January 13, 2005 12:40 PM PST

Five years of Ballmer--the effect on Microsoft

In the five years since Bill Gates surprised the technology world by announcing he would give up his title as chief executive at Microsoft, has the company changed?

Yes--and no. While CEO Steve Ballmer has clearly retooled some parts of Microsoft to more closely mesh with his hard-driving style, the world's largest software maker still faces many of the same challenges: open source, legal skirmishes, and slowing growth in some of its core businesses.

The eventual shift of power to longtime friend and colleague Ballmer was expected, but the announcement itself, five years ago Thursday, on Jan. 13, 2000, was something of a shock.

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What's new:
Five years ago today, Microsoft's Bill Gates handed the CEO reins to longtime friend Steve Ballmer.

Bottom line:
Ballmer's hard-driving style (can you say, "Developers! Developers! Developers! Developers!"?) has been quite a switch from Gates' more introverted approach. Still, though Ballmer has reworked the company to some extent, the software titan faces many of the same problems it did under Gates.

More stories on Steve Ballmer

The ever-boisterous Ballmer presents a decidedly different face for the company than that of Gates, the more introverted techie who had headed the company since founding it with Paul Allen in 1975.

Ballmer reorganized the company into separate business units, changed the way workers are compensated and moved toward a broad strategy to expand on Microsoft's core products by slicing and dicing them in new ways.

"It's clearly Ballmer's company from a business perspective," said Directions on Microsoft analyst Matt Rosoff. "The seven business units were largely his deal. It probably wouldn't have happened under Gates."

Another Ballmer-inspired change: fostering a kinder, gentler image and greater trust among both customers and partners. Ballmer issues annual missives to his troops calling on them to build products that are more useful for customers and to be more responsive to customer needs.

Ballmer tackled Microsoft's image problems almost from day one. In one of his first public appearances after taking over the CEO reins, he talked about the company's dilemma. "Microsoft is a company that, in my opinion, is not very well-understood. For some people, we're the Windows company...we're known mostly by our stock market success. We're also, I think, to some extent viewed as the scourge of Silicon Valley. Unfortunately...we're known as a legal defendant," he told the Commonwealth Club of California back in February of 2000.


Gates, meanwhile, has become the brain trust behind some of Microsoft's most complex--and risky--product strategies, such as the new Longhorn release of Windows and the company's move into home entertainment.

Trying to measure the success of the Ballmer era is tricky. Since the announcement, Microsoft has seen its fortunes fluctuate. Sales have grown from just less than $23 billion in fiscal 2000 to $36.8 billion in fiscal 2004, and the company's cash balance has more than tripled. At the same time, Microsoft' stock has foundered, dropping from $47.80 on the day Gates announced his plans to around $27 a share.

Many of the issues, though, that Microsoft has faced in recent years--security issues, slowing tech spending and the rising popularity of open-source software, are things that any Microsoft CEO would have had to face.

"It's a little hard to separate the changes that would have happened anyway from the changes that happened specifically from Ballmer

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8 comments

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5 years of idiotic comments
Like Bush,his only positive contribution has been as a clown to laugh at.
Posted by (242 comments )
Reply Link Flag
Mentioned stock price reduced due to stock split!
The article mentioned that the stock price has foundered from $48 when Gates retired to around $27. He doesn't mention that there has been a 2:1 stock split!! Microsoft's shares are still a major success. This author should do his research before publishing.
Posted by preraksanghvi (1 comment )
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stock split
<a class="jive-link-external" href="http://www.analogstereo.com/vauxhall_tigra_owners_manual.htm" target="_newWindow">http://www.analogstereo.com/vauxhall_tigra_owners_manual.htm</a>
Posted by Al Johnsons (157 comments )
Link Flag
Same old Same old
Ballmer, Gates, what's the difference, they are both of a culture of greed. As I had just comment on the whole issue of Apple's new Mini, think what Microsoft would be like today if Steve Jobs and crew had decided to license out THEIR operating system to other computer manufacturers in the 1980s. Could imagine for a second that Microsoft product would go out with all of the problems we have seen for decades now. Quality Control would rule and tech support would be free and last for the lifetime of the product.

Suddenly now there is little ****** in the Microsoft armor with Linux, Firefox and now an inexpensive Apple computer. If the powers to be in Apple could come to their senses and finally license out their OS, and all Apple computer could significantly drop in price, then you would really see a change in the Microsoft mentality, but for now it's the same old same old.
Posted by Foggy (32 comments )
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Culture of greed? Are you serious?
Microsoft is the world's largest charitable donor per capita. It's employees donated over 30 million dollars to charity this year alone.

Gates donated his entire $3 billion from the one-time dividend to charity.

How many open-source people have that kind of charitable donation record?

Grow up and get a life, *******.
Posted by (127 comments )
Link Flag
Ed Ed
iF YOU HAVE THE APPLE VS PC ARGUEMENT TO TALK ABOUT, NOTHING CONSTRUCTIVE TO ADD PLEASE DON'T WRITE YOU HAVE NOTHING TO ADD TOO THE ALREADY WORN OUT ARGUMENT. JOBS IS TOO CHEAP AND THINKS HIS PRODUCTS ARE SUPEROR TO ANY PC. SORRY ED, 95 PERCENT OF THE COMPUTERS OUT THERE ARE PC BECAUSE WE CAN AFFORD THEM. APPLE IS A FINE MACHINE AND SHOULD BE CHEAP'R TO BUY. THAT IS FROM A MAN WHO HAS BEEN IN COMPUTERS SINCE DOS 3.1 AND STAYED WITH THEM BECAUSE THEY WERE "AFFORDABLE". PLUS YOU COULD BUY PARTS FOR IT "EVERYWHERE" AND AFFORD IT.
Posted by Richie (21 comments )
Reply Link Flag
thanks for the caps... not!
stop yelling. it's hurting my eyes.
Posted by dejo (182 comments )
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