Steve Ballmer was an underrated CEO | Patreon

There's a common narrative that Microsoft was moribund under Steve Ballmer and then later saved by the miraculous leadership of Satya Nadella. This is the dominant narrative in every online discussion about the topic I've seen and it's a commonly expressed belief "in real life" as well. While I don't have anything negative to say about Nadella's leadership in this post, this narrative underrates Ballmer's role in Microsoft's success. Not only did Microsoft's financials, revenue and profit, look great under Ballmer, Microsoft under Ballmer made deep, long-term bets that set up Microsoft for success in the decades after his reign. At the time, the bets were widely panned, indicating that they weren't necessarily obvious, but we can see in retrospect that the company made very strong bets despite the criticism at the time.

In addition to overseeing deep investments in areas that people would later credit Nadella for, Ballmer set Nadella up for success by clearing out political barriers for any successor. Much like Gary Bernhardt's talk, which was panned because he made the problem statement and solution so obvious that people didn't realize they'd learned something non-trivial, Ballmer set up Microsoft for future success so effectively that it's easy to criticize him for being a bum because his successor is so successful.

Criticisms of Ballmer

For people who weren't around before the turn of the century, in the 90s, Microsoft used to be considered the biggest, baddest, company in town. But it wasn't long before people's opinions on Microsoft changed — by 2007, many people thought of Microsoft as the next IBM and Paul Graham wrote Microsoft is Dead, in which he noted that Microsoft being considered effective was ancient history:

A few days ago I suddenly realized Microsoft was dead. I was talking to a young startup founder about how Google was different from Yahoo. I said that Yahoo had been warped from the start by their fear of Microsoft. That was why they'd positioned themselves as a "media company" instead of a technology company. Then I looked at his face and realized he didn't understand. It was as if I'd told him how much girls liked Barry Manilow in the mid 80s. Barry who?

Microsoft? He didn't say anything, but I could tell he didn't quite believe anyone would be frightened of them.

These kinds of comments often came with comments that Microsoft's revenue was destined to fall, such as these comments by Graham:

Actors and musicians occasionally make comebacks, but technology companies almost never do. Technology companies are projectiles. And because of that you can call them dead long before any problems show up on the balance sheet. Relevance may lead revenues by five or even ten years.

Graham names Google and the web as primary causes of Microsoft's death, which we'll discuss later. Although Graham doesn't name Ballmer or note his influence in Microsoft is Dead, Ballmer has been a favorite punching bag of techies for decades. Ballmer came up on the business side of things and later became EVP of Sales and Support; techies love belittling non-technical folks in tech1. A common criticism, then and now, is that Ballmer didn't understand tech and was a poor leader because all he knew was sales and the bottom line and all he can do is copy what other people have done. Just for example, if you look at online comments on tech forums (minimsft, HN, slashdot, etc.) when Ballmer pushed Sinofsky out in 2012, Ballmer's leadership is nearly universally panned2. Here's a fairly typical comment from someone claiming to be an anonymous Microsoft insider:

Dump Ballmer. Fire 40% of the workforce starting with the loser online services (they are never going to get any better). Reinvest the billions in start-up opportunities within the puget sound that can be accretive to MSFT and acquisition targets ... Reset Windows - Desktop and Tablet. Get serious about business cloud (like Salesforce ...)

To the extent that Ballmer defended himself, it was by pointing out that the market appeared to be undervaluing Microsoft. Ballmer noted that Microsoft's market cap at the time was extremely low relative to its fundamentals/financials relative to Amazon, Google, Apple, Oracle, IBM, and Salesforce. This seems to have been a fair assessment by Ballmer as Microsoft has outperformed all of those companies since then.

When Microsoft's market cap took off after Nadella became CEO, it was only natural the narrative would be that Ballmer was killing Microsoft and that the company was struggling until Nadella turned it around. You can pick other discussions if you want, but just for example, if we look at the most recent time Microsoft is Dead hit #1 on HN, a quick ctrl+F has Ballmer's name showing up 24 times. Ballmer has some defenders, but the standard narrative that Ballmer was holding Microsoft back is there, and one of the defenders even uses part of the standard narrative: Ballmer was an unimaginative hack, but he at least set up Microsoft well financially. If you look at high ranking comments, they're all dunking on Ballmer.

And if you look on less well informed forums, like Twitter or Reddit, you see the same attacks, but Ballmer has fewer defenders. On Twitter, when I search for "Ballmer", the first four results are unambiguously making fun of Ballmer. The fifth hit could go either way, but from the comments, seems to generally be taken as making of Ballmer, and as I far as I scrolled down, all but one of the remaining videos was making fun of Ballmer (the one that wasn't was an interview where Ballmer notes that he offered Zuckerberg "$20B+, something like that" for Facebook in 2009, which would've been the 2nd largest tech acquisition ever at the time, second only to Carly Fiorina's acquisition of Compaq for $25B in 2001). Searching reddit (incognito window with no history) is the same story (excluding the stories about him as an NBA owner, where he's respected by fans). The top story is making fun of him, the next one notes that he's wealthier than Bill Gates and the top comment on his performance as a CEO starts with "The irony is that he is Microsofts [sic] worst CEO" and then has the standard narrative that the only reason the company is doing well is due to Nadella saving the day, that Ballmer missed the boat on all of the important changes in the tech industry, etc.

To sum it up, for the past twenty years, people having been dunking on Ballmer for being a buffoon who doesn't understand tech and who was, at best, some kind of bean counter who knew how to keep the lights on but didn't know how to foster innovation and caused Microsoft to fall behind in every important market.

Ballmer's wins

The common view is at odds with what actually happened under Ballmer's leadership. In financially material positive things that happened under Ballmer since Graham declared Microsoft dead, we have:

There are certainly plenty of big misses as well. From 2010-2015, HoloLens was one of Microsoft's biggest bets, behind only Azure and then Bing, but no one's big AR or VR bets have had good returns to date. Microsoft failed to capture the mobile market. Although Windows Phone was generally well received by reviewers who tried it, depending on who you ask, Microsoft was either too late or wasn't willing to subsidize Windows Phone for long enough. Although .NET is still used today, in terms of marketshare, .NET and Silverlight didn't live up to early promises and critical parts were hamstrung or killed as a side effect of internal political battles. Bing is, by reputation, a failure and, at least given Microsoft's choices at the time, probably needed antitrust action against Google to succeed, but this failure still resulted in a business unit worth hundreds of billions of dollars. And despite all of the failures, the biggest bet, Azure, is probably worth on the order of a trillion dollars.

The enterprise sales arm of Microsoft was built out under Ballmer before he was CEO (he was, for a time, EVP for Sales and Support, and actually started at Microsoft as the first business manager) and continued to get built out when Ballmer was CEO. Microsoft's sales playbook was so effective that, when I was Microsoft, Google would offer some customers on Office 365 Google's enterprise suite (Docs, etc.) for free. Microsoft salespeople noted that they would still usually be able to close the sale of Microsoft's paid product even when competing against a Google that was giving their product away. For the enterprise, the combination of Microsoft's offering and its enterprise sales team was so effective that Google couldn't even give its product away.

If you're reading this and you work at a "tech" company, the company is overwhelmingly likely to choose the Google enterprise suite over the Microsoft enterprise suite and the enterprise sales pitch Microsoft sales people have probably sounds ridiculous to you.

An acquaintance of mine who ran a startup had a Microsoft Azure salesperson come in and try to sell them on Azure, opening with "You're on AWS, the consumer cloud. You need Azure, the enterprise cloud". For most people in tech companies, enterprise is synonymous with overpriced, unreliable, junk. In the same way it's easy to make fun of Ballmer because he came up on the sales and business side of the house, it's easy to make fun of an enterprise sales pitch when you hear it but, overall, Microsoft's enterprise sales arm does a good job. When I worked in Azure, I looked into how it worked and, having just come from Google, there was a night and day difference. This was in 2015, under Nadella, but the culture and processes that let Microsoft scale this up were built out under Ballmer. I think there were multiple months where Microsoft hired and onboarded more salespeople than Google employed in total and every stage of the sales pipeline was fairly effective.

