It’s hard to step into the shoes of a giant. Just look at Steve Jobs’ successor at Apple. Every move is scrutinized. Every decision is compared to Steve Jobs’ decisions. Every statement is met, at least in some circles, with the question, what would Steve Jobs have done? The fact of the matter is, if you find yourself in the role of the guy who takes up after the pioneer, who comes to do the job left by the person who built the company, it’s very hard not to be compared to the person who came before you. In many respects, it is unfair because the business environment changes. There is a wide gulf of difference between forming a company, pioneering an industry, establishing the key inventions that put the company on the map and the person who is tasked to essentially keep the company growing, and most importantly, not screw anything up. All these dynamics play out in a very vivid way in the post-Bill Gates era Microsoft.
Microsoft CEO Steve Ballmer has been under a lot of pressure lately. He’s been the recipient of much criticism, a lot of it unfair, after Bill Gates has left from active management of the company. Indeed, about a year ago, a very influential investor in Microsoft, David Einhorn, was calling for the resignation of Steve Ballmer. He considers Ballmer’s continued presence in Microsoft as one of its biggest liabilities.
Is this criticism fair?
Sure, at a surface level, Einhorn might have a point. It is undisputable that Microsoft missed the boat when it comes to personal digital music players. Apple’s iPod redefined personal music, and Microsoft came up with the forgettable Zune player. The internet has radically restructured consumers’ expectations of applications and has begun to shift it towards a cloud-based remote computing model. A lot of Microsoft is still rooted in local software, this might prove to be its undoing, unless it adapts fairly soon to a completely cloud-based world. Finally and most visibly, Microsoft really missed the boat when it comes to tablets and smartphones. While its partnership with the previous smartphone world-leader, Nokia, in rolling out the Lumia smartphone is generating some sales, some critics were saying this is too little too late. When it comes to tablets, some critics were saying that Microsoft missed that entirely as well. All these add a lot of pressure to Steve Ballmer to get Microsoft going again in these fast-growing fields, especially, tablet and smartphone market.
Mobile devices are increasingly shaping and radically transforming how consumers view computing. No wonder then than Microsoft has taken a very big gamble with two initiatives: the Surface tablet and Windows Phone 8. Indeed, Windows 8 is also a key point of evolution for Microsoft. Steve Ballmer’s future might hang in the balance. Windows Phone 8, which was introduced very recently is quite competitive, on a technical level, with Apple’s iOS and Google’s smartphone OS Android. Still, it suffers from two key competitive disadvantages: it doesn’t have enough apps and there are not enough carriers of the OS. These are two disadvantages that played previous versions of Windows Phone. There is still no comprehensive battle plan on how this is going to be fixed by Microsoft.
Earlier, we reported that Microsoft was willing to pay apps developers for porting their existing apps into Windows Phone 8. This is still a far-cry from a lot of strategic advantages held by Android and Apple’s iOS, with the most important advantage being some app makers are focused on exclusive apps for those particular OS. Another question that needs to be resolved by Ballmer’s team very quickly is whether Windows 8 will hit the ball out of the park immediately after it is officially released. As we have reported earlier, early adoption of the OS trails Windows 7 at the same stage of development when Windows 8 was released. This could only make managers at Microsoft worried because for all intents and purposes, Windows 8 being such a radical departure from a typical Windows OS layout and operations must come out swinging, or else, it might end up as a major flop. Finally, in terms of the Surface tablet, this is a major gamble for Microsoft, not only is it venturing into an unchartered territory of being a hardware manufacturer, it also runs the risk of alienating its hardware vendors.
As we have also written earlier, Microsoft’s perceived industry role is strictly as a software maker. It has cultivated, over the years, very sensitive and highly lucrative partnerships with hardware vendors. This move might be considered, depending on how you look at it, as a stab in the back that might put competitive pressure on previous allies. As alarmed as some industry observers maybe regarding Steve Ballmer’s future, considering the fact that Microsoft has a comprehensive strategy that doesn’t suffer from the strategic shortcomings of either Google or Apple’s grand view of computing, it might just turn out that Microsoft’s vision will win out in the end. Microsoft’s vision, as we have explained earlier, is that all devices, whether they are ATMs, kiosk computers, tablets, smartphones, all devices would have to go through a Windows OS in order to access the internet, to talk to other devices and to process information locally. While these raise the hackles of some observers that would rather have a free OS or a purely independent computing system, this vision offers standardized integrated computing experience and data interchangeability across all hardware platforms.
In a very real sense, this is like walking into a McDonald’s. Regardless of which McDonald’s you walk in to in all corners of Planet Earth, you would be assured of a certain level of quality, a certain level of consumer experience. This is a very powerful value proposition. In comparison, Google’s vision misses by a mile. While Google is also shooting for the same standardized experience across all devices, they all require plugging into the internet. This is a luxury that many people, in many parts around the world, simply don’t have. There is a higher level of control when it comes to local software. This is a key problem that Google has to overcome. Apple’s vision, on the other hand, divorces creative computing with business computing, and there seems to be like an artificial wall between the two. If it were to pursue Microsoft’s vision, then all eyes will be turned once again, to the huge margin Apple’s commanding for basically the same functionality. This has the seeds of its own destruction as well. From a grand strategic perspective, Steve Ballmer, in our opinion, is on the ball. The question here really is whether Microsoft can implement its fighting a three-front war across differing hardware platforms. But experiences have shown that while you may beat Microsoft in one or two battles, it’s still a bad idea to bet against the company over the long haul. We’ll soon find out if this is still the case. Give this issue one to two years to fully play out.