Miscalculation(s)

by Da'Von B.

Now that the dust has settled over the Steve Ballmer fiasco (then again maybe not), there are more than a few things to look at with relation to his “retirement”, where interestingly many news outlets are suggesting “hey maybe this wasn’t planned” (seriously?). The fact that these outlets believed from the beginning this was all planned out I have a few “magic” beans they’d definitely be interested in.

When the CEO of a major tech company as substantial as Microsoft decides to simply “retire” after establishing a major internal company re-organization, and no successor in place there’s a red-haring there that people are simply ignoring. The investment community including news organizations (with no ties to the company) have cried for years about Apple’s lack of formal succession plan in the event Steve Jobs were to leave not knowing that the succession plan was staring them in the face with Tim Cook serving as interim CEO on more than one occasion as the obvious successor to the late Steve Jobs. Yet with Microsoft and the random if not late departure of Steve Ballmer there’s no outcry, no extensive questioning, no further investigating, almost as if no one really cares about this company like they used to (something I highly doubt). The consolidation of power with the new company restructuring was to Ballmer himself at the center, an organizational structure never seen at Microsoft, and now he’s leaving.

Ballmer may not have been a terrible CEO, but he was substantially great at miscalculating the technological shift that was taking place literally right in front of him. And he had a knack for putting his foot in his mouth, but he’s not and shouldn’t have been expected to be perfect, though it goes without saying he was great at putting his foot in his mouth. And that becomes a problem when the potential and/or eventual competitors you laugh off end up overtaking markets when you’re resting on your laurels, consider for a moment the question; what ever happened to the Microsoft Zune? And why didn’t that device catch on? How about the comment “Google is not really a company. It’s a house of cards”, not sure what that’s supposed to mean because Microsoft’s response has been the struggling search engine Bing and that continues to bleed money though the bleeding has slowed…somewhat.

And then there’s one quote that one quote that makes the assertion, the assumption, the arrogance simply laughable “There’s no chance that the iPhone is going to get any significant market share. No chance”. Now yes this was said in 2007 when the iPhone was announced to be sold at $500 before they went on to drop in price, but there was no follow up, the assumption that the phone would flounder remained. And looking at the numbers from 2012 (currently awaiting the numbers for 2013 where they’ll likely look very similar), the image along paints the picture.

120906060913-iphone-gallery-microsoft-large-gallery-horizontalThe image shows from June 2011 to June 2012 the iPhone business alone (for those hard of understanding this is excluding the Mac Business, the iPad and iPod business, as well as the iTunes and Accessories businesses) during this period was worth more than all of Microsoft’s businesses combined. This will likely look the same from June 2012 to June 2013 once the numbers have been crunched. So while the iPhone business continues to remain strong against the logic and wishes of Wall Street and continue to be a major player in the mobile industry even after Microsoft held a funeral for the iPhone, it’s Microsoft that struggles to (re)gain market share with Windows Phone 8 that based on sales, comments, and actions from many OEM partners, no one seems to actually want. How many Samsung Windows Phone 8 commercials have you seen? Or did you know Samsung and HTC actually made Windows Phone 8 devices?

How could Microsoft, the company who was obviously aware of the importance of mobile as they’ve had OEM’s develop millions and millions of Windows Mobile devices allow themselves to be overwhelmingly incompetent when it came to developing for the mobile marketplace as Apple and eventually Google understood what would be important over the next 10 to 20 years? The irony of how Microsoft tripped over their own feet and became astoundingly close to and/or on the verge of irrelevance in the mobile market place can be read here in detail. The world has gone mobile, there’s no reversing this, people are no longer chained to a desk with a personal computer utilizing Windows to simply check their email, write papers, search the internet, or play games, that’s being done on tablets (mainly iPads but certainly Kindle Fires as well(?)) as well as a myriad of Android devices and iPhones in many cases this is also happening in the enterprise level, why be chained to cumbersome laptops or desktops when you can build customized apps using a lightweight device for your business?

So after years of miscalculations with numerous markets most recently the tablet PC market (something they themselves with no one else to compete against them pioneered over a decade ago) having to write-down $900 million on the Surface business, it seems the board finally decided to suggest Steve Ballmer go into retirement as opposed to firing him outright (a bit of save-face for both the company and Ballmer). But why now? Why suggest that your CEO who has provided substantial profits over the years that it would be best he retire at this moment? After you’ve approved the new restructuring of the entire organization and Senior VP levels why would you go this route and not have anyone announced as the successor to Ballmer? Is it because the potential successors have all left? Why do this at this moment? One would expect corporate speak filled with misdirection and confusion, as Ballmer’s letter on his retirement is filled with this and more, but it’s blatantly clear to many this wasn’t as smooth as it could’ve or should’ve been. Maybe it’s the $900 million write-down they had to make…but that’s confusing seeing as how the Bing business did nothing but bleed billions of dollars for years and remains a distant number 2 in search.

The timing of everything taking place is ill-fated, when you’re dealing with struggles on multiple ends, a new power structure within the company, and the release of new products on the way only to give yourself 12 months to find someone who can step in and figure out which way to right the ship and determine how much can be salvaged from the flood damage may not have been the best way to go. But what were the other options besides realizing the board probably should’ve done this years ago were available? This isn’t just another billion dollar company looking for a new CEO this is Microsoft, a company that has helped shape the future in technology. The company has the money and has access to the talent to rebuild themselves but the question is are they aware that innovation and making tough choices with their legacy product(s) are what may be needed to move forward? It’s always easy to play the armchair CEO, there are likely many options available for them to pick themselves back up and it’s for them to figure out.

Personally I hope and wish the best for them, it’s not ideal to have only two powerhouses in the mobile industry in iOS and Android, a third player needs to emerge and give the both of them a run for their money, a kick in the tail to engage in and further their nature of innovation. Because the end result in many or all cases are the choices and services available for the consumer and in a business sense, the more consumers you have the more money they spend on your product(s) the higher your revenue and profits. One should never take pride or glee in the misfortunes of others (my apologies for the ‘preachiness’ but it should be said).

In the end, it’s probable that this was just another one of their many miscalculations.

Update

It’s possible, this new transaction to purchase parts of Nokia may be heading in the right direction, this won’t auto(magic)ally turn them around but it’s intriguing to say the least. There will absolutely be more thoughts on this later.

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