Ronnie05's Blog

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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Microsoft’s biggest strategy shift can leave it in the middle of no-where.

Posted in Mobile Devices and Company Updates by Manas Ganguly on October 10, 2012

About 3 months back, I had been musing about the change that was afoot at Microsoft – The 30 year old OS centric company was for the first time shedding its old feathers to look, feel and compete with the new kid on the block – Google and a resurgent old rival – Apple. Ballmer’s letters to Microsoft share holders clearly signals that Microsoft is moving away from its make the OS & the service, let the partner handle the device model, which is what Ballmer terms as “significant shift, both in what we do and how we sees ourselves”. This is clearly necessitated by Internet and cloud centric business models, which puts the Microsoft traditional server, desktop and OS centric model. Given the momentum that Apple has now in mobile workforce and cloud space and the initial cold shrugs that Microsoft’s high price tablets have seen, Micorosft will take more batter before they get better. Also, the head start that Apple and Android have in the mobility space can be hard to overcome. Microsoft has to play the game changer and it needs its OEMs to support it while it does so. However the device route would mean that it will expend itself trying to integrate things into the user experience and the device. May be Google and Apple are doing this bit – but Microsoft will have to really execl to take the game away from Google and Apple.

The Windows centricity still remains as per Ballmer the intent to “firmly establishing one platform, Windows, across the PC, tablet, phone, server and cloud to drive a thriving ecosystem of developers, unify the cross-device user experience, and increase agility when bringing new advancements to market.” With Windows8, Microsoft is pushing to have unified messaging across all platforms. More than just sharing the same name, the various versions of Windows for different devices will now share a common foundation. It’s a move not dissimilar to what Apple does with OS X and iOS and its an essential part of making it easy for developers to target specific platforms.

Ballmer closes his shareholder letter by noting that “it truly is a new era at Microsoft ” and that the company has “an unprecedented amount of opportunity for both this year and the long term.” However given the number of competitors that it has to contend with, and the umbrage of the OEM makers who see Microsoft’s device designs as a challenge to their own competencies – it will be a complex equation, making the revenue and profits strategy work in a dynamic environment. Already the new game that Microsoft is playing itself is hurting itself as it suffered its worst loss ever in its 26 year old history in April-June quarter 2012.

However, it does make sense for a possible take over a beleaguered Nokia by Microsoft. Doesn’t it?

Microsoft brings Gesture Control to Windows and XBox

Posted in Computing and Operating Systems, Value added services and applications by Manas Ganguly on July 17, 2009

Microsoft has been working on gesture recognition as extension on Microsoft gaming console Xbox. The integration of gesture recognition in its gaming console has been named Project Natal. Depth-sensing cameras such as the one Microsoft is adding to the Xbox allow people to control their PCs, game devices, and televisions. Now Microsoft wants to bring Project Natal and its technology to Windows.

microsoft-natal

Depth camera would connect up to Windows PCs for interacting in terms of meetings, and collaboration, and communication. This was first conceptualized and developed by Microsoft research and is now being commercialized by both the Xbox and Windows units. The Xbox guys and the Windows guys have now latched onto the idea and Microsoft expects the office applications (coupled with Depth sensing camera) can be quite exciting.

In an interview to CNet, Microsoft Chairman Bill Gates, “Using your body to control devices makes a lot of sense. I think the value is as great for if you’re in the home, as you want to manage your movies, music, home system type stuff, it’s very cool there. And I think there’s incredible value as we use that in the office connected to a Windows PC. So Microsoft research and the product groups have a lot going on there, because you can use the cost reduction that will take place over the years to say, why that shouldn’t be in most office environments.”

Gates actually dropped the first hint of Natal during his joint appearance with Steve Jobs at the D: All Things Digital conference in 2007

“Imagine a game machine where you’re just going to pick up the bat and swing it, or the tennis racket and swing it,” Gates said.

Moderators Walt Mossberg and Kara Swisher mocked Gates, saying such a technology already exists and it’s called the Wii. But Gates disagreed. “No, that’s not it. You can’t pick up your tennis racket.”

He later added, “You can’t sit there with your friends and do those natural things,” he said. “That’s a 3D positional device. This is video recognition. This is a camera seeing what’s going on.”

However, there are doubts about Microsoft’s ability to execute such futuristic moves. It was about 10 years earlier that Microsoft had promised voice controlled computers. 10 years and few many generations of processors later, Microsoft has been no-where close to pioneer voice recognition as an input to computing devices. (It would have put some distance between itself and competitors if it would have executed this strategy). Instead all it has done is to release “delta development” versions, which has left it vulnerable to more innovative competitors.

Ref: http://news.cnet.com/8301-13860_3-10286309-56.html?part=rss&subj=news&tag=2547-1_3-0-20

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Microsoft: Music for free/Download to own service

Posted in Mobile Devices and Company Updates, Value added services and applications by Manas Ganguly on July 14, 2009

Starting end of July, Microsoft will offer users the chance to stream music for free and also download to own. Music is an important area for Microsoft and they are looking at launching a music streaming service imminently (also from a view to bolster the appeal of Microsoft Zune). This music streaming service is similar in principle to Spotify.

zune1

 Users can stream music for free in exchange for listening to around a minute of advertising every half hour but for £9.99 a month, the ads will be turned off. It is thought Microsoft’s offering will be ad-supported too as well as having a paid-for premium service.

 Microsoft is looking at how other similar businesses have structured their business models and trying to figure out what will work best for both consumer and Microsoft. The service would be operated and owned by Microsoft, while being promoted through MSN and other parts of the Microsoft network.

The service could be tied in with Microsoft’s Xbox gaming console, though the details of how a partnership would work have not been drawn yet. The addition of a Microsoft-owned music streaming service would tie in with an increasingly consumer focussed strategy from company to make its Xbox 360 console the main “entertainment hub” in the family home. Users are already able to download movies through their console and play games against one another online.

In an increasingly competitive marketplace, Microsoft can bring “scale and a quality of product” to the music streaming scene. The knowledge of the music industry the company had gleaned via Zune and also the player’s technology, had all been incorporated into the service’s development process. Microsoft recently announced it would launch a high definition version of its music player: Zune , but it will only be available in the United States. Microsoft is in talks to identify download partner for its music streaming service.

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