Ballmer was employee number 30 at Microsoft, coming on board in 1980 – five years after its founding. He was the first business manager hired by founder Bill Gates, and led a number of divisions before becoming president in 1998, and then CEO in 2000 when Gates stepped aside from the day-to-day management of the company. Under his tenure, Microsoft’s annual revenue rose from $25 billion to $70 billion, and most recently he has driven an attempt to unify the mobile and desktop operating systems with Windows 8.
“There is never a perfect time for this type of transition, but now is the right time,” Ballmer said in a statement. “We have embarked on a new strategy with a new organization and we have an amazing senior leadership team. My original thoughts on timing would have had my retirement happen in the middle of our company’s transformation to a devices and services company. We need a CEO who will be here longer term for this new direction.”
Microsoft’s board has appointed a special committee to lead the succession search, and Gates is among its members.
“As a member of the succession planning committee, I’ll work closely with the other members of the board to identify a great new CEO,” said Gates. “We’re fortunate to have Steve in his role until the new CEO assumes these duties.”
Ballmer’s departure will be the passing of the baton from one of Microsoft’s early employees to a new generation, and one of the last executives to help lead a company from a start-up into a Fortune 500 giant, said James Alexander, a senior vice-president with the Info-Tech Research Group.
“Lots of people are talking about the fact Microsoft needs a change but just look at the fortunes of some of the other iconic companies, the Sun Microsystems of this world, and you have to say regardless of whether the criticism he receives for not growing the company or it getting stodgy, it’s still in business and has the largest footprint in the corporate world of any organization,” said Alexander.
While some critics have said Ballmer should have passed on the baton sooner, Alexander said it could be argued he could have stayed on longer. Microsoft is well-positioned with its one user experience across multiple devices strategy, they’re dominant in their core office automation space, and have legitimate offerings in ERP and CRM.
David Senf, vice-president of the infrastructure solutions group at IDC Canada, is less charitable on Ballmer, calling him part of the old guard. It’s time, said Senf, for Microsoft to skate to where the puck will be, not where it is today.
“Google, Amazon, Apple and a lengthy list of startups represent the shift of the IT industry towards cloud and towards mobility, said Senf. “Finding a successor who can run Microsoft, the Microsoft economy and direct it at the right pace into the changing IT industry, is a tall order.”
One thing is clear though said Daren Bibby, vice-president of software channels and alliances research with IDC: Ballmer was a true champion of and advocate for the channel partner.
“With what he’s done for the partner community, there’s no question he’s been a strong proponent of channel partners, ISVs and all sorts of partners, even to a fault at times,” said Bibby. “There has been no bigger proponent of the channel partner over the years at Microsoft than Ballmer, and no bigger proponent since the beginning of our industry than Microsoft for developers and ISVs.”
Alexander said he doesn’t see any logical internal successors to Ballmer – COO Kevin Turner’s retail background may not be what’s needed – but there’s lots of ways to go about bringing in new energy and perspective with an outside hire.
One way to go, said Alexander, would be to follow IBM’s example when it went outside the organization for the first time to bring in Lou Gerstner as its CEO. Having led one of IBM’s largest customers, Gerstner brought a fresh perspective.
“He was able to bring the voice of the customer into the organization and make the kind of changes that positioned IBM well for the next decade or two,” said Alexander. “Or maybe someone from Google, one of the competitors that are offering different business models. There’s lots of ways to go.”
Likewise, Senf said Microsoft doesn’t need an old-school executive like a Jack Welch, or an insider such as Turner.
“They’ll have a COO for those tasks. Visionary wanted,” said Senf. “Someone like Ford’s CEO Alan Mulally would fit well.”
— With files from Nestor Arellano