Windows of change at MSFT – Ballmer announces his retirement

So the winds of change, or should I saw the Windows, of change are coming to Microsoft. Today Steve Ballmer, bombastic and often demonized, CEO of the software giant will be leaving once his successor is found. Clearly the changing of the guard at the technology giant.

As Ballmer points out in his internal memo (see below), he points to some

After hearing that the Surface and Bing weren’t doing so well

impressive statistics of the company when he started and how he is leaving it. Of course he isn’t the only driving force behind this…a certain Bill Gates also has a few finger prints on this success.

Many who have been in the technology world have their opinions on the MSFT CEO. In a nutshell, to me he was an arrogant and pompous blow hard who thought he was the greatest thing since sliced bread. Then again are those characteristics so foreign for someone running one of the largest and most dominate brands in business? From what I have heard, from anecdotes, he appears to have been an inspiration to some of his employees, wasn’t a tyrant (for the most part) and was able to guide Microsoft effectively enough to maintain its lofty status. So net net I would say he was a good CEO for Microsoft. Did he make mistakes and miss opportunities? Of course. But which leader bats 1.000? None.

So now what for Microsoft?

• Bring in a CEO from outside. Ballmer had been there for a long long long time. Get some fresh blood.  It does not necessarily have to be a tech giant either…why? Because…
• This is a great time to “break” up the band. Microsoft, and it sounds like they are moving in that direction, is shifting focus. Well take the opportunity to bite the bullet. Does not mean sell off parts, but rather start managing MSFT much like a GE. Have separate and autonomous divisions that might have nothing to do with one another. For example: split off a corporate division, one that could restart talks with acquiring an SAP type company. MSFT already does a lot in areas such as supply chain and business intelligence. Make this a separate group. You could potentially have this division manage services – the consulting arm for MSFT. Spin off  consumer division, stick the XBox in that group. That group would be ideal to look at acquiring assets such as Yahoo! as it almost did a while back. Create a mobile division – go after the likes of Android and IOS – allow them to really push the Surface see what is there. Maintain a Windows and office division. Just milk that cash cow and prepare to continue battling Google for control of the desk top.
• By doing this the new CEO would be looked at to manage these disparate groups and divisions. Much like Jack Welch at GE. The new CEO would be asked to check her ego at the door and allow these sub groups to run autonomously, at times acting as peace maker or ensuring the buck stops with them. Innovation and new directions would be expected to come from the sub teams, not from the top.
• Microsoft needs to do something to shake things up. They are woefully behind when it comes to devices (tablets, phones etc). They have no social play nor are they in the app game. Their assets such as Bing, Hotmail, Surface and XBox do not seem to be able to crack the nut of Google, Apple, Facebook, Twitter or even capture buzz like did the Wii.

Not sure if this will happen. There were rumblings that Microsoft had debated spinning off Xbox in a consumer centric group. Time to go all in with that concept and allow the parts compete.

The parts are more nimble than the whole.

Memo from Ballmer:

I am writing to let you know that I will retire as CEO of Microsoft within the next 12 months, after a successor is chosen. There is never a perfect time for this type of transition, but now is the right time. My original thoughts on timing would have had my retirement happen in the middle of our transformation to a devices and services company focused on empowering customers in the activities they value most. We need a CEO who will be here longer term for this new direction. You can read the press release on Microsoft News Center.

This is a time of important transformation for Microsoft. Our new Senior Leadership team is amazing. The strategy we have generated is first class. Our new organization, which is centered on functions and engineering areas, is right for the opportunities and challenges ahead.

Microsoft is an amazing place. I love this company. I love the way we helped invent and popularize computing and the PC. I love the bigness and boldness of our bets. I love our people and their talent and our willingness to accept and embrace their range of capabilities, including their quirks. I love the way we embrace and work with other companies to change the world and succeed together. I love the breadth and diversity of our customers, from consumer to enterprise, across industries, countries, and people of all backgrounds and age groups.

I am proud of what we have achieved. We have grown from $7.5 million to nearly $78 billion since I joined Microsoft, and we have grown from employing just over 30 people to almost 100,000. I feel good about playing a role in that success and having committed 100 percent emotionally all the way. We have more than 1 billion users and earn a great profit for our shareholders. We have delivered more profit and cash return to shareholders than virtually any other company in history.