Microsoft's misses under Ballmer

When people point to a long list of failures like Bing, Zune, Windows Phone, and HoloLens as evidence that Ballmer was some kind of buffoon who was holding Microsoft back, this demonstrates a lack of understanding of the tech industry. This is like pointing to a list of failed companies a VC has funded as evidence the VC doesn't know what they're doing. But that's silly in a hits based industry like venture capital. If you want to claim the VC is bad, you need to point out poor total return or a lack of big successes, which would imply poor total return. Similarly, a large company like Microsoft has a large portfolio of bets and one successful bet can pay for a huge number of failures. Ballmer's critics can't point to a poor total return because Microsoft's total return was very good under his tenure. Revenue increased from $14B or $22B to $83B, depending on whether you want to count from when Ballmer became President in July 1998 or when Ballmer became CEO in January 2000. The company was also quite profitable when Ballmer left, recording $27B in profit the previous four quarters, more than the revenue of the company he took over. By market cap, Azure alone would be in the top 10 largest public companies in the world and the enterprise software suite minus Azure would probably just miss being in the top 10.

As a result, critics also can't point to a lack of hits when Ballmer presided over the creation of Azure, the conversion of Microsoft's enterprise software from set of local desktop apps to Office 365 et al., the creation of the world's most effective enterprise sales org, the creation of Microsoft's video game empire (among other things, Ballmer was CEO when Microsoft acquired Bungie and made Halo the Xbox's flagship game on launch in 2001), etc. Even Bing, widely considered a failure, on last reported revenue and current P/E ratio, would be 12th most valuable tech company in the world, between Tencent and ASML. When attacking Ballmer, people cite Bing as a failure that occurred on Ballmer's watch, which tells you something about the degree of success Ballmer had. Most companies would love to have their successes be as successful as Bing, let alone their failures. Of course it would be better if Ballmer was prescient and all of his bets succeeded, making Microsoft worth something like $10T instead of the lowly $3T market cap it has today, but the criticism of Ballmer that says that he had some failures and some $1T successes is a criticism that he wasn't the greatest CEO of all time by a gigantic margin. True, but not much of a criticism.

And, unlike Nadella, Ballmer didn't inherit a company that was easily set up for success. As we noted earlier, it wasn't long into Ballmer's tenure that Microsoft was considered a boring, irrelevant company and the next IBM, mostly due to decisions made when Bill Gates was CEO. As a very senior Microsoft employee from the early days, Ballmer was also partially responsible for the state of Microsoft at the time, so Microsoft's problems are also at least partially attributable to him (but that also means he should get some credit for the success Microsoft had through the 90s). Nevertheless, he navigated Microsoft's most difficult problems well and set up his successor for smooth sailing.

Earlier, we noted that Paul Graham cited Google and the rise of the web as two causes for Microsoft's death prior to 2007. As we discussed in this look at antitrust action in tech, these both share a common root cause, antitrust action against Microsoft. If we look at the documents from the Microsoft antitrust case, it's clear that Microsoft knew how important the internet was going to be and had plans to control the internet. As part of these plans, they used their monopoly power on the desktop to kill Netscape. They technically lost an antirust case due to this, but if you look at the actual outcomes, Microsoft basically got what they wanted from the courts. The remedies levied against Microsoft are widely considered to have been useless (the initial decision involved breaking up Microsoft, but they were able to reverse this on appeal), and the case dragged on for long enough that Netscape was doomed by the time the case was decided, and the remedies that weren't specifically targeted at the Netscape situation were meaningless.

A later part of the plan to dominate the web, discussed at Microsoft but never executed, was to kill Google. If we're judging Microsoft by how "dangerous" it is, how effectively it crushes its competitors, like Paul Graham did when he judged Microsoft to be dead, then Microsoft certainly became less dangerous, but the feeling at Microsoft was that their hand was forced due to the circumstances. One part of the plan to kill Google was to redirect users who typed google.com into their address bar to MSN search. This was before Chrome existed and before mobile existed in any meaningful form. Windows desktop marketshare was 97% and IE had between 80% to 95% marketshare depending on the year, with most of the rest of the marketshare belonging to the rapidly declining Netscape. If Microsoft makes this move, Google is killed before it can get Chrome and Android off the ground and, barring extreme antitrust action, such as a breakup of Microsoft, Microsoft owns the web to this day. And then for dessert, it's not clear there wouldn't be a reason not to go after Amazon.

