By Greg Mills
The poor performance of Microsoft in the last 10 years has fundamental issues that will hobble the company for years to come. A stock hedge company has issued a paper demanding Microsoft CEO Steve Ballmer’s head on a pike.
Since Mr. Ballmer took over from Bill Gates in 2000, Microsoft’s market cap has been cut in half. Once the most valuable tech company in the world, Apple passed Microsoft last year.
Failure to innovate is deadly for high tech companies. Gates is famously quoted as saying, “Companies that fail to obsolete their own products are doomed to see the competition do it.” Innovation at Microsoft has been fraught with more failures than successful products during Ballmer’s term as CEO.
Apple launched the iPhone, and Microsoft launched the Kin Phone. The iPhone has become the de-facto standard for smartphones that the competition strives to match, and consumers compare all competitive phones with. The Kin was discontinued within weeks. Apple has made billions and Microsoft has lost millions on smartphones. Apple’s iOS smartphone platform has only recently been emulated by Microsoft with WIndows Mobile 7. This late-to-the party smartphone OS left all the handset makers without a viable OS and opened the door for Google’s Android OS.
Apple launched the iPad, and Microsoft was convinced that it was a fad that would die a natural death. They were so wrong. The confidence that the tablet form factor wasn’t going anywhere was based on attempts by Microsoft to run Windows for the PC on tablets and that failure falsely taught Ballmer to the dismiss iPad. Wrong move. The lack of a Microsoft tablet platform for hardware makers tablets left the door open for Google to launch the HoneyComb tablet OS.
Ballmer has allowed Microsoft to shrink down to a company that only makes money on the WIndows OS for the PC, which is declining in market share due to advances by Apple and Google in mobile platforms. Microsoft has also finally made some money on the Xbox game platform after years of losses. Ballmer should have listened to Bill Gates. Copying Apple can only go so far in leading a company.
Ballmer’s solution is to further emulate Apple by attempting to buy their way into Apple’s position. Paying Nokia to use their mobile OS is certainly a desperate move. Talk of Microsoft buying Nokia to vertically follow the leader is even more desperate. If Microsoft is losing money in the mobile platform and Nokia is losing money selling dumb phones, how can the combination make money? The stock market has been asking that question and coming to a rather negative reaction.
On another note, RIM is being punished by the market for its flawed PlayBook. Despite serious advertising sales have been estimated to be less than 450,000 since its launch and returns have been a serious problem.
That’s Greg’s bite out of Ballmer’s hide for today.