An Honest Critique of Microsoft and Steve Ballmer

For the last five years there have been calls for Steve Ballmer to step down from Microsoft and I have refrained from comment until today because a confluence of news and events has made commentary necessary. Specifically, David Einhorn, an influential hedge fund manager – whose firm Greenlight Capital owns almost 9M shares of Microsoft, said (video) Ballmer is stuck in the past and is ruining Microsoft’s stock.

Technologist Vs. Businessperson: One compliant about Steve Ballmer is that he is more a businessperson than a technologist and as a result, new and innovative products have been developed much more slowly. This point is very tough to argue with and more importantly, what is Ballmer’s vision for Microsoft? From the outside looking in – it seems to be in lots of different markets and make as much money as possible.

There isn’t anything necessarily wrong with this vision but if you are supposed to be the technology leader and passion is replaced by profit -seeking you end up losing the magic in your culture and pride in your work. Moreover when you couple these challenges with a stock which hasn’t moved in ten years, you see why so many high level execs are leaving the company.

Marketing: This is an area where Ballmer’s team is doing a great job – the company has solid messaging and is consistent – much more so than many other tech leaders. If you think Ballmer should go because he is a businessperson – at least you can’t fault his outward messaging – especially as it relates to specific product launches.

But this doesn’t mean the company is doing well in the PR race – Google seems to be in the news many times a day because they have a new data center cooled by the ocean or some other innovation which is unique and appealing to many people concerned about the environment.

Mobile: Under Ballmer’s watch, Microsoft’s mobile strategy emerged, flourished and crashed. We have known for years the mobile market will become more important to tech companies. I remember marveling at my last Windows Mobile device years back – it was an incredible achievement in functionality but never fun to use.

Consumerization of IT: And to miss the consumerization trend in IT is unforgivable – at some point Microsoft must have seen how fun consumer devices were gaining traction in the market. The Chumby for example – a cuddly web device gained an instant cult following. And then there was the iPod.

For the most part using Microsoft products is an exercise in cerebral masochism – they design user interfaces which only a dominatrix could be proud of. For example I recently had to enter the parental password on the Xbox to watch a DVD – I would rather write this article on an iPod Nano than enter 4-digits on an Xbox.

Is it really so difficult to have a master UI department outfitted with the latest Apple devices and not approve any UI until it as at least in the same ballpark in terms of ease of use?

Mobile Wallet: A decade ago a senior Microsoft exec made the prediction at a TMC trade show in Washington DC that soon we would use our cell phones as digital wallets. Not only did Microsoft not deliver on this promise it lost its position in the mobile space. Today Google launched what may be a very successful mobile wallet solution as it has a wide range of powerful partners from banks to carriers and retailers. And to be honest, in five years the credit card will be as useful to consumers as a standalone camera is today. In other words, some of us will carry one around for occasional use.

Search: Microsoft is pouring billions into search and partnerships with Yahoo, Facebook and others and although you cannot blame the company for missing the search market – almost everyone did – they aren’t lighting the search world on fire either. But I would say in the face of Google’s overwhelming dominance, Microsoft is doing as much as can be expected with Bing.

Piracy: Recently Steve Ballmer complained about piracy in China and the fact that billions in revenue are not being made because the Chinese for the most part aren’t paying for software. In fact, the software company makes more money in the Netherlands where only 17M people live than in China!

The challenge here is this isn’t a new problem and we should have worked to solve it sooner. How is it US tech companies haven’t banded together to force our government to get the Chinese and other countries to value our intellectual property? With so much to lose, Ballmer and Microsoft should have been way ahead of this.

The situation reminds me about my post on the Apple App Store being the OPEC of the west as at least it encourages more revenue to be made when software is acquired.

Cloud: Microsoft almost has to embrace the cloud defensively because of its potential to eat into current licensing revenue. There is no blame here.

Kinect: The Xbox Kinect is one of the best all-time products – kudos to Ballmer and the team for having the vision to bring such a leading-edge technology to the market. But with this success in its pocket does it have a follow-up interface which blends touch, voice and gestures? They better because you know Apple is.

Tablets: Microsoft has tried a few times to push tablets but somehow missed the mark. This is what I don’t get though – the iPad is nothing more than a large iPod – so why didn’t any tech company have the vision to design a larger iPod before Apple? Microsoft has had gesture-based demos in their labs – I have seen them years ago. Why was this tech never commercialized? We all know the story of PARC and how many leading-edge technologies were invented but never monetized properly. Does any company want to be known as PARC 2.0?

iPhone: We know that RIM was shaking in its boots when it saw the iPhone and now the company has a credible tablet competitor in the PlayBook – as well as a number of touchscreen smartphones which aren’t as spectacular in my opinion. Why has it taken Microsoft so much longer to respond? We all know mobile devices are the future of computing. Why is it Mango is just surfacing now while people are contemplating purchasing an iPhone 5?

Social: Duh Social. Duh Facebook. Microsoft invested in Facebook early – was hammered by many who said they spent too much and it turns out they made a smart move. Nice going Steve!

Size: Is Microsoft too big? Well it certainly isn’t too small and if RIM and Google can respond to Apple with a slew of touchscreen smartphones years ahead of Microsoft – you have to wonder just how bloated the management at Microsoft has become.

Vision: What does Microsoft stand for besides a company trying desperately to maximize profits? If we are to assume that Apple is the biggest threat to Microsoft (we will leave Google out of it for now) and Apple’s products and retail stores are oozing with minimalistic elegance, what is the reason someone would choose Microsoft over Apple?

I have a brand new Dell laptop for example and the experience in lugging and using this mini-mainframe is not great and if I didn’t need the apps which aren’t on the iPad or Apple’s other OS – I am not sure I would carry the Dell at all. Moreover, why is it I can answer numerous emails on an iPad while I am waiting for the Dell to boot up?

In other words, why does the PC experience suck? Moreover, Why doesn’t Steve Ballmer know it sucks – and if he does know and can’t solve these problems, then what is the future for Microsoft’s desktop business?

What do we need to see? Well I suggest Steve get working on the Steve Ballmer Minimalist Manifesto which details soup to nuts, how the company needs to refocus on delighting customers – not with bloatware laden with infinite features but more exciting interfaces and designs. Moreover, they need to start working with hardware providers like Dell to make sure when a laptop or any other device carries a Microsoft OS and logo that it is up to some sort of design standard.

In other words – protect your customers Steve, not your profits. And believe me, in my experience protecting customers makes them more loyal and in the end you will see profits increase. Customers trust Steve Jobs to control the experience and make it awesome – when they feel the same about you, can retire in glory.

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