August's announcement that Microsoft’s current CEO Steve Ballmer will leave the company within the next 12 months seems to have come as a surprise to both observers of Microsoft politics and company insiders.
Yes, his management has been criticised, but Ballmer had still delivered one of the best profit records on Wall Street in the face of a dotcom bust that might have done much more damage to the company. And only recently he has undertaken a root and branch structural re-organisation of the company in an attempt to remove the silos regarded as hampering a unified approach to product research and development.
To read the commentary, you'd think we were reading an obituary rather than news about a change of career. This summer's under-performance of Microsoft stock may be part of the reason – Windows 8 and the Surface tablet have certainly failed to deliver the hoped for fillip to company fortunes.
But Ballmer's history is much older than that: He has been in post for 13 years. He was employee number 30 at Microsoft, and worked closely with Bill Gates before, as heir apparent, he took over the reins in January 2000. His biggest sin seems to be that he was not the technical visionary of either Gates or competitor Steve Jobs were, but instead a mere 'sales specialist'.
The most often cited quote in all these obituaries, and perhaps the black spot he must now always carry, is the ill-judged comment he made in response to the announcement of Steve Jobs' iPhone six years ago when he said: “There's no chance that the iPhone is going to get any significant market share. No chance...”
But remember the context of this remark; a world where Microsoft had 96% of the PC market, and Apple just 4%. Other product misfortunes during his tenure such as Zune and Windows Vista reinforced the technocrat's view of Ballmer as a simple salesman with no understanding for product. But with a product portfolio and range as broad as Microsoft’s, perhaps no-one would get it right all the time. The move to Azure and cloud-based services, the acquisition of Skype and the development of 365 applications (or should we call them services?) are surely all the other side of that particular coin?
The reality is that Microsoft has sustained itself and in particular has continued to deliver impressive profits since Ballmer's appointment. The company share price has been more disappointing. But his biggest misfortune has been to be judged by market expectation fuelled by Steve Jobs and the extraordinary turnaround at Apple that happened during his tenure.
However, Apple is a hopeless yardstick. It was a relatively small and failing company when Jobs returned, and has been propelled into its top slot by a unique consumer led vision – most particularly the iPhone and then the iPad. Even if Ballmer hadn't killed Microsoft’s tablet plans way back, it's hard to see how any company of Microsoft's size could possibly have carefully planned an equivalent renaissance.
In contrast, IBM seems a far more realistic model for a future Microsoft. IBM management has, in the past, struggled to keep up with rapid technological and consumer change, in spite of a commitment to research and development. Sound familiar? After opening up the PC client market in the first place, and giving Bill Gates his big break, the company gracefully removed itself from the melee as it become too consumer, price and commodity driven. Yet IBM has survived and thrived as a producer of business services, continuing to show healthy share price growth.
Given the high penetration of Microsoft into businesses across the globe, wouldn’t this be a better model to replicate? In which case Ballmer's legacy of 'hardware and services' as defining the future may just prove to be his parting misfire. Microsoft does not seem a credible supplier of the next wave of consumer client devices, any more that IBM was as a PC supplier. Hardware is always where the fight is toughest, the margins thinnest and the future least predictable. In the corporate and services arena however, Microsoft is already installed and fundamental in most large corporations and has been busy moving them to cloud-based applications and services.
Let’s not be too hard on Steve Ballmer. If the CEO of a key technology company which has ridden the recent recession and radical change in client and consumer behaviours, sustaining profit throughout, is regarded as a failure, there can't be too many successes out there. Ballmer may have been a sales guy with an over-baked and slightly irritating enthusiasm for all things Microsoft, but he is still passing a viable, credible, company on to his successor.
And maybe that new CEO, whoever he or she may be, will conclude that consumer and hardware worlds are not the ones Microsoft should be competing in, just as IBM did just under a decade ago...