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« Ballmer is Gone: Justified. Elop at Nokia Still With His Job: Unjustified | Main | Ballmer Aftermath Part 2 - Impact to Nokia, especially Lumia running Windows Phone »

August 24, 2013

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eduardo

Tomi, you say that MS is going to drop Windows Phone and focus on its big money-makers. But Ben Thomson says that Ballmer's problem was he focused on profits, instead of innovating to delight users like Apple does.

http://stratechery.com/2013/if-steve-ballmer-ran-apple/

zlutor

@winter: " the loss of real cross-platform (CPU) hardware knowledge at MS" - loss of what?!? :-)

The last CPU running MS OS not being x86 one was DEC Alpha/Power PC if I recall correctly. but support was dropped after NT4.0 (http://en.wikipedia.org/wiki/Windows_NT)

So, if they had it at all, they lost that capability loooong-loooong time ago. On the other hand they did not need it lately (before mobile boom), too...

Tester

@eduardo:

I think the article is spot-on.
But it's not a contradiction to what Tomi said.

According to the article Ballmer focussed on profit alone - and it clearly shows today. The customer didn't mean anything at all to him. He had his monopolies and tried to squeeze their users dry to get more profit out of them. He went the unpopular (with customers) route wherever he could if he thought it could increase profits. The result: We got the Evil Empire, the company that never manages to make a product the customer likes. They still got to buy it because they have no choice.
People hate Windows 8, yet everybody who needs a new computer has to buy it. People hate the Ribbon interface, yet Office users have no choice. They need the product. People clearly stated that they want the start button back, yet all we got is an half-assed attempt. These were all the actions of a management team that had a vision of future profits by creating 'synergies' the user didn't need (and they failed misarably for that reason.)

In the end, though, these products will remain profitable because there are no alternatives for most users. And if someone with clearer vision of customer satisfaction gets his say, they can be fixed. Microsoft's current problem in these markets is that customers are fed up with this monopolist attitude and look for alternatives. And if people find alternatives they'll take them. The major thing the next CEO needs to do is stop this - and it can only be stopped by improving the company's reputation (i.e. no Evil Empire anymore.) Otherwise the slow decline will continue.

Now on to Windows Phone. Windows Phone does not have a monopoly. It doesn't even have a significant market position. People have a choice and the vast majority votes against it. In fact, Microsoft wouldn't be able to sell anything at all, wasn't it for ultra-low price points and the Nokia brand name. These are issues that can NOT be fixed. The mobile market is already dominated by the competition. No matter how much money Microsoft throws at it, it won't matter. They have tried for over two years now with utterly pathetic results. If the cash flow stopped now the product would be dead within a year.
And even if they tried to fix the problems on the design side to 'delight users' it'd be too late. We see with Blackberry how tough it is to position a new operating system in this market, even if it is well designed.
3, even 2.5 years ago, with a well designed system Microsoft might have had a good chance. But what did they focus on: System lockdown, user restrictions, a rigid user interface that was prohibited to be changed, a system 100% incompatible to its predecessor - and the infamous '101(?) design flaws'. Ballmer tried the monopolist's view on a market he didn't own and he failed. And then one year later he pulled WP8 out of the head, and repeated one of the biggest mistakes: It was again incompatible to its predecessor. He again took the accountant's view, trying to maximize profit with the least amount of work and totally forgot that he'd lose a lot of people he would have needed: effectively he also killed the developer community that would have slowly formed.

And once the honest projections are in the open, if they tell that WP will never generate any profit, it will get the axe, mobile be damned. No sane CEO would pursue such an undertaking unless there were contracts requiring him to continue.

winter

@zlutor
MS cannot even write drivers anymore as the PLPC debacle showed.

@Tester
Even the "succesful" Xbox has burned so much money that there is no way MS will ever see a positive ROI. The same for Bing if it ever is a succes.

It has been said before: Outside Windows and Office/sharepoint, every endeavor of MS has had a negative ROI, ie, a failure

Birne

Ballmer's actions remind me of this little article I found some time ago:

http://www.inc.com/karl-and-bill/maximizing-shareholder-value-is-not-a-dumb-idea.html

Look in particular for a section starting with 'But there’s a right way and a wrong way to do so. The right way:'

Hands up who thinks that Ballmer did not ignore any of the points that were said there. No wonder he's in trouble. Ballmer was the typical CEO for whom the bottom line was all that mattered, regardless of how he got there. The one thing he completely failed at was 'treating his customers well'.

Even before he became CEO he was already regarded as the cause of Microsoft's bullyish behaviour and once he took over the really bad things started to happen right away - beginning with the product activation in Windows XP. Strange that this only became an issue for them after he took control. ('Yes we assume you may be a thief and in order to protect us we take preemptive measures to limit your use of the product...') Truly great impression.

winter

People who hire a bully and robber are as bad as the person they hire. Ballmer was in office this long because those who hired him were pleased by his actions. He is now fired not because the powers that rule the evil empire want to mend their immoral ways, but because Balmer's bullying did not bring in enough money.

