Tuesday, October 05, 2010

Steve Ballmer, on the Blind Side

Microsoft hopes to bury iPhone, Android
By Bill Rigby

Last month, a few hundred Microsoft Corp employees acted out their fantasy with a mock funeral for Apple Inc's iPhone at its Redmond, Washington campus….

—Reuters, October 1, 2010

The iPhone “funeral” Reuters thus reported on—and which we are not making up—included a kilt-wearing bagpiper, a frock-clad minister, and Windows-signboard-wearing pallbearers carrying a mock-up of an iPhone, all trailing a white hearse.

The stunt, of course, is the act of a desperate company. Worse, it is the act of a company that might have learned by now that what kills-off a competing product is not hackneyed publicity stunts, but better products.

Besides, even really bad publicity doesn’t necessarily hurt a great product: does anybody recall the lasting damage from the firestorm that erupted over the iPhone 4’s antenna? No?

Well, that’s because there really wasn’t much lasting damage to speak of, if iPhone market share is any indication.

Now, as deluded antics go, Microsoft’s “iPhone funeral” smacks of no one so much as Steve Ballmer, the former P&G marketing genius who, as Employee Number 24 at Microsoft, helped his friend and fellow genius, Bill Gates, build and enforce the software monopoly by which Microsoft would come to wreak havoc on the lives of millions of computer users through subtle but devious methods such as the strangely insidious “Insert” command, which nobody uses except by mistake.

Indeed, so Ballmeresque is this particular stunt that we here at NotMakingThisUp are willing to bet dollars-to-donuts, as the saying goes, that Ballmer dreamed up the funeral as one way of heralding the imminent launch of a new generation of Windows software for mobile phones—specifically, Windows Phone 7.

The fact that Windows Phone versions 1-6 have made so little impact on the mobile phone market that nobody outside Redmond, Washington particularly cares what the new version looks like, does not seem to have made an impression on Mr. Ballmer, and for good reason: he famously (as previously reported in these virtual pages) does not use Apple products, nor does he allow his children the pleasures of anything so easy-to-use as an iPod, or Google, for that matter.

Lest readers think we are making that up, here is how we reported what Ballmer told Fortune Magazine when asked if he had an iPod, in “Over-Share from Dr. Evil’s Hideaway”:

“No, I do not. Nor do my children…. I’ve got my kids brainwashed: You don’t use Google, and you don’t use an iPod.”


Is it any wonder that Microsoft has failed to replicate the success of both Google and Apple in the various markets with which it has attempted to compete—such as music players and search engines, let alone smart-phones?

But that’s exactly what happens when a heretofore successful company cuts itself off from understanding first-hand what its customers really want, as the former “Big Three” Detroit automakers finally found out, to their chagrin and the American taxpayer’s loss.

The consequences of precisely this kind of intentional blindness are now being felt by Mr. Ballmer and the company he has run with a iron hand since becoming CEO in January of 2000—the literal and figurative peak of Microsoft, if the stock price is telling us anything—and only now does it seem the Microsoft Board of Directors may be coming out of their torpor, if Microsoft’s recently issued proxy statement is any clue.

For the following is how the proxy describes Mr. Ballmer’s latest incentive awards, or lack thereof:

For fiscal year 2010, Mr. Ballmer’s Incentive Plan award was $670,000, which was 100% of his target award. The incentive plan award was recommended by the Compensation Committee and approved by the independent members of our Board of Directors based on his performance appraisal by the independent members of our Board and other information deemed relevant, including: Mr. Ballmer’s performance against his individual commitments; the strong financial year…; the operating income performance of the Company relative to 25 large technology companies; his leadership in continuing the prior year’s disciplined expense management; a series of successful product launches including Windows 7, Office 2010, Bing, Windows Server, and SQL Server; progress pursing new innovations that will position the Company to lead the transformation to the cloud (Azure and Office Web Apps) in active gaming (Kinect), and in other product areas in which work is well underway; the unsuccessful launch of the Kin phone; loss of market share in the company’s mobile phone business; and the need for the Company to pursue innovations to take advantage of new form factors [Emphasis added].

Give Ballmer and Microsoft’s Compensation Committee credit for paying the man a much smaller figure than most hard-charging, long-time executives could chisel out of their pals on the Board of Directors.

Give the company credit, too, for laying out in a public document the reasons for doing so—both the good and the bad.

But instead of watching idly while the CEO is wasting time and money on the kind of stunts that help make their company a YouTube laughing-stock—and doing so before their smart-phone product is actually released, and actually has succeeded in coming close to “burying” their dearest rival—it might be worth the Board’s time to wonder how, exactly, Ballmer’s self-imposed blindness to the wonders of Apple’s new products (not to mention Google’s search engine and its Android smart-phone operating system) have damaged for all-time the company they are charged with caretaking.

Jeff Matthews
I Am Not Making This Up

© 2010 NotMakingThisUp, LLC

The content contained in this blog represents only the opinions of Mr. Matthews, who also acts as an advisor: clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.


