who would be on board for the long run, as Microsoft goes through a wide-ranging overhaul designed to make it more nimble.

Story continues below advertisement

"This is an emotional and difficult thing for me to do," he wrote. "I take this step in the best interests of the company I love; it is the thing outside of my family and closest friends that matters to me most."

During his 13 years as CEO, Mr. Ballmer earned a reputation as a loud, brash salesman, one who had no qualms about taking to the stage in front of thousands and yelling at the top of his lungs about Microsoft's latest product or service.

His frequent outbursts of enthusiasm became the stuff of corporate legend. In one infamous appearance, he took to the stage at a company event in a fit of screaming and skipping, paused for a moment to catch his breath, and then yelled, "I have four words for you: I love this company!" In another, he led the audience in a chant of "Developers! Developers! Developers!" as he clapped his hands, a large sweat stain covering much of his shirt.

But while Mr. Ballmer's dedication to his employer has never been questioned, much of his decision-making was.

He famously dismissed the original iPhone, saying it was not a great e-mail device and would not be taken seriously by business users because it did not have a physical keyboard.

Since then, Microsoft has struggled to play catch-up in the mobile industry, releasing its new Windows software for mobile devices long after Google Inc. and Apple Inc. had claimed the lion's share of the mobile software market.

Story continues below advertisement

Recently, Windows-based phones overtook BlackBerry Ltd. in worldwide smartphone market share, but is still in a very distant third place.

Perhaps the most glaring example of Microsoft's inability to capitalize on the shift to mobile devices is its Surface tablet. Since as far back as 2008, the company had been considering a tablet, but corporate infighting among Microsoft's internal departments reportedly kept the product from becoming a reality.

By the time Microsoft released the Surface in October, 2012, Apple's iPad already had a massive lead in the tablet market, and the Windows-based tablet never caught on. Last month, Mr. Ballmer said Microsoft took a $900-million (U.S.) hit on unsold Surface tablets.

However, Mr. Ballmer did score numerous victories, many of them in areas that receive far less attention than the consumer products divisions, such as server software and cloud services.

Its success in generating recurring revenue from these areas has helped Microsoft withstand the ups and downs of the consumer mobile industry.

"He's brilliant, he's intense and he's very, very focused on working every minute of the day," said David MacDonald, CEO of Softchoice, the biggest reseller of Microsoft products in Canada. "People are much more likely to judge him based on consumer technology trends such as mobile and search, but outside of Apple, almost nobody's making money on mobility yet."

Mr. Ballmer plans to stay at the helm until Microsoft finds his successor. The most likely internal candidate for the top job is Qi Lu, who runs the company's applications and services divisions.

The company has lost a number of talented executive lately, including Don Mattrick, the Canadian former head of Microsoft's interactive entertainment division, who left earlier this summer to become CEO of troubled game-maker Zynga.

The board committee charged with finding Mr. Ballmer's successor is also likely to look outside Microsoft. Mr. Enderle said names such as that of Pat Gelsinger, CEO of cloud software company VMware, may come up on the short list of candidates.


Potential contenders:

Microsoft Corp., the world's largest software company, has had only two chief executives in its 38-year history – retiring head Steve Ballmer and co-founder Bill Gates – and no clear succession plan. Here's a list of potential candidates for the corner office.

Tony Bates: Went to Microsoft two years ago as CEO of the acquired Skype and was recently elevated to lead Microsoft's business development and overall strategy.

Terry Myerson: The executive in charge of operating systems, which is still the heart of Microsoft, ranging across personal computers, tablets, phones and the Xbox game console.

Satya Nadella: Heads Microsoft's cloud and enterprise group, which is coming to the fore as the company struggles to catch up in online and mobile computing.

Kevin Turner: As chief operating officer for the past eight years, the former Wal-Mart Stores Inc. executive leads Microsoft's enormous sales organization, but is generally considered to lack the technology credibility to be CEO.

Steven Sinofsky: The former head of the Windows unit was widely tipped as a potential Microsoft CEO until his abrupt departure in November. His reputation has taken a hit since then with the dismal sales of the Surface tablet he launched and the lukewarm reception of Windows 8.

Vic Gundotra: The high-flying Google Inc. engineer, key to that company's mobile phone and social initiatives, is a former Microsoft executive who could be tempted to return.

Reed Hastings: The CEO of Netflix Inc is a rising Silicon Valley star and has intimate knowledge of Microsoft's business after several years on its board, until his departure last year.

Paul Maritz: One of the key powers in the early days of Windows, Mr. Maritz left in 2000 and eventually ran virtualization firm VMware Inc. until last year. Talk occasionally surfaces that he could return to Microsoft, but he has never indicated any interest publicly.

Report an error Licensing Options

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