Tester

'People who hired him' would be Bill Gates - and he hired him long, long before he became CEO. He had been there almost since the very beginnings of Microsoft's existence. Even when Gates was still CEO, Ballmer had a significant amount of influence in the company and to a great deal was responsible for how Microsoft was perceived.

And I don't think he had to go because his bullying didn't bring in enough money but because his bullying started to harm the company. This type of CEO works to a degree with a monopolist but he's utterly incapable of defending market positions in a competetive market, and also to explore new markets well.
'Scroogled', for example was a typical Ballmer-brainchild. Instead of delivering something good, just badmouth the competition. Too bad, if that competition is too strong to get harmed by such antics, especially if your own competing product is as piss-poor as Bing.

But in the end he was the CEO, he decided how to make business - and he was Bill Gates's 'best pal'. Don't count on the shareholders, if someone went up before them telling them they'd get rich they'd say 'yes' and 'amen' to everything that's being suggested.

你好

@tester @tomi

i agree with tester opinion that most of the wp problem started with balmer (i.e restriction, locked user interface/launcher, etc).
therefore the solution might not to throw away the product but to change/lighten up the restriction.

and not doing scrogle, not fighting over youtube but follow google guideline, bring product (office, internet explorer, game) to android.

chithanh

@zlutor
Windows NT 4.0 ran on X86 and Alpha in the end (it launched with more platforms)
Xbox 360 (PowerPC) operating system is also based on Windows.
Windows XP ran on X86 and Itanium.
Windows CE runs on ARM, MIPS and SH.
Windows Phone and Windows RT run on ARM.
Windows 8 runs on X86 and X64.

Microsoft supports fewer hardware platforms than many Linux distributions, but I don't think there is a total lack of cross-platform knowledge.

darwinphish

To put all of this in perspective, if Ballmer had been running Apple for the past 5 years, there would be many more versions of the iPhone (including one with a keyboard) and the iPhone would be available on far more carriers. In other words, he would have done just about everything Tomi has suggested Apple should do!

eduardo

Tomi, I have an idea for a post that would make good use of your expertise and be of interest to many of your readers.

You say Nokia was so successful at least in part because it had such good relations with the telecoms. Why don't you write about what Nokia specifically did to get such good relations, and how that changed under Elop?

R

Well, if Ballmer had been running Apple, then the iPhone would never have been released. It would have been developed, prototypes shown to the press, and then killed at the last minute because it wasn't compatible with the existing MacOS business.

Then the developers would stretch their interpretations of what could be reported in expense reports, and ultimately resign.

http://www.ted.com/talks/dan_ariely_what_makes_us_feel_good_about_our_work.html

Well, Ariely's account is somewhat anonymized, so I can't be sure that he was talking about Microsoft Courier. But there can't be that many companies matching that description.

http://news.cnet.com/8301-10805_3-20128013-75/the-inside-story-of-how-microsoft-killed-its-courier-tablet/

R

Microsoft will not abandon the mobile market. Bill Gates said that what they were doing with Windows Phone was obviously a mistake, because it did not dominate. But he himself led Microsoft into mobile devices several times until Windows Mobile stuck and achieved 12% market share.

Mobile is crucially important to Microsoft. Microsoft makes loads of money from server licenses, office products, and Windows, and mobile devices are important to all of those businesses.

Server sales depend on stuff being served. A bunch of servers are sold running Exchange, so when email was the most important application, mobile devices had to hook into Exchange. Now a lot of mobile applications depend on "the cloud," and the cloud is reified in Linux servers run by Amazon, Google, Rackspace, Facebook, etc. This is a major threat to Microsoft, which is why they were so happy to have the Azure cloud grow into a $1 billion business so quickly.

Office depends on documents being locked into the Office formats. The Office division prefers to develop for Windows. (The MacOS port is done by a separate Macintosh Business Unit organizationally within the Office division.) With mobile devices becoming more powerful, people are trying to do more work on them, which currently means they're weaning themselves off of Office. No more commentary needed.

Windows is an obvious thing. Fall of PCs, rise of mobiles. One problem is that Apple has trained their developers to be used to the idea of disruptive change every couple years. Microsoft has cultivated an image of being nice and solid, so improvement-averse companies could build on Microsoft systems. Now that Microsoft is adopting Apple-style disruptive change but not achieving Apple-level market shares, they are making the whole Microsoft Windows lock-in model less attractive.

R

@leebase

Actually, the rise of mobiles not running Windows is hugely threatening to Microsoft. Microsoft was founded back when "PC" meant a box with no user interaction except for a panel of switches and a couple rows of lights. Microsoft has adapted as PCs have changed into their current forms. Everybody in the operating system industry agrees that smartphones are basically PCs that can make phone calls.

