The Economist's Ludwig Siegele opens up one of the most important questions for the next 10 years of software: What happens to Microsoft after Bill Gates leaves?
In Ray Ozzie's (and, perhaps, Microsoft's) view, Microsoft's new goal is the same as the old goal: dominate everything. But the battle has shifted to the "cloud" now. Complicating the matter further, Microsoft no longer has a technical leader, one who combines vision, tenacity, and introspection. Instead it has an aggressive, sometimes bumbling bloodhound of a CEO, Steve Ballmer.
Can Mr. Protect-My-Desktop-Monopoly-By-Whatever-Means-Necessary really push Microsoft to the future? Can Ballmer deliver on this goal? According to Siegele, Microsoft's goal:
...is to become the dominant force in the forthcoming era of cloud computing--or, to refresh Microsoft's original mission: "to supply services to every desk, to every home and to every hand."
To understand what that means, and the difficulties it poses Microsoft, start with the idea that computing is undergoing one of its great periodic shifts....Now communications is catching up with hardware and software and, thanks to cheap broadband and wireless access, the industry is witnessing a pull back to the middle. This is leading much computing to migrate back into huge data centers. Networks of these computing plants form "computing clouds"--vast, amorphous, delocalized nebulae of processing power and storage.
This is a huge opportunity for Microsoft, Google, Yahoo, Amazon, and others. But only Microsoft brings a massive ball-and-chain to the party called the Windows desktop business, which accounts for the vast majority of its revenue and pervades its company culture. The very thing that makes Microsoft so successful may well ensure that it will play a bit part in the future of computing.
... Read moreOver the years, CNET News.com senior writer Ina Fried has had around a dozen one-on-one interviews with Microsoft Chairman Bill Gates. She just returned from Redmond, Wash., with her latest (I won't say last, because you never know!) interview, and I sit down with her in Tuesday's edition of the Daily Debrief and talk about his imminent departure from the company.
As everyone has suspected, and as Ina reiterates, Gates will, despite his retirement, continue to play a part-time role at Microsoft, lending his expertise and vision where he sees fit. One particular pet project is the continued development of the company's search technologies. Friday is Gates' last day with Microsoft, and while I imagine the departure will be imperceptible to the general public, it will no doubt be fascinating to see how Gates' baby takes its first few steps without him.
A handful of smaller acquisitions can't make one Yahoo deal, Microsoft's Steve Ballmer says.
Ballmer: Search is "the most important application".
(Credit: Dan Farber/CNET Networks)Ballmer, speaking to the Financial Times, said that despite rumors, the company has no plans to make up for the failed Yahoo deal by acquiring a string of smaller companies. "People don't understand what they are talking about. At the end of the day, this is about the ad platform. This is not about just any one of the applications," Ballmer said.
Yahoo rejected Microsoft's acquisition offer and instead inked a search deal with Google last week.
Clearly, search is still at the top of Ballmer's list of priorities. "The most important application for the foreseeable future...is search," Ballmer told the FT.
Bill Gates and Steve Ballmer have been close friends and business partners for nearly 30 years. But the two sometimes clashed over the sharing of power at Microsoft, particularly before Ballmer's rise to the CEO slot.
The sparring became so intense that at one point, board members intervened to iron out differences, according to a detailed, behind-the-scenes look at the men Thursday in The Wall Street Journal. The power struggle may have also undermined product strategies and slowed decision making on key issues.
The story forms a backdrop to Gates' planned transition out of day-to-day management at Microsoft, beginning June 27.
Reporter Rob Guth reveals that, despite Gates' decision to hand over the chief executive title to Ballmer in 2000, he sought to retain his power within the company. As Guth writes:
Things became so bitter that, on one occasion, Mr. Gates stormed out of a meeting in a huff after a shouting match in which Mr. Ballmer jumped to the defense of several colleagues, according to an individual present at the time. After the exchange, Mr. Ballmer seemed "remorseful," the person said.
In meetings involving the two men, Gates "still held sway that wasn't tied to a title...Mr. Gates would interject with sarcasm, undermining Mr. Ballmer in front of other executives, Mr. Gates and other Microsoft executives say," according to the report.
Gates and Ballmer share the stage at the D6 conference last week.
(Credit: Dan Farber/CNET News.com)Gates gradually came to accept his role as No. 2 at the company. "I had to change," Gates said, according to the report.
Now, as Gates' departure is imminent, Ballmer will have free reign. "I'm not going to need him for anything. That's the principle. Use him, yes, need him, no," Ballmer told the Journal.
Last week, the two men shared the stage at the D6 conference to reminisce about Microsoft's beginnings and to discuss future products, such as Windows 7, the successor to Windows Vista.
While the behind-the-scenes anecdotes make for compelling reading, perhaps the more revealing sections of the story deal with internal struggles over key product development efforts.
