Ronnie05's Blog

The tale of two Steves- Bee and Jay

Posted in Computing and Operating Systems, Device Platforms by Manas Ganguly on August 28, 2013

The two Steves- Bee and Jay have been vanguards of technology – and yet the difference between them couldnot have been stark. Everything Jay was Bee wasn’t. Bee’s accomplishments are an antithesis of the achievements of Jay. This is the follow up on my earlier post – Microsoft’s lost decade and it looks down upon (Literally) on Bee’s big judgement errors….

Bee and Jay

A good part of the 90s and early 2000s will be remembered as Microsoft’s decade – and Microsoft was the most dominant force in the technology space, the Alpha-male in technology. The ubiquitous Wintel partnership as it was then however fell behind the Moore’s law and grossly underestimated the migration from desk stationed devices to handhelds. Even while Microsoft had launched its Windows Mobile in 2000 and brought out the first tablet in 2000, Gates, Ballmer & Co misread the shifting sands in personal computing and were unable to capitalize on both these fronts. On hindsight, Microsoft did not open up to the eco-system effects and benefits – and were more happy selling proprietary licenses – A lack of flair and foresight there, which precipitated into a losses that we see today. Put simply – The world has moved faster that Microsoft’s licensed software business model could respond (Analyst Ted Sandler)

Here’s comparing how the two Steve’s measure up on different and yet common device, technology and platform initiatives-

Apple versus Microsoft - the story of two Steves

The list doesnot quite stop there – There’s Microsoft’s wasteful effort on Bing versus Google and its advetures with XBox and Kinect versus Playstation. To me Xbox and Kinect were ideal innovations – but Microsoft and Bee failed to push it… across platforms. Microsoft worked across disparate platforms and was never able to integrate the customer experience across devices and platforms. And then again, projects such as Microsoft courier never saw the light of the day – the plug pulled out through half way.

Bluntly put – Technology is one thing – the ability to conceptualize the portfolio, integrating the services in a manner of user experience that is engaging and habit forming, a layer by layer structured format of business allowing scalability of services and devices into different domains is something that Ballmer missed upon very completely. Take an Apple for instance – It started with an iPod, created a layer of services around it (iTunes), scaled the device into new form factors , upstaged the Music industry, leveraged the design into a smartphone (iPhone), scaled up another service layer (Application Store), upstaged the industry and leveraged it yet again for new device/dimension (iPad) and upstaged the industry all over again – there is this continuity in design, form factor, service, portfolio and monetization streams. Instead Microsoft had a Windows media Player, a Zune, a Zune Media Store, an Xbox and a Kinect, a Surface – they are all great pieces plagued by a discontinuity. The best examples being xBox and Kinect – good innovations, mind numbing possibilities and yet these innovations have struggled to give Microsoft worthwhile mileage.

What they said ... when Steve was asked to retire is not all that great!

What they said … when Steve was asked to retire is not all that great!

Steve (Jay) put the Microsoft problem in a neatly worded statement: “ The trouble with Microsoft is they have no taste. They have no taste and I don’t mean that in a small way, I mean that in a big way.” Absolutely right Steve! Ballmer’s successor clearly has an awful lot of work to do….

Steve Ballmer & Microsoft’s Lost Decade

Steve_Ballmer_peace

Steve Ballmer, CEO Microsoft since January 2000 is to retire from his post within the next 12 months. Rumours are that our man was asked to march since the board was not too please about the $900 Million write offs on a spate of current projects. Within a few hours of this release, Microsoft stock jumped by $2.36 (7.3%) over a broad trade of 223.3 million shares. The news of Ballmer’s exit added an immediate $20 billion to Microsoft’s capitalization.

The movement of the MSFT scrip shows a variance of 97 cents on 23rd August with the share touching $34.97 post Ballmer's Announcement. Initial Euphoria?

The movement of the MSFT scrip shows a variance of 97 cents on 23rd August with the share touching $34.97 post Ballmer’s Announcement. Initial Euphoria?

Over the course of last 14 years, Microsoft hasn’t really done significantly different – besides sharing the spoils with investors in terms of dividends. Yes, it has increased the market capital of Microsoft – but as far as results go – there is hardly anything much on the board. With Ballmer at the helm – Microsoft has actually offered negative returns. Ballmer can be credited with an effort to shift strategies at Microsoft – but it didnot really pay off.

MS Share Prices

If you compare the indices of Microsoft versus Dwo Jones, NASDAQ and S&P500, the picture that comes through is an eye opener.

Microsoft Compared

To put the numbers – Dow Jone outperformed Microsoft by 3X in Ballmer’s Decade, S&P outdid Microsoft by 10% through the Decade. The face saver was NASDAQ, the technology index itself dropped by 10%. Compare Microsoft’s stagnant share price to 700% increase in Gooogle’s share price value and a 1600% escalation in share price of Apple.

Microsoft versus Apple & Google

Microsoft S&P NASDAQ DJ

Infact, Apple’s Get a Mac campaign was a very clever lampoon of the archetypical Ballmer personality. In Ballmer’s decade, Apple overshadowed the Redmund giant and emerged as the quintessential technology business after bringing the revolutionary iPod, iPhone, and iPad platforms to market. To date, only Google Android has emerged as a formidable rival to the popular Apple iOS operating system. Meanwhile, Microsoft and Ballmer have been literally caught with their pants down. In hindsight – Ballmer never really estimated the eco-system effects and advantages and consequentially was never able to capitalize.

Ballmer met some degree of success with the Microsoft XBox and Kinect – the only game changers. However, XBox and Kinect have not translated into any huge seismic impact – quite unlike the other Steve in town – the one from Apple.

Steve Ballmer’s greatest gambit (and his greatest failure in course) was Windows 8 – The equivalent to the promised land for Microsoft – the back bone of Microsoft’s future in personal computing from Tablets to Laptops to Smartphones. A year of Windows 8 later –

1. Windows 8 has not even nudged the cash registers at Microsoft
2. Reports have suggested that Windows 8 sales and adoption has trailed behind Vista at similar points of Product Life cycle chronologies
3. Windows is still some distance from being able to make a mark in the Tablet segment even while PC Desktops and Laptops keep getting written off… PC Markets have been shrinking for 5 consecutive quarters and there appears no hope of recovery in the horizon
4. At low single digits market shares in Smartphones and Tablet markets – Microsoft is a relative non factor. At Microsoft’s scale – they ought to be looking at upstaging Android and not be overjoyous about the decline in Apple.

It is perhaps ironical, that Microsoft and its Wintel partnership must fail to Moore’s law. Wintel understood the law pretty well in terms of size and power management principles – but miscalculated the consumption shift towards smartphones and tablets.

To sum up, Steve Ballmer has been very instrumental and effective in running existing product lines – but in terms of innovation and new products – Ballmer has been less than good and the 13 years at helm of Microsoft have been years of opportunity loss – Microsoft’s lost Decade.

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