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Summary:

In technology and business, it’s all three: whether you won, whether you lost, and how you played the game. Now that Steve Ballmer has finally decided to retire, it’s report card time.

event_CESBallmerKeynote_Hero_Keynote

The only constant in technology is change, and the world has changed a lot in the 13 years that Steve Ballmer was CEO of Microsoft, one of the greatest companies the tech industry has ever produced. But that 13 years was a series of missed opportunities for Microsoft, which did not handle the transition from the unconnected PC era to the mobile cloud era nearly as well as a host of rivals that were either struggling to stay afloat or dorm-room fantasies when Ballmer took the wheel.

It’s a decidedly mixed legacy. Under Ballmer Microsoft’s revenue and profit grew and it maintained a strong and healthy relationship with enterprise computing customers, but its relevance among consumers fell to levels not seen since The Cosby Show was America’s most popular entertainment option. Apple and Google are creating the future of personal computing while Microsoft is scrambling to catch up in a market it helped invent. Ballmer’s inability to recognize these trends until it was too late has created big problems down the road for Microsoft.

MSFT Chart

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As Ballmer prepares for his retirement, which Microsoft announced Friday will happen within the next 12 months, we present a report card on how Microsoft fared on the subjects most important to us during his tenure.

Ballmer graduated magna cum laude from Harvard in 1977. He did not do quite as well as Microsoft CEO.

Tom Krazit

Cloud/enterprise apps

In cloud infrastructure, Ballmer’s Microsoft had a big, bold vision for Windows Azure. Unfortunately its timing was off. When the company finally launched Azure in February 2010, it was as a full-fledged Platform-as-a-Service. And by that time reams of developers at startups — and increasingly at larger companies too — had fallen in love with Amazon’s even-geekier Infrastructure-as-a-Service, which had been out a couple of years.

By the time Microsoft delivered IaaS-like functionality in Azure last April, AWS had churned out a truckload of new services and options. To sum up, Azure was late to market and then ended up not being what the market wanted. But on the plus side it has huge scale and is now offered in very competitive price scenarios of the sort only a Microsoft (or a Google) could offer. The question is whether its delivery of what people really wanted is too late to make a dent in AWS at a time when Google is also in the IaaS fray. Grade: B

On desktop apps and Microsoft’s effort to move users from the cash cow of full Office to SaaS-based Office 365, the jury is out. But Office 365 adoption, from what I can see, is underwhelming. Grade: C

Overall grade: B-/C+
Barb Darrow

Microsoft Surface RT

PCs/mobile

Ballmer was in charge for the launch of both the company’s arguably best and worst platform products: Windows XP and Windows Vista. Windows 7 undid some of the Vista damage, which Ballmer said Friday was his greatest regret as CEO. But Ballmer personified the company’s failure to create a compelling consumer tablet — after more or less inventing the category early in his reign with Windows Tablet PC — in 2010. On stage at the Consumer Electronics Show, Ballmer showed off the HP Slate running Windows 7, fumbling with the non-optimized on-screen controls during the demonstration. Ballmer’s Microsoft finally got closer to the target with Windows 8 and its Surface product, but it hasn’t yet been as successful as iPads and Android tablets. In fact, just last month Microsoft was forced to write down $900 million worth of Surface tablet inventory after it became clear the devices weren’t selling.

From a more mobile perspective, under Ballmer Microsoft made better strides in handsets. Windows Mobile was beyond saving in the late 2000’s following the debut of the iPhone and it was smart to start anew with Windows Phone. The idea was sound, but Ballmer didn’t get the team to execute quickly enough compared to the competition. As a result, Ballmer will be leaving behind a Microsoft that’s still an underdog in the mobile space while it also combats a market shifting from traditional computing to mobile and cloud-based activities.

