3rd September 2013
Microsoft’s Chief Executive, Steve Ballmer, has announced that he will retire from his role at the tech giant within 12 months. The news has come as a surprise to many, with Ballmer having only recently announced a restructuring at the company aimed at delivering its long-term strategy. The news also saw share in Microsoft rise by 7.3% with many people holding Ballmer responsible for Microsoft’s perceived failure to capitalise on new trends during his thirteen-year tenure.
Whether such criticism is entirely justified is debatable. Certainly Microsoft was slow in reacting to the emergence of mobile, whilst Apple and Google all but divvied up the market between themselves. Likewise, it appeared slow to react to the opportunities presented by social media. But where companies like Apple, Google and Facebook have been able to create post-Web empires by reacting quickly to emerging trends, none of them had the juggernaut size to turn around around that Microsoft did.
Microsoft’s huge success was rooted in providing software for desktop PCs and was established long before the Web era. With the rise of the Web and mobile and the decline of the desktop PC, the company would have to change direction at some point, but would have to continue servicing its existing business. Meanwhile, other startup (or in Apple’s case, re-emerging) companies were able to capitalise on the rise of the Web without the vast amount of existing interests.
Microsoft is in the process of pivoting from being primarily a software house to providing, as Ballmer himself wrote in a company memo in July, “devices and services for individuals and businesses.” Green shoots can been seen in its mobile (Windows Mobile 8) and service (Office 365) offerings and so it is perhaps not such a surprise that Ballmer would choose now as his opportunity to retire. As he said, “There is never a perfect time for this type of transition,” but Microsoft are in arguably the best shape looking to the future than they have been for the duration of his reign.
Office 365 is perhaps the biggest indicator of Microsoft’s shift in strategy. Office is still the most widely productivity suite available and has been the market leader for decades. Despite that, the launch of a cloud version is the biggest change to the product in all that time – and it tilts at Microsoft’s wider strategy. Cloud-based services mean lower production costs, subscription-based revenues and more higher levels of retention. The consumer, meanwhile, always has the latest version of the software, can access their documents from anywhere and is safe in the knowledge that data is backed-up.
Ballmer has overseen the groundwork for perhaps the biggest shift in focus of Microsoft’s existence. It was never going to be entirely tidy, but someone had to do it. It should also be remembered that Microsoft has more than tripled revenues and doubled profits under Ballmer’s leadership. Now, Microsoft has an opportunity to appoint a leader who can focus entirely on delivering a strategy that is already in place.
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