One, for instance, involves an internal effort to build an online application suite in 2000, called NetDocs, long before Google and other competitors began offering Internet-based rivals to Microsoft's Office franchise (longtime readers of CNET News.com will recall that we wrote some of the first stories about the NetDocs effort in 2000). According to Guth:
In one case, two vice presidents clashed over the future of NetDocs, a promising effort to offer software programs such as word processing over the Internet. The issue: because NetDocs risked cannibalizing sales of Microsoft's cash cow Office programs, some executives wanted NetDocs killed. Messrs. Gates and Ballmer were unable to settle on a plan. First, NetDocs ballooned to a 400-person staff, then it got folded into the Office group in early 2001, where it died.
Now, as Microsoft continues to struggle with its transition to an online-advertising and product strategy, Gates is staying largely on the sidelines, letting Ballmer and other executives call the shots. Guth highlights the now-aborted bid for Yahoo as evidence that the transfer of power is nearly complete.
Gates promises to leave those matters to Ballmer and will not return full-time to the company. "I am done with that," he told the Journal.
Bill Gates and Steve Ballmer share the stage at D6 on Tuesday with Walt Mossberg and Kara Swisher.
(Credit: Dan Farber/CNET News.com)
Tonight at the D6 conference in Carlsbad, Calif., Microsoft CEO Steve Ballmer and Chairman Bill Gates will take the stage together. The dual interview, to be presided over by The Wall Street Journal's Walt Mossberg, will be, in part, an exit interview. Gates is stepping down from his full-time role at Microsoft (corrected: he will remain as chairman of the board) in July. We will also get an early demo of Windows 7. As Dan Farber reports, we'll see a little bit of the interface, which promises to be very shiny. I'm hoping that we go a bit deeper than that: that there's news about robustness, open architecture, and maybe even the object-oriented file system we were supposed to have in Vista.
Here's the liveblog:
Click here for full coverage of the D: All Things Digital conference.
Here's the full text of Yahoo's response after Microsoft withdrew its offer to acquire the company.
Chairman Roy Bostock: We remain focused on maximizing shareholder value and pursuing strategic opportunities that position Yahoo for success and leadership in its markets. From the beginning of this process, our independent board and our management have been steadfast in our belief that Microsoft's offer undervalued the company and we are pleased that so many of our shareholders joined us in expressing that view. Yahoo is profitable, growing, and executing well on its strategic plan to capture the large opportunities in the relatively young online advertising market. Our solid results for the first quarter of 2008 and increased full year 2008 operating cash flow outlook reflect the progress the company is making. Today, Yahoo has:
• a refined strategic focus to drive enhanced volume and yield;
• reorganized to focus its efforts on its most promising products and services;
• invested in innovations designed to revolutionize display advertising and facilitate closing the competitive gap in search; and
• enhanced expense and resource management to support improved profitability.
CEO and co-founder Jerry Yang: I am incredibly proud of the way our team has come together over the last three months. This process has underscored our unique and valuable strategic position. With the distraction of Microsoft's unsolicited proposal now behind us, we will be able to focus all of our energies on executing the most important transition in our history so that we can maximize our potential to the benefit of our shareholders, employees, partners and users.
Microsoft CEO Steve Ballmer says he knows exactly what Yahoo is worth and isn't willing to go a dime over that, Silicon Alley Insider reported Thursday.
Ballmer, speaking to Microsoft employees in a so-called town hall conference call Thursday, also said an announcement regarding Yahoo is coming "in very short order," the blog site reported. But what he meant by that is unclear, since he also noted that he had "nothing to say today." A reporter for Silicon Alley Insider apparently listened in on the call.
Balllmer says he knows what Yahoo is worth.
(Credit: Dan Farber/CNET News.com)Ballmer also didn't put a price tag to what he thinks Yahoo is worth, but his comments may indicate that talks between the two companies are still going on. The Yahoo comments came up during a question-and-answer session in which he reiterated Microsoft's three options: Make a friendly deal, go hostile, or walk away.
The Microsoft chief exec also explained to his employees that Microsoft needs Yahoo in order to gain scale in the online market. "(Yahoo) accelerates scale. Gets us more advertisers, gets us search. Yahoo's not a strategy. It's a part of a strategy. We're interested in paying for it at some level, and beyond that level we're not willing to pay for it," Ballmer said, according to Alley Insider.
Interestingly, Ballmer seems to believe that on the Internet, many people would think of his company as the underdog as it tries to play catchup with Google. "The world," he said, "is rooting for us."
"Hey! Ho! Time for Ballmer to go," a Wired.com headline proclaimed on April 29.
My rejoinder: "Hell, no. There are no Softies ready for a promo."