If everything people do can be done in a web browser that is not Internet Explorer, then why go with Microsoft for the "truck class"? Macs are nice but safely expensive. But Chromebooks and Chrometops promise the web browser with no maintenance hassle. If Android is your primary platform, then why not use that on your "truck"? Several companies now sell micro-PCs that plug into HDMI ports and run Android. A few companies, including HP, are selling experimental All-in-One PCs running Android instead of Windows.

While Microsoft is still profitable, they're looking at trends and taking the long-term view. And the trend is that traditional PC sales are going down, not just market share. If you include smartphones and tablets, Microsoft's market share is already a minority. Printers are being built with Airprint and Cloud Print, so you could actually do office work entirely on your iOS or Android device. It's a sign of the waning influence of Microsoft, because printer manufacturers are not known for producing printer drivers that they don't have to.

Desktop is the present of Microsoft, but they need Mobile to be the future. They will do whatever they have to for a chance of Bill Gates-level success in it. I hate Microsoft, and Ballmer is a big, 6'5" part of that hate, so they have their work cut out for them.

Tester

@R:

>> They will do whatever they have to for a chance of Bill Gates-level success in it.

Hint: They will never achieve that. The owned the PC because there was no competitor. The only one who might have been able to own this space was Apple and they priced themselves out of business with their early Macs and their refusal to open up the system.

To rule Mobile it's too late, plain and simple. And they won't stand any chance with an Apple copycat (locked down and restricted) when the original is more popular tham Macs have ever been in the PC world and an open competitor with huge market share already exists.

Microsoft can try what they want, this battle is lost forever. Also, please read the fine print: Nobody predicts that Microsoft may abandon mobile, but it can easily be that they abandon Windows Phone because it'll get them nowhere. The system had it chance and everything that happened so far tells us that the only way to sell it is by selling below cost.

Tester

@leebase:

>> This will change over time. But it's going to change from both directions. Tablets are going to get more powerful, and their apps more sophisticated. The Surface shows that PC's are coming down from the high end. They are getting touch interfaces, and encroaching in the tablet space.


Fully agreed and yet it shows Microsoft's big error in thinking: If both of these converge (and yes, that would be my prediction for the future), why did they produce a Frankensteinian monster of two mutually incompatible user interfaces into one system instead of providing a standard API extension to create touch apps? This is not one coherent OS but essentially two, hastily stitched together.

If PC and tablet/mobile phones really converge, what is needed is an operating system that serves both ends equally well - and by that I mean that an app can offer both user interfaces all at once. But no, they have to be programmed separately and worse, the distribution channels are totally separated. That part makes no sense at all.

As for Android not working well on PCs, yes, that's obviously correct. But due to its Linux base and openness it may even be in a better position than Windows is to fill that gap.

Yes, Microsoft can still get there, but not with the products they currently have. They first need to fix them and that's not going to be easy.

R

@Tester:

Smartphones have taken over only about half of the mobile phone market. With the really short product cycles, I think there's still room for something exciting to happen, though I genuinely hope it's Jolla or Firefox or Ubuntu that becomes a major third ecosystem. But I like Linux and hate Microsoft, so there's an obvious bias.

@leebase: I think you're wrong, but I don't have time for you.
http://xkcd.com/386/

Sigunas

Surprise surprise :)
http://blogs.technet.com/b/microsoft_blog/archive/2013/09/02/the-next-chapter-an-open-letter-from-steve-ballmer-and-stephen-elop.aspx

Bruno

Now it would be pretty interesting, but not likely, for Nokia to buy Jolla and start over again with mobile department. Maybe they won't have Devices and services anymore, but know-how and people fired from Nokia are still in Finland and, as I can read, patent portfolio isn't sold, only non exclusively licensed to M$ for next 10 years.
Anyway, this is a sad day for mobile industry...

Alan

Spelling "brower" should be "browser". Also would be interested to learn what ways OpenOffice does not fit your needs.

Michael

Nokia smartphones were simply crap. Remember the N97 debacle. The only reason they were selling was because they practically had no competition. The moment the alernative was presented they were dead. Of course the phones continued to sell due to momentum, price points and so on. Apple nailed the first nail in Nokia's coffin, Android and Samsung nailed the last.

For years Nokia only cared about shipped volume instead of anything else. Like it or not Nokia was content with being the official supplier of phones to the third world countries.

Nokia only cared about selling hardware, the concept of having smartphone and having OS support for the next few years was unknown to them. The minute mobile industry shifted from hardware to software they were doomed. Much like IBM with their PC industry in 80's.

I hope there will be no more Nokia phones. i hope Nokia phases out 'Nokia' brand on mobile devices. it wasn' t Microsoft's or Elop's fault that Nokia became synonymous with cheap plastic phones.

Nokia's brand name in mobile industry today is as technologically exciting as is Kodak's in camera industry.

Nokia's path to doom was set by incompetent OPK and his board of directors. The decisions they made, at the time they made it, had doomed Nokia's future.

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