After internal debate, Microsoft declined to kill Google not due to fear of antitrust action, but due to fear of bad PR from the ensuing antitrust action. Had Microsoft redirected traffic away from Google, the impact on Google would've been swifter and more severe than their moves against Netscape and in the time it would take for the DoJ to win another case against Microsoft, Google would suffer the same fate as Netscape. It might be hard to imagine this if you weren't around at the time, but the DoJ vs. Microsoft case was regular front-page news in a way that we haven't seen since (in part because companies learned their lesson on this one — Google supposedly killed the 2011-2012 FTC against them with lobbying and has cleverly maneuvered the more recent case so that it doesn't dominate the news cycle in the same way). The closest thing we've seen since the Microsoft antitrust media circus was the media response to the Crowdstrike outage, but that was a flash in the pan compared to the DoJ vs. Microsoft case.

If there's a criticism of Ballmer here, perhaps it's something like Microsoft didn't pre-emptively learn the lessons its younger competitors learned from its big antitrust case before the big antitrust case. A sufficiently prescient executive could've advocated for heavy lobbying to head the antitrust case off at pass, like Google did in 2011-2012, or maneuvered to make the antitrust case just another news story, like Google has been doing for the current case. Another possible criticism is that Microsoft didn't correctly read the political tea leaves and realize that there wasn't going to be serious US tech antitrust for at least two decades after the big case against Microsoft. In principle, Ballmer could've overridden the decision to not kill Google if he had the right expertise on staff to realize that the United States was entering a two decade period of reduced antitrust scrutiny in tech.

As criticisms go, I think the former criticism is correct, but not an indictment of Ballmer unless you expect CEOs to be infallible, so as evidence that Ballmer was a bad CEO, this would be a very weak criticism. And it's not clear that the latter criticism is correct. While Google was able to get away with things like hardcoding the search engine in Android to prevent users from changing their search engine setting to having badware installers trick users into making Chrome the default browser, they were considered the "good guys" and didn't get much scrutiny for these sorts of actions, Microsoft wasn't treated with kid gloves in the same way by the press or the general public. Google didn't trigger a serious antitrust investigation until 2011, so it's possible the lack of serious antitrust action between 2001 and 2010 was an artifact of Microsoft being careful to avoid antitrust scrutiny and Google being too small to draw scrutiny and that a move to kill Google when it was still possible would've drawn serious antitrust scrutiny and another PR circus. That's one way in which the company Ballmer inherited was in a more difficult situation than its competitors — Microsoft's hands were perceived to be tied and may have actually been tied. Microsoft could and did get severe criticism for taking an action when the exact same action taken by Google would be lauded as clever.

When I was at Microsoft, there was a lot of consternation about this. One funny example was when, in 2011, Google officially called out Microsoft for unethical behavior and the media jumped on this as yet another example of Microsoft behaving badly. A number of people I talked to at Microsoft were upset by this because, according to them, Microsoft got the idea to do this when they noticed that Google was doing it, but reputations take a long time to change and actions taken while Gates was CEO significantly reduced Microsoft's ability to maneuver.

Another difficulty Ballmer had to deal with on taking over was Microsoft's intense internal politics. Again, as a very senior Microsoft employee going back to almost the beginning, he bears some responsibility for this, but Ballmer managed to clear the board of the worst bad actors so that Nadella didn't inherit such a difficult situation. If we look at why Microsoft didn't dominate the web under Ballmer, in addition to concerns that killing Google would cause a PR backlash, internal political maneuvering killed most of Microsoft's most promising web products and reduced the appeal and reach of most of the rest of its web products. For example, Microsoft had a working competitor to Google Docs in 1997, one year before Google was founded and nine years before Google acquired Writely, but it was killed for political reasons. And likewise for NetMeeting and other promising products. Microsoft certainly wasn't alone in having internal political struggles, but it was famous for having more brutal politics than most.