Wired's story attempts to make a case for CEO Steve Ballmer taking the hits for Vista's less-than-stellar market reception, as well as the so-far-unconsummated
There's just one problem, as Wired notes in an aside. No one's ready to step up within the company and fill Ballmer's big shoes.
In my new book on Microsoft's future, entitled Microsoft 2.0: How Microsoft Plans to Stay Relevant in the Post-Gates Era, I make a similar argument.
When Chairman Bill Gates hangs up his day-to-day hat on June 30, it will be an all-Ballmer, all-the-time show. And there's no heir apparent inside the company to Steve B. Given this void, Microsoft needs Ballmer to stay at the top, at least for the foreseeable future, for continuity and leadership reasons, if nothing else.
Up until now, Microsoft has been a company where science mattered more than sales. Specifically, Gates valued technology more than marketing and built Microsoft to reflect his priorities. Gates' tech vision was evident through the people Microsoft hired and promoted, the projects that got funding, and the amount of commitment the company put behind various initiatives.
The balance of power is set to change drastically, come this summer. And while Ballmer is no technical slouch, he admits that "one of the biggest mistakes I've made over time is not wanting to nurture innovations where I either didn't get the business model or we didn't have it."
In the brave, new post-Gatesian world, who's poised to lead the company? Who is on the fast track at Microsoft these days? Who are the up-and-coming superstars likely to take charge during Microsoft's next 10-plus years? I've asked various Microsoft watchers, partners, customers, and employees these questions, and the fact that few could come up with any immediate suggestions says volumes.
Five years ago, back in 2003, Business 2.0 magazine compiled a list of the 10 most promising rising stars at Microsoft, a group the publication dubbed "The Baby Bills."
Indicative of how quickly things change, that list looks obsolete today. Some of Gates' potential heirs-apparent have left (or been forced out of) the company; several others have been pushed into less visible jobs at Microsoft. The Softie who many thought would be a shoe-in successor to Gates--Eric Rudder--has retreated from a visible position running Microsoft's Server and Tools business, to working in a research incubator while plotting his next move.
Here's a snapshot of the Business 2.0 Baby Bill Class of 2003 and what each of these execs is doing today:
Eric Rudder--Then: senior vice president, Servers and Tools. Now: Allegedly working on a secret distributed operating-system project under Chief Research Officer Craig Mundie.
Chris Jones--Then: corporate vice president, Windows Client Group. Now: corporate vice president of Windows Live Experience Program Management.
J Allard--Then: corporate vice president, Xbox Platform. Now: corporate vice president, Design and Development, Entertainment and Devices Division.
Yusuf Mehdi--Then: corporate vice president, MSN Personal Services and Business Division; and later, chief advertising strategist. Edged out of advertising management as a result of the aQuantive purchase and subsequent Microsoft realignment. Now: senior vice president of Strategic Partnerships.
Steven Sinofsky--Then: senior vice president, Office. Now: senior vice president of Windows and Windows Live Engineering.
Martin Taylor--Then: platform strategist (and Ballmer's chief of staff). Fired by Microsoft allegedly for a company policy violation. Now: operating principal, Vista Equity Partners.
Tami Reller--Then: corporate vice president, marketing and strategy, Business Solutions. Passed over for job running Microsoft Business Solutions unit. Now: chief financial officer, Platforms & Services Division.
From the original "Baby Bills" short list, Allard, Jones, and Sinofsky remain among the core group of influencers at Microsoft (and of these, Allard's current role is rather sketchy, as Rick Thompson, not Allard, is the Zune king at the company).
Along with the three Microsoft presidents--Kevin Johnson, head of Platforms & Services; Jeff Raikes (who will be replaced this fall by Stephen Elop--the head of Business Systems); and Robbie Bach, head of Entertainment & Devices--along with Chief Software Architect Ray Ozzie, there are a handful of Microsoft managers whose strategies and thinking will help Microsoft make--or miss--a transition into its next phase as more of a software and service provider.
Are any of these individuals next in line to succeed Ballmer? Many Microsoft watchers are doubtful that Ballmer and the board will go inside to find the next Microsoft leader. I tend to agree. Next time Microsoft needs a CEO--which could be at any time the 52-year-old Ballmer decides he's finally had enough--the company might look outside, rather than inside, for fresh top management blood. (For the record, Ballmer has said he plans to stick around at Microsoft for close to a decade or longer--at least until his youngest son is in college.)
What about Ozzie? My gut is Ozzie wants to retreat even further behind the scenes than he is already. The last thing he wants is an OzzieSoft with him anointed as the "next Bill Gates."