Overall Grade: C-
Kevin Tofel

MSFT Revenue Quarterly Chart

MSFT Revenue Quarterly data by YCharts

Xbox/gaming

Perhaps the best thing that Steve Ballmer ever did for Xbox was to stay the hell out of its way. Though he has presided over all of the consoles Microsoft has released, Ballmer has only been in charge of the Xbox business directly in the last month, when former Xbox President Don Mattrick left for the CEO job at Zynga. In fact, Ballmer took a hands-off role with the Xbox’s business and development, leaving it to Mattrick and his predecessors, Peter Moore and J. Allard, with little argument.

But Ballmer was influential in two regards. First, Ballmer hired Moore to boost the Xbox 360 project after the original console’s modest performance. Moore led the Xbox 360 to triple the sales of the original Xbox, and brought it into homes everywhere, cementing Microsoft’s place in gaming. Second, Ballmer championed the idea of the Xbox as a “living room device” rather than a game console, something that has indelibly affixed itself to Xbox’s vision and will be most fully realized with the Xbox One.

Hopefully Ballmer will make his best decision yet in finding someone to lead Xbox into 2014 and beyond. While he didn’t make much of an impact directly, his influence on the infrastructure and hierarchy has been commendable.

Overall Grade: B+
Lauren Hockenson

Bing and Ballmer

Bing/Research

Looking back at Ballmer’s reign in mid-2013, his legacy in the field of computer science should be pretty positive. Whatever his motives were at the time, he oversaw the launch of Microsoft’s Bing search engine and didn’t kill it even when it became clear (in most outsiders’ eyes, at least) the service would always play second fiddle to Google search. That might turn out to be a really good decision.

Ballmer also kept Microsoft Research funded.

The combination of data and systems-engineering experience that comes from running a massive search engine, along with a team of smart researchers, has led to some impressive accomplishments. Microsoft has become a leader in the world of machine learning, for example, demonstrating at a live event in 2012 a near flawless translation of spoken English into written Chinese. In March, I attended the company’s annual TechForum event and saw a handful of promising research projects dedicated to data analysis of all types — from streams of manufacturing data to the path of viral content through Twitter’s sprawling network.

It doesn’t always get the respect or the attention that Google does, but Microsoft is no slouch in the world of computer science research. If the company’s plans to eventually turn some of its projects into products – further incorporating machine learning into Xbox, Office and Windows, for example – actually help its bottom line, Ballmer can smile coyly knowing the seeds were planted in his tenure.

Overall Grade: B
Derrick Harris

MSFT Profit Margin Quarterly Chart

MSFT Profit Margin Quarterly data by YCharts

There’s a saying in tech that when companies stop innovating, they start litigating instead. Microsoft, under Ballmer’s tenure, would certainly support that theory.

In the last ten years, the company did more than most to fuel the tech sector’s ubiquitous patent lawsuits, suing rivals directly but also engaging in “privateering” — giving patents to shell companies in order to harass their competitors. These tactics brought Microsoft income through judgments and licensing revenue, but also damaged the overall smartphone economy, as billions of dollars were devoted to lawyers than rather than developers. During this time, the company also engaged in other dirty tricks in the patent wars such as paying bloggers who wrote slanted coverage about archrival Google — and all the while missing out on the massive smart phone market that is now dominated by Google and Apple, as noted above.

Microsoft’s litigate-not-innovate strategy also stretched into the search engine market, an area where the company furiously pressed antitrust regulators to sanction Google over allegations that it abused its market share. Meanwhile, in an ironic symbol of the company’s declining power, a decade long consent agreement with the Justice Department came to an end — a deal that was intended to protect consumers and competitors from Microsoft’s one-time might.

Overall Grade: B
Jeff Roberts

Ballmer_MacBookAir

Strategy/vision

This is perhaps the most important task for anyone who wants to be a technology leader: You must be able to understand your company, your industry and the future, maneuvering as needed to make sure you “skate to where the puck is going to be,” a phrase the late Steve Jobs was fond of borrowing from hockey legend Wayne Gretzky. This world moves too quickly to accommodate leaders who can’t put that puzzle together.