Although Ballmer certainly didn't do a perfect job at cleaning house, when I was at Microsoft and asked about promising projects that were sidelined or killed due to internal political struggles, the biggest recent sources of those issues were shown the door under Ballmer, leaving a much more functional company for Nadella to inherit.

The big picture

Stepping back to look at the big picture, Ballmer inherited a company that was a financially strong position that was hemmed in by internal and external politics in a way that caused outside observers to think the company was overwhelmingly likely to slide into irrelevance, leading to predictions like Graham's famous prediction that Microsoft is dead, with revenues expected to decline in five to ten years. In retrospect, we can see that moves made under Gates limited Microsoft's ability to use its monopoly power to outright kill competitors, but there was no inflection point at which a miraculous turnaround was mounted. Instead, Microsoft continued its very strong execution on enterprise products and continued making reasonable bets on the future in a successful effort to supplant revenue streams that were internally viewed as long-term dead ends, even if they were going to be profitable dead ends, such as Windows and boxed (non-subscription) software.

Unlike most companies in that position, Microsoft was willing to very heavily subsidize a series of bets that leadership thought could power the company for the next few decades, such as Windows Phone, Bing, Azure, Xbox, and HoloLens. From the internal and external commentary on these bets, you can see why it's so hard for companies to use their successful lines of business to subsidize new lines of business when the writing is on the wall for the successful businesses. People panned these bets as stupid moves that would kill the company, saying the company should focus is efforts on its most profitable businesses, such as Windows. Even when there's very clear data showing that bucking the status quo is the right thing, people usually don't do it, in part because you look like an idiot when it doesn't pan out, but Ballmer was willing to make the right bets in the face of decades of ridicule.

Another reason it's hard for companies to make these bets is that companies are usually unable to launch things that are radically different from their core business. When yet another non-acquisition Google consumer product fails, every writes this off as a matter of course — of course Google failed there, they're a technical-first company that's bad at product. But Microsoft made this shift multiple times and succeeded. Once was with Xbox. If you look at the three big console manufacturers, two are hardware companies going way back and one is Microsoft, a boxed software company that learned how to make hardware. Another time was with Azure. If you look at the three big cloud providers, two are online services companies going back to their founding and one is Microsoft, a boxed software company that learned how to get into the online services business. Other companies with different core lines of business than hardware and online services saw these opportunities and tried to make the change and failed.

And if you look at the process of transitioning here, it's very easy to make fun of Microsoft in the same way it's easy to make fun of Microsoft's enterprise sales pitch. The core Azure folks came from Windows, so in the very early days of Azure, they didn't have an incident management process to speak of and during their first big global outages, people were walking around the hallways asking "is it Azure down?" and trying to figure out what to do. Azure would continue to have major global outages for years while learning how to ship somewhat reliable software, but they were able to address the problems well enough to build a trillion dollar business. Another time, before Azure really knew how to build servers, a Microsoft engineer pulled up Amazon's pricing page and noticed that AWS's retail price for disk was cheaper than Azure's cost to provision disks. When I was at Microsoft, a big problem for Azure was building out datacenter fast enough. People joked that the recent hiring of a ton of sales people worked too well and the company sold too much Azure, which was arguably true and also a real emergency for the company. In the other cases, Microsoft mostly learned how to do it themselves and in this case they brought in some very senior people from Amazon who had deep expertise in supply chain and building out datacenters. It's easy to say that, when you have a problem and a competitor has the right expertise, you should hire some experts and listen to them but most companies fail when they try to do this. Sometimes, companies don't recognize that they need help but, more frequently, they do bring in senior expertise that people don't listen to. It's very easy for the old guard at a company to shut down efforts to bring in senior outside expertise, especially at a company as fractious at Microsoft, but leadership was able to make sure that key initiatives like this were successful3.

When I talked to Google engineers about Azure during Azure's rise, they were generally down on Azure and would make fun of it for issues like the above, which seemed comical to engineers working at a company that grew up as large scale online services companies with deep expertise in operating large scale services, building efficient hardware, and building out datacenter, but despite starting in a very deep hole technically, operationally, and culturally, Microsoft built a business unit worth a trillion dollars with Azure.

Not all of the bets panned out, but if we look at comments from critics who were saying that Microsoft was doomed because it was subsidizing the wrong bets or younger companies would surpass it, well, today, Microsoft is worth 50% more than Google and twice as much as Meta. If we look at the broader history of the tech industry, Microsoft has had sustained strong execution from its founding in 1975 until today, a nearly fifty year run, a run that's arguably been unmatched in the tech industry. Intel's been around as bit longer, but they stumbled very badly around the turn of the century and they've had a number of problems over the past decade. IBM has a long history, but it just wasn't all that big during its early history, e.g., when T.J. Watson renamed Computing-Tabulating-Recording Company to International Business Machines, its revenue was still well under $10M a year (inflation adjusted, on the order of $100M a year). Computers started becoming big and IBM was big for a tech company by the 50s, but the antitrust case brought against IBM in 1969 that dragged on until it was dropped for being "without merit" in 1982 hamstrung the company and its culture in ways that are still visible when you look at, for example, why IBM's various cloud efforts have failed and, in the 90s, the company was on its deathbed and only managed to survive at all due to Gerstner's turnaround. If we look at older companies that had long sustained runs of strong execution, most of them are gone, like DEC and Data General, or had very bad stumbles that nearly ended the company, like IBM and Apple. There are companies that have had similarly long periods of strong execution, like Oracle, but those companies haven't been nearly as effective as Microsoft in expanding their lines of business and, as a result, Oracle is worth perhaps two Bings. That makes Oracle the 20th most valuable public company in the world, which certainly isn't bad, but it's no Microsoft.

If Microsoft stumbles badly, a younger company like Nvidia, Meta, or Google could overtake Microsoft's track record, but that would be no fault of Ballmer's and we'd still have to acknowledge that Ballmer was a very effective CEO, not just in terms of bringing the money in, but in terms of setting up a vision that set Microsoft up for success for the next fifty years.

Appendix: Microsoft's relevance under Ballmer

Besides the headline items mentioned above, off the top of my head, here are a few things I thought were interesting that happened under Ballmer since Graham declared Microsoft to be dead

One response to Microsoft's financial success, both the direct success that happened under Ballmer as well as later success that was set up by Ballmer, is that Microsoft is financially successful but irrelevant for trendy programmers, like IBM. For one thing, rounded to the nearest Bing, IBM is probably worth either zero or one Bings. But even if we put aside the financial aspect and we just look at how much each $1T tech company (Apple, Nvidia, Microsoft, Google, Amazon, and Meta) has impacted programmers, Nvidia, Apple, and Microsoft all have a lot of programmers who are dependent on the company due to some kind of ecosystem dependence (CUDA; iOS; .NET and Windows, the latter of which is still the platform of choice for many large areas, such as AAA games).

You could make a case for the big cloud vendors, but I don't think that companies have a nearly forced dependency on AWS in the same way that a serious English-language consumer app company really needs an iOS app or an AAA game company has to release on Windows and overwhelmingly likely develops on Windows.

If we look at programmers who aren't pinned to an ecosystem, Microsoft seems highly relevant to a lot of programmers due to the creation of tools like vscode and TypeScript. I wouldn't say that it's necessarily more relevant than Amazon since so many programmers use AWS, but it's hard to argue that the company that created (among many other things) vscode and TypeScript under Ballmer's watch is irrelevant to programmers.

Appendix: my losing bet against Microsoft

Shortly after joining Microsoft in 2015, I bet Derek Chiou that Google would beat Microsoft to $1T market cap. Unlike most external commentators, I agreed with the bets Microsoft was making, but when I looked around at the kinds of internal dysfunction Microsoft had at the time, I thought that would cause them enough problems that Google would win. That was wrong — Microsoft beat Google to $1T and is now worth $1T more than Google.

