Microsoft boss quits before he's pushed
Steven Ballmer announced on Friday that he was leaving the top job at Microsoft, paving the way for a generational change at the once-dominant technology company and giving it an opportunity to reinvent itself for a world dominated by mobile devices, social media and other technologies that have eluded its influence.
But with no clear successor to Mr Ballmer lined up and a jumble of businesses that will require the skills of a polymath to run, the company still faces huge obstacles to reclaiming its former glory.
While Microsoft in Mr Ballmer's reign as chief executive has yielded the spotlight to more glamorous companies like Apple, Google and Facebook, it still makes some of the biggest money-gushers in the technology business, including its Windows operating system for personal computers and Office applications like Word.
Its profit last quarter was nearly $US5 billion, compared with $US3.2 billion for Google and $US6.9 billion for Apple.
But the PC business is under siege by mobile devices like tablets, which Mr Ballmer famously underestimated.
"The walls are falling now," said George Colony, chief executive of Forrester Research, a research and advisory firm. "They may fall very quickly. There's not much time for the board."
Nonetheless, it has given itself a year to choose a successor, and Mr Ballmer, 57, will stay on until then.
Some analysts have suggested that Microsoft could use a seasoned turnaround artist in the mould of Lou Gerstner, who rescued IBM from irrelevance in the 1990s. Current and former Microsoft executives said the company would more likely turn to someone with a technology pedigree. Others believe Microsoft is not governable in its current form.
Ben Slivka, a 14-year employee of Microsoft who left in 1999, said the company should split into five independent companies he calls "Baby Bills" devoted to Windows client software, Office applications, servers, Xbox and the web.
"Give each of them [say] $US5 billion for a rainy day, but not much more," Mr Slivka wrote in a post on Facebook after the news of Mr Ballmer's retirement. "You want them to be hungry. Return most of the cash hoard to shareholders."
That Mr Ballmer announced his plans without a successor in place led to speculation among Microsoft executives that company co-founder and chairman Bill Gates might have been losing patience with his long-time friend, whom he first met when they were students at Harvard University in the 1970s.
Microsoft's disappointing stock price may have been a factor in his departure. Over Mr Ballmer's 13-year tenure at Microsoft, the stock has lost 36 per cent of its value, excluding dividends. Apple, meanwhile, was up nearly 2000 per cent over the same period. With the announcement of Mr Ballmer's departure, Microsoft's stock rose more than 7 per cent.
"Microsoft will have to go through a very hard and painful transition," said Joachim Kempin, a former senior Microsoft executive, who has written a book critical of the company under Mr Ballmer. "I'm not very confident the next guy will be able to immediately turn the ship around."
This year, ValueAct, a hedge fund known for behind-the-scenes shareholder activism, acquired a stake in Microsoft. Two years ago, the investor David Einhorn said Mr Ballmer was "stuck in the past" and called for him to go.
Mr Ballmer provided plenty of fodder for such critics with his dismissals of technologies that turned out to be game-changers. Soon after Steve Jobs introduced the iPhone, Mr Ballmer said there was "no chance that the iPhone is going to get any significant market share".
Apple now has 13 per cent of the global smartphone market, with more than $US18 billion in revenue from iPhone during the last quarter - four times Microsoft's Windows sales during that period. Microsoft's mobile phone software runs on less than 4 per cent of devices shipped.
The company posted disappointing results in its most recent quarter as its Windows business showed signs of succumbing to a broader slump in personal computer sales. Microsoft also disclosed a $US900 million charge to cover its unsold inventory of Surface tablets, the company's answer to the iPad.
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