Former Microsoft CEO Steve Ballmer's Biggest Regret

Mar 4 2014, 2:33pm CST | by

Former Microsoft CEO Steve Ballmer's Biggest Regret
Photo Credit: Forbes Business

Microsoft’s biggest mistake in the 14 years of Steve Ballmer’s leadership was not making the transition from software to hardware quickly enough. Who says so? Ballmer himself, that’s who.  Facing an audience of students at Oxford University’s Said Business School in his first public appearance since retiring as chief executive in February, Ballmer was asked to outline his biggest regret and, with characteristic bluntness, he did not hesitate.

“If I look back with 20-20 hindsight, the thing I regret is that we didn’t put the hardware and software together soon enough,” he said. It was almost magical the way the PC came about with an operating system from us and hardware from IBM. There was a little bit of magic too for Android and Samsung coming together. But if you really want to bring a vision to market, it’s helpful to be able to conceive and deliver the hardware and software.”

Ballmer believes Microsoft is in the process of fixing this problem, with Surface tablets and Windows phones now in its portfolio and the $7.2 billion acquisition of Nokia’s mobile phone business adding serious weight in hardware.

“Our company is in the process of building new muscle so that we’re not just thinking about things like tablets in advance and letting Apple commercialise them,” he said. “We have the innovation muscle and the marketing muscle and you see it in what we’re doing today with Surface and what we’re doing now with Windows phones and Nokia. Does that mean for sure that we will lead the next generation? No, but we’re there working hard to make sure that in that next wave, we’re there, we’re catching it, we’re driving.”

Ballmer, who met Bill Gates at Harvard and was Microsoft’s 30th employee when he joined in 1980, said he is extremely proud of the company’s record of innovation in his 34 years at the company.

“Most technology companies fail,” he said. “They’re zero trick ponies. They never do anything well and go away. You’re pretty much a genius in our business if you’re a one trick pony and even companies that get to be public companies generally have one trick; something that they get right and fix and then spin it really fast.

“At our company, I’m very proud of the fact that we’ve done at least two tricks. We really invented the modern PC by building Office. Then the second thing we did was really bring microprocessor technology into the data centre.”

He added: “I’d say we’ve done more tricks than anybody else. Apple has done two. I’d say we’ve done two and a half as I’d like a half-credit for Xbox. Most companies only do one. Google has got one to its credit. Oracle is still running the same play book. The fact that we’ve done two and a half is something I’m really, really proud of. And the fact that we’ve built muscle that lets us do new tricks in the future will distinguish us from all other technology companies on the planet.”

So what happened to make Microsoft miss out on much of the mobile phones revolution, not to mention the market for computer tablets that the company showcased years before Apple launched the iPad but never brought to development? Ballmer was uncharacteristically penitent on the matter.

“At the front edge of what’s called the ‘mobile trick’, we got a little bit behind,” he admitted. “The question is: what do you do when you get behind. Do you give up and go home… or do you say ‘what did we do wrong and how do we make sure we’re building assets that let us seize on things going forward?’ We stayed going forward. We came out with Surface, we came out with our phones, we have our proposed acquisition of Nokia, which is very important to us, and we prepare for the next generation.”

Ballmer believes the Nokia transaction was one of the most difficult strategic decisions for Microsoft in recent years but also one of the most significant. “It’s important because the name of the company is Micro-soft,” he said. “As a fundamental part of the founding principles, we were a software company and yet with X-Box, then Surface and now the phones, essentially we have a profile that will wind up being far more mixed in the future. That’s a pretty fundamental change in the way that we self-identify, think about and express the value we add and our innovation.”

The issue is that others are innovating too, though it is tricky to measure their potential for genuine long-term success. Should tech companies be measured on eyeballs on websites, even if they have yet to be monetised via subscriptions or advertising?

Ballmer believes such measurement remains tricky and needs refinement. On the subject of Facebook’s $19 billion acquisition of messaging service WhatsApp, for example, he commented:  “Obviously if your goal is to sell the company, they had the right goal-set: low cost, 450m users and sell for $19 billion. Does this imply that everything that gets 450 million users would sell for $19 billion? No it does not. Is it a fad? Well, probably not. I don’t know whether they’ll be successful or not but you do have to really sit there and say, ‘What’s my goal?’ Will that asset ever be worth anything? Will those 450 million people ever generate enough revenue for it to pay off? {Facebook chief executive} Mark Zuckerberg believes so and {there’s} no reason to doubt it. But you really have to look at it and say, ‘What is the measure of success?’ In the long run, the measure of success is: Do I make a lot of money for my shareholders, relative to their expectations? That’s the long term? The question is: how you get there?… And do I think there are still a lot of things to be figured out? Yes, I do.”

There’s plenty to play for still. Ballmer asked how many of his audience really expect the devices they love to look remotely like their present form in ten years’ time. He certainly doesn’t. He also sees enormous opportunity, with globalisation and the development of technology both in what he regards as their early years. “Globalisation, we could say is in the rear-view mirror but I don’t believe that,” he said. “The fact that is world markets are going to continue to grow in an unprecedented way for the next 25-30 years. There are seven billion people on the planet and maybe two billion of them have much in the way of resources. Let’s say that grows to three billion. That’s a fundamental opportunity for innovation, growth and improvements in world prosperity.”

Has Microsoft missed the trick for good or is it on the way back? Let me know what you think. Follow me here and  on Twitter at @Andycave

Source: Forbes Business

 
 

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