Not everyone at Microsoft is quite as shy and retiring, however. Here are some of the young (and not so young) Turks bucking to influence Microsoft's near-term, post-Gates directions:
J Allard: The closest thing that Microsoft has at the executive level to a hip exec able to appeal to the all-important 16-to-34-year-old mountain-bikeriding, gaming-savvy geek demographic. Allard is a 15-year Microsoft veteran. But what's Allard's job these days? In spite of his lofty-sounding title of corporate vice president, Design and Development, Entertainment and Devices Division, no one really seems to know what Allard is up to these days. Plus, Allard is much more of a "Bill guy" than a "Steve guy."
Craig Mundie: Chief Research and Strategy Officer Mundie is seen as the No. 2 technology guy at Microsoft. But according to recent rumors, Mundie is none too happy about living in Chief Software Architect Ozzie's shadow and is looking for a way to climb his way up the corporate ladder. Mundie's been way more visible than Ozzie lately on the speaking circuit and is championing Microsoft's move to multicore, among other strategic hot spots.
Satya Nadella: Sixteen-year Microsoft veteran Nadella has trod a long and winding road inside Microsoft. Nadella currently is corporate vice president in charge of Microsoft's engineering team for Web search, advertising, and commerce--aka, the Windows Live Search, Microsoft adCenter, and subscriptions/points/billing platforms. What will Nadella's role be if MicroHoo comes to pass? Unclear.
Steven Sinofsky: Steven Sinofsky runs engineering for two key teams at Microsoft: Windows Client and Windows Live. He was moved into this role in 2006 for a reason--Microsoft's top brass were tired of being hurt and embarrassed by Microsoft's ongoing failure to release products on a timely basis. So far, Sinofsky's been able to maintain radio silence on most of the projects (Windows 7, IE 8, etc.) he's spearheading.
Kevin Turner: The former Walmart CIO currently runs field sales and marketing, product support, customer support, branding, advertising, public relations, marketing research, corporate operations, and internal IT at Microsoft. In short, he's one of Microsoft's chief ambassadors to the outside customer world, as well as the uber-boss of nearly 40,000 of Microsoft's 80,000 or so employees.
Even though some shareholders (including some of Microsoft's own employees) believe a change in leadership is what's needed to keep the company relevant in the next five-plus years, it doesn't seem as though Ballmer or the bulk of his inner circle"--aka the "Senior Leadership Team"--is going anywhere. Sometimes, no move just might be the best move.
Fear is a human emotion. It's part of our survival mechanism--the adrenaline fight or flight response. In ancient times when a caveman felt fear, he ran and hid or readied himself for battle. Those who paid attention to their fear survived; those who didn't, well, let's just say their descendants probably aren't around to read this.
Having courage does not mean ignoring fear. It means facing fear head-on and doing the right thing anyway. At least that's my definition. If you fail to face fear and act appropriately you're not necessarily a coward, but you're not the best you can be either.
The most successful people on the planet are the ones who face the cold, hard truth of reality and act accordingly. They don't surround themselves with "yes men" and they don't view the world through rose-colored glasses. ... Read more
The death of Windows XP may have been greatly exaggerated.
Microsoft CEO Steve Ballmer said the company could re-evaluate its plans to phase out Windows XP by June 30, if customers demand that it stick around. So far, they have not.
"XP will hit an end-of-life. We have announced one. If customer feedback varies, we can always wake up smarter, but right now, we have a plan for end-of-life for new XP shipments," Ballmer said during a Thursday news conference in Belgium, according to Reuters.
Big-name computer makers are still scheduled to have to stop selling models with Windows XP installed by the end of June. Mainstream technical support will continue to be available for Windows XP through April 2009, and more limited support will continue through April 2014.
Microsoft CEO Steve Ballmer on Windows XP's impending demise: "If customer feedback varies, we can always wake up smarter."
(Credit: Dan Farber/CNET News.com)Microsoft does plan to continue selling Windows XP for a limited class of PCs it calls "ultralow-cost PCs." It's a category that covers machines with slower processors, smaller screens and, in many cases, flash memory, rather than a traditional hard drive, for storage.
Ballmer said most consumers are choosing to buy the current version of Windows, Vista. Many acquire Vista by default, however, since most new PCs ship with the operating system. Businesses have been slower to catch on, as many have clung to Windows XP and older versions of Windows.
While Microsoft ponders yet another stay of execution for Windows XP, it's readying a new version of Windows, being developed under the code name "Windows 7."
Earlier this month, Microsoft Chairman Bill Gates indicated that Windows 7 could come within the next year--in some form, possibly a developer-oriented version--far ahead of the development schedule previously indicated by the software maker.
Ballmer on Thursday also reiterated Microsoft's intention of appealing directly to Yahoo shareholders, if the company rejects Microsoft's offer of $43.6 billion for the company.
"We've sent them a letter that says, 'it's a good price; please let us know. If you don't let us know, maybe your shareholders will think it's a good price,'" Reuters reported.