I don't think I would've made the bet even a year later, after seeing Microsoft from the inside and how effective Microsoft sales was and how good Microsoft was at shipping things that are appealing to enterprises and the comparing that to Google's cloud execution and strategy. But you could say that I made a mistake that was fairly analogous to what external commentators made until I saw how Microsoft operated in detail.

Thanks to Laurence Tratt, Yossi Kreinin, Heath Borders, Justin Blank, Fabian Giesen, Matthew Thomas, and Nam Nguyen for comments/corrections/discussion

  1. Fabian Giesen points out that, in addition to Ballmer's "sales guy" reputation, his stage persona didn't do him any favors, saying "His stage presence made people think he was bad. But if you're not an idiot and you see an actor portraying Macbeth, you don't assume they're killing all their friends IRL" [return]

  2. Here's the top HN comment on a story about Sinofsky's ousting:

    The real culprit that needs to be fired is Steve Ballmer. He was great from the inception of MSFT until maybe the turn of the century, when their business strategy of making and maintaining a Windows monopoly worked beautifully and extremely profitably. However, he is living in a legacy environment where he believes he needs to protect the Windows/Office monopoly BY ANY MEANS NECESSARY, and he and the rest of Microsoft can't keep up with everyone else around them because of innovation.

    This mindset has completely stymied any sort of innovation at Microsoft because they are playing with one arm tied behind their backs in the midst of trying to compete against the likes of Google, Facebook, etc. In Steve Ballmer's eyes, everything must lead back to the sale of a license of Windows/Office, and that no longer works in their environment.

    If Microsoft engineers had free rein to make the best search engine, or the best phone, or the best tablet, without worries about how will it lead to maintaining their revenue streams of Windows and more importantly Office, then I think their offerings would be on an order of magnitude better and more creative.

    This is wrong. At the time, Microsoft was very heavily subsidizing Bing. To the extent that one can attribute the subsidy, it would be reasonable to say that the bulk of the subsidy was coming from Windows. Likewise, Azure was a huge bet that was being heavily subsidized from the profit that was coming from Windows. Microsoft's strategy under Ballmer was basically the opposite of what this comment is saying.

    Funnily enough, if you looked at comments on minimsft (many of which were made by Microsoft insiders), people noted the huge spend on things like Azure and online services, but most thought this was a mistake and that Microsoft needed to focus on making Windows and Windows hardware (like the Surface) great.

    Basically, no matter what people think Ballmer is doing, they say it's wrong and that he should do the opposite. That means people call for different actions since most commenters outside of Microsoft don't actually know what Microsoft is up to, but from the way the comments are arrayed against Ballmer and not against specific actions of the company, we can see that people aren't really making a prediction about any particular course of action and they're just ragging on Ballmer.

    BTW, the #2 comment on HN says that Ballmer missed the boat on the biggest things in tech in the past 5 years and that Ballmer has deemphasized cloud computing (which was actually Microsoft's biggest bet at the time if you look at either capital expenditure or allocated headcount). The #3 comment says "Steve Ballmer is a sales guy at heart, and it's why he's been able to survive a decade of middling stock performance and strategic missteps: He must have close connections to Microsoft's largest enterprise customers, and were he to be fired, it would be an invitation for those customers to reevaluate their commitment to Microsoft's platforms.", and the rest of the top-level comments aren't about Ballmer.

    [return]
  3. There were the standard attempts at blocking the newfangled thing, e.g., when Azure wanted features added to Windows networking, they would get responses like "we'll put that on the roadmap", which was well understood to mean "we're more powerful than you and we don't have to do anything you say", so Microsoft leadership ripped networking out of Windows and put Windows networking in the Azure org, giving Azure control of the networking features they wanted. This kind of move is in contrast to efforts to change the focus of the company at nearly every other company. For an extreme example on the other end, consider Qualcomm's server chip effort. When the group threatened to become more profitable and more important than the mobile chip group, the mobile group to had the server group killed before it could become large enough to defend itself. Some leadership, including the CEO, supported the long-term health of the company and therefore supported the sever group. Those people, including the CEO, were removed from the board and fired. It's unusual to have enough support to unseat the CEO, but for a more typical effort, look at how Microsoft killed its 1997 version of an online office suite. [return]