Under Ballmer, Microsoft chased a lot of pucks. Ballmer famously derided the iPhone. He was quite aware of the power that could be obtained from attracting mass numbers of developers to a platform, but has been forced to beg developers to work on Windows 8 and Windows Phone. He has protected the company’s twin Windows and Office client software monopolies on the PC and is a friendly face in the offices of Fortune 500 CIOs, but is kind of a joke among the younger executives that are building the companies of the future around mobile devices and cloud computing.

CEOs are judged on lots of things: revenue, profits, stock prices, employee satisfaction and leadership ability. But perhaps the easiest way to judge a leader is to ask whether or not the company you’ve led is stronger and more prepared for the future than the day you became the leader.

Microsoft will remain a force in the tech industry for years to come. Yet it’s hard to argue that the company is more relevant to the future of computing in August 2013 than it was in January 2000.

Overall Grade: C
Tom Krazit

  1. I think you got strategy/vision wrong as Win 8 is a big fat F and I’ve been programming Windows since 2.x

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  2. Windows 8 has made pretty much every notebook being sold today a frustration, especially ones that don’t permit Windows 7 due to lack of manufacture-supplied drivers. It’s one serious reason why I’m contemplating building a desktop for my next purchase rather than going with a new notebook.

    Windows 8 may be great for slates and convertibles, but desktops and notebooks work best with Windows 7.

    It’s also rather unfortunate that Ballmer killed TechNet. Having access to full-version Windows and Office software for platform testing is something that many IT professionals still require.

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  3. You got Bing so wrong! Anybody can throw tens of billions over 10 years and produce something much better than Bing. Yet, Ballmer failed miserably with online services.

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  4. NOT A SINGLE F??? WHY?

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  5. Not a single F, WHY? If I were to rate Steve it will be something like this:

    Cloud: S
    PC/Mobile: U
    Xbox/Gaming: C
    Bing: K
    Legal: A (very good at fighting)
    Strategy/Vision: Double Negative Z

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  6. A completely flat stock price during his tenure warrants a grade range of basically “B” to “C”?

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  7. I think overall it’s a fair assessment. Strategy and vision is a bit harsh. The next 2 to 5 years at a minimum will be necessary to determine whether he had a strategy that is better than a C.

    On the cloud side of things you overlooked Office365 and the fact that Bing, Office365, Skydrive, and a ton of other services the company offers actually run on Azure today!

    Dogfooding might not be sexy on a balance sheet but it’s still a left pocket to right pocket kind of thing and in terms of mileage on a platform the amount of miles Microsoft is able to put on Azure with its own offerings is by far larger and more compelling to CIOs than the spectrum of startups that are riding the AWS wave.

    I think you need a lot more depth in your assessment for it to be all inclusive. But for a site that knows very little about Microsoft, not bad.

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  8. Ballmer has tripled Microsoft’s revenues and more than doubled its profits since he became CEO

    Read more: http://www.dailymail.co.uk/sciencetech/article-2401286/How-Steve-Balmer-700-million-firing-Microsoft.html

    and still we blame the guy. can one of the so called ANALYSTS run MS and then we’ll see where they take MS!

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  9. Avneesh Übermensch Balyan Monday, August 26, 2013

    Strategy/Vision: C??? The article is useless.. (that’s humor, its nice writeup).

    There was no vision.
    Strategy was simple, burn cash, create hardware and five free to all employees (60-70K)… and show the first Quarter big sales number without big market push…. End results were always same….

    The company was killed by Bill Gates. Instead of accepting Justice deptt law suit result, should have divided into 2 companies, apps and OS… But his love for Microsoft eventually leading to its demise. Sad part is, his emotions should be with OS, all apps (Office too) are bought from outside… The company would have free run after the split (no law suit, no conditions attached)…

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