Citizen AllenM said...

Ballmer has been a detriment for a very long time to Microsoft.

Quite frankly, he has replicated P&G's stifling management, and is killing the brand.

Gates has gone off to give away money, and hang with Becky Quick.

Now, where is the benefit for the young and hungry working for Microsoft?

Uh, that would be nothing.

Dying utilities, competing with a free brand OS and a very expensive sophisticated Apple are a sure bet downward.

Where is the next generation stuff at really cheap prices?

Oh yeah, nowhere.

What a waste.

Might as well take Windows and turn it into the Mozilla model, and shut down the rest of the fiasco. Give the shareholders back their money, and pay off the bondholders.

Either that or enjoy that long slide into oblivion.

Mamon said...

It is amazing to me that such otherwise smart people would be so blind. Steve Jobs also, the IPhone will end up like Apple computers, nothing more than a niche product. By trying to control everything he will push customers off to Android phones. I would like to know what you think of MicroSoft's suit against Motorola, does it have merit or is it desperation and publicity seeking?

Ben said...

Hilarious, I thought of your previous post when I read the clueless interview of Ballmer in the WSJ. It seems fairly obvious to me that tablets are going to replace a large portion of the PC market (at least for consumers) in the next few years. That leaves Microsoft with a shrinking PC business mainly for enterprises and a bunch of poorly managed competitive products to market leaders and disruptive companies like Google, VMWare, and Apple. Seems like if Microsoft is going to have any chance at all they have to get rid of Ballmer pronto.

Anonymous said...

it is a stunt worth of Greg Marmalard

Sean said...

A big step up from the last Microsoft post on here.

Like a baseball player who controls the strike zone, you just have to wait for it to come to you. This is totally absurd and makes for much more exciting writing than a broken keyboard.

How much money can MSFT really squeeze from its product base and very incremental improvements? There really appears to me no direction and this stunt is more reminiscent of the Dunder Mifflin paper company than one of the largest companies in the world.

Anonymous said...

Ironic that MSFT has become like the bloated, unfocused IBM that made them relevant in the 1980's.

The son grew up to be the father in this case.

Anonymous said...


if you genuinely are willing to bet dollars for donuts, then I will take that wager. Ballmer had nothing to do with that stunt.

Seriously! Calm down already.

There are plenty of people who have commented that the Windows Phone is going to be a worthy competitor, at least on the technology side. Google might have their measure on the business side. The thing is, Windows Phone 7 has been rebuilt from the ground up. The antiquated junk that passed for all the previous generations of mobile device is gone!

So calm down, wait until you've seen the product, and let those damn kids up in Redmond have their fun.

Jeff Matthews said...

Anybody else reading these comments think that last one, from "Anonymous," about letting "those damn kids up in Redmond have their fun," was from a Microsoft PR guy/gal?

I'd bet dollars to donuts on it.


Anonymous said...

Murmurings in Redmond are that the maker of the world's most vital computing platform and productivity suite is going to pack it in and shut down the company because a snarky blogger doesn't like their new phone software that he hasn't even seen yet.

Jeff Matthews said...

The last "Anonymous" misses the point.

Back in March 2005--5 1/2 years ago--we first began warning of the impending irrelevancy of Microsoft thanks to the company's institutional insistance that everything it does must promote Windows.

And in November 2005 we pointed out the institutional self-delusion of the folks in Redmond as it appeared in a Wall Street Journal article describing Ray Ozzie's internal memo on Microsoft's smartphone operating system, in which Ray was quoted as follows:

Microsoft, he [Mr. Ozzie] wrote, has long “understood mobile messaging,” but “only now are we surpassing the Blackberry.”

Well that wasn't very accurate, was it.

And now it is five years later, and Microsoft must surpass not only Blackberry, but Apple's OS and Android to boot.

Based on the track record of the last five years, I'll bet against it. "Anonymous" can bet any way he or she likes.


Anonymous said...

I once had a position in MSFT, got uncomfortable, and got out at no loss. (reading this blog was some part of that discomfort)
How can you trust these people when they've never even been able to fix the system tray clock?
You should be able to place the cursor over it and get a date popup. It only works half the time and this known problem has been going on for years and years and since at least two maybe three OS's back.
At least they are consistent; what with missing the big things too. And despite elucidating material such as found here I still just can't understand how it happens, or is allowed to happen. I just don't get that.

Anonymous said...

It is interesting that despite MSFT's continuous failing to adapt, there still is no competition in the overall PC market, holding at health 88%. That includes PCs, laptops and netbooks. Discounting Microsoft in the tablet and smartphone market is a bit early as well, their initial product offering for Windows Mobile 7 is surprisingly broad.

The biggest challenge that Microsoft has is not the technology and its implementation but its image and that won't go away even if Ballmer hangs himself at the next board meeting.

As far as the continuous whining about OS quality, a comedy website has a better grasp of reality than most of the technologically... challenged users out there: