UPDATED 16:07 EDT / AUGUST 24 2013

Ballmer Era Ends, Setting Microsoft Free

Yesterday’s surprise announcement of Microsoft CIO Steve Ballmer’s impending retirement should be good news for the company and for its fans if it also signals the end of his “One Microsoft” policy that has chained the company to the past exactly when it needs to be the most agile, says Wikibon Co-founder and CTO David Floyer. One Microsoft has held Microsoft back at every turn, giving veto power over innovation to divisions of the company that are slow to respond to change.

Whatever triggered the decision, it was forced on him. “He got bounced by the board. Vote of no confidence,” says SiliconAngle Founder and Editor-in-Chief John Furrier. “He made the turn-around in July, big announcement. He went out publicly, tried to rally the troops. That was a move for him to make a last stand. Apparently the board didn’t like it.”

As to who might replace him, Furrier likes Microsoft Executive VP and former Skype CEO Tony Bates and VP and head of the Windows Phone Division Joe Belfiore. “I think this is a symptom of the disruption of the Cloud. Look at the carnage. HP. Cloud’s forcing all this to happen. That to me is the big trend — cloud/mobile/social/big data. This is a fundamental mindshare shift. Think differently.”

The economics of IT are changing, he says. Whether it’s apps on end-user devices or servers in the data center, the market no longer wants the old high margin, expensive products, and vendors have to adapt to the new market economics.

“The fundamental problem with Ballmer is he’s a classic marketing guy,” Floyer says. “He’s good at that, but he’s tone deaf to the subtleties, the intricacies of a broader world than just PCs. And he has just got things so wrong as to be an embarrassment to his colleagues and supporters.” He showed that when he failed to understand the revolutionary nature of the iPhone. Whoever replaces him must understand the fundamental trends in the industry and where Microsoft can contribute. The Xbox, the Zune, and Bing, for instance, products far outside Microsoft’s core strengths, have been huge losing investments that are symptomatic of Ballmer’s lack of understanding.

What Microsoft needs to do, Floyer says, is to admit that they have lost control of the end user market, treat Windows Desktop as a cash cow, and focus on their many strengths. “Investing billions and billions in resurrecting the mobile phone and tablet is just a waste of resources.” New ventures should be in areas congruent to those strengths rather than in areas far from the company’s core competencies. “He’s not in tune with cloud computing, with software-as-a-service, with a true social, mobile world.”

One Microsoft

The One Microsoft anchor, which ties the most agile groups in Microsoft to the pace of the slowest just when the company needs to respond quickly to the changes rocking IT, was a major symptom of that lack of understanding, Floyer says. For instance, flash storage has introduced atomic writes, the ability to write every change in data immediately into even very large databases. This has multiple benefits, particularly for companies with applications that require very high performance, among other things protecting valuable transactional data from loss in an unplanned system interruption.

Microsoft could add support for atomic writes to SQLserver on Linux, gaining a competitive advantage over Oracle, which does not yet support this feature. But under One Microsoft it cannot add  atomic writes until Windows Server provides support. By the time that happens, Oracle may well beat SQLserver to market with this important advance.

Play to its strengths

Floyer believes that at this point Microsoft should cut its losses and focus on its strengths. “Microsoft has an excellent portfolio of products,” Floyer says. “Microsoft can be successful without the tablet and smart phone business at all.” The Windows desktop is still very profitable, and Microsoft Office and other end-user software is still popular. But “the last thing you should do is tie your best software to a platform that is declining.”

It needs to get Office onto  iOS and Android. “What drives that business is not Windows. Windows is irrelevant. It’s the applications. You have a tablet because of the applications you can run on it. And those applications are cheap, plentiful, and cover huge spread. If you look at the applications on fundamental Windows, they’re very limited indeed — you’re talking about less than 100 key applications. And they’re expensive, hundreds of dollars each…. That’s why the PC is going down — it’s not needed.”

On the other hand, it needs to work with Intel to defend their joint server monopoly against the threat of 32 bit ARM low-end machines running Linux. Once that gains a foothold, it could eat up the server market from the bottom just as Wintel ate up that market and drove the RISC servers (except IBM’s Power chip) out of business in the 1990s. The issue there will be price, but Floyer says, “They can win that battle.”

And it needs to stop lying to the public and develop a more ethical approach to its business. Ballmer, he said, should have fired the person who stole search technology from Google to improve Bing.

On the other hand, “On the server end they have so many strengths its unbelievable. Active Directory, Exchange, Lincs, what else is out there to compete with them? They have the best unified communications for the enterprise out there.” In Exchange 2013 Microsoft has added support for Android and iOS. “What you want is not One Microsoft. You want each of these to be moving forward as fast as possible.”


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