Can Microsoft Profit From Having Steve Ballmer Take Total Control?

by drjim on July 8, 2008

Steve Ballmer Now Runs Microsoft

Steve Ballmer Now Runs Microsoft

The news is a bit old by now; however, it’s still a big deal that Steve Ballmer has finally taken full control of Microsoft now that Bill Gates has officially stepped down. I believe that Microsoft employs over 100,000 staff and so Steve has got his hands full trying to find a way (or ways) to once again make Microsoft more agile. Hopefully Steve will be able to sort out what path he wants the company to follow: strategy, quality, or innovation.

What would you do if you were in Steve’s IT shoes? Microsoft has a fundamental dilemma: are they one huge company (a la Wal-Mart) or are they a loosely connected set of business units (a la GE)? The key point to remember here is that Microsoft is neither a Wal-Mart nor a GE so whatever path they take, they will need to create their own unique structure.

In terms of major projects, the next release of the Windows operating system cannot happen quickly enough. No matter what you think of Vista, the public perception of it is that it is undesirable. Steve can put his best people on it and see if he can turn this perception around or he can simply quickly release the next version and consider Vista a horrible learning experience.

Next Microsoft still seems to be interested in getting into the mobile phone market. I’m not sure if this is simply a case of “We can do whatever Apple can do…” or if they really see it as a key pillar of their growth. No matter what, they need to put some creative talent onto this one. They’ve got a powerful lever in the Exchange email tool — if they can build on that, they could have a leg to stand on.

Finally, Steve has got to realize that the Internet is all about search. Right now it looks like he’s still maneuvering to get a piece of Yahoo’s search business. Perhaps what he really should be doing is looking further out and finding out where Google is NOT the dominate search engine and spend some of those Microsoft R&D dollars to attack Google from the outside instead of going head-to-head with them.

No matter what, Steve will be kept quite busy for the foreseeable future. Since I use products made by his company, I hope that he makes some good decisions. Buy or sell your Microsoft stock based on how you think he’s going to do!

 

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{ 2 comments… read them below or add one }

Fred Otto April 9, 2009 at 4:43 pm

I think that Balmer would be best off adopting the Berkshire Hathaway model, where he and a small group manage the money, and then split Microsoft into multiple subsidiaries or separate corporations. Initially Microsoft could own all of the companies, but let it be known that the companies can be spun off if they underperform, or spun off as separate companies in IPOs and Microsoft maintain a financial interest or shareholder interest, but not necessarily control. A venture capitalist does not necessarily have a problem in cashing out of an investment with a profit.

Unfortunately Microsoft has lost its way. I do not know whether it has grown too big, but it needs some skunk works and competition and be able to reward its entreprenuers. At one time it had the reputation of hiring the smartest of the graduates, but Google seems to have taken that title away. With the kind of money which Microsoft generates and is sitting on, Microsoft needs to assist its partners and affiliates with venture capital without gaining control to start its entreprenuerial endeavors up again.

I think a purchase of Yahoo, only puts Microsoft in second place as a search provider. I am sure that they can arrange a license to use Yahoo’s search technology without buying the store.
Fred Otto
847-698-1160

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Dr. Jim Anderson April 10, 2009 at 3:42 pm

Fred: I fully agree with you – the purchase of Yahoo sure seems like a “me-too” play. I really like your suggestion – Microsoft started small and grew to be big. Perhaps it’s now time for it to look for ways to “grow small” again by breaking into multiple parts. No matter what direction it chooses to go, Steve B. has some tough decisions ahead of him. Here’s hoping that he makes the right decisions for the long run…

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