I am excited by our mission of empowering the world and believe in our future success. I cherish my Microsoft ownership, and look forward to continuing as one of Microsoft’s largest owners.

This is an emotional and difficult thing for me to do. I take this step in the best interests of the company I love; it is the thing outside of my family and closest friends that matters to me most.

Microsoft has all its best days ahead. Know you are part of the best team in the industry and have the right technology assets. We cannot and will not miss a beat in these transitions. I am focused and driving hard and know I can count on all of you to do the same. Let’s do ourselves proud.

Steve

Xbox One, weak name but strong move to controlling the entertainment hub

This seems to be the year that the big video game console manufacturers decide to release new consoles. Microsoft went first yesterday, Sony is expected to follow this Fall. Unlike other technologies – smart phones, tablets, laptops to name a few – video game consoles have appeared very slow with regards to new generation releases. It has been 8 years since the XBox 360 and 7 years since the PS3…wow…to put that in perspective, 2007 is when the first generation iPhone was released. So 2013 will give us the opportunity to have two major generation upgrades in the gaming console world.

The Xbox One

The first console out of the gate – the Xbox One. From all reports it brings some new bells and whistles – voice activation, enhanced Kinect, centralized control of music/video/game etc. Of course it has some “negatives” such as no backward compatibility with video games…ugh. All expected evolutions for the console. What this is really about is the continued battle for control of the home entertainment hub. Microsoft said as much:

Indeed, Microsoft is totally explicit about Kinect (and Kinect-related IP) being the central part of its strategy in the console battle as well as in the wider war for the living room — far beyond other aspects of the hardware.

Microsoft, as does a host of other technology companies, sees the entertainment center as the next frontier a place where all their software, content and devices will converge. As much as we love our smartphones and tablets, the television still provides the powerhouse of displays. We still gather around the television and leverage it as the communal entertainment hub some even use it as their personal dance trainer. However no one has really taken the “lead” when it comes to this space. Cable companies are trying to leverage their control of the content to be their play. Microsoft and Sony both look to their gaming consoles as the conduit to the entertainment hub. Google has made forays into the actual hardware – Google TVs. Of course Google is also embedded with search and YouTube in many new smart TVs. While Apple TV has been around for a while but has yet to really get into the game – they do have a firm lock on the streaming content via iTunes. What about Amazon? They also have a massive library of content as well as a device – the Kindle – that can force their way into the conversation. Question for Amazon, do they make an investment in hardware to put themselves physically in the living room?

All these moves will be good for the consumer – allow for a host of choices. Of course the problem might arise if all these vendors go with a walled garden strategy. Where the choice we make in hardware is one we might have to live with for a long time or buy multiple platforms!

You thought you had privacy issues with the TSA…beware of you gaming system’s snooping!

I realize this is the craziest week in the United States when it comes to traveling, one of the reasons I am thankful I hardly have to go further than 45 minutes by car…even that can be stressful at times! Of course couple this with the new TSA regulations for security screening that some are criticizing violate our privacy and civil rights and you have a recipe for a “lovely” travel season, once again I am thankful I will not be participating in this carnival.

Of course what I find interesting is there is an uproar over security actions that are necessary to protect our safety, I realize there have been some cases that are reprehensible, embarrassing and unnecessary, but if we are really up in arms about this violation of civil liberties what about the new XBox Kinect. The Kinect is the answer from Microsoft to go after the Wii market, the gaming market where simple controllers are too pedestrian and instead the way you move your arms, legs, body, head and other body parts will be translated onto the gaming screen.

Looks cool, doesn’t it! And it appears to be the new hot gaming accessory coming to the market, look out Wii! What is more interesting/frightening is the fact that the cameras that are leveraged to see what you are doing and translate those actions into the video game…can also see who is in the room, what they are wearing and what they are watching.  Ummm talk about big brother! I realize from a marketing point of view it is gold, I can run an ad on the television and actually track whether or not your watch…wow. I can use placement ads in your favorite show and see if your eyes go to that spot? Awesome. I can figure out if you live in Boston but are a Steeler fan? Great. I know whether or not you drink Coke or Pepsi? As I have stated before, there is a heated battle over the control of the television, it remains the center of our entertainment universe. The ability to bring “seeing” devices into that space would be a gold mine for marketers, but also touches a dangerous zone of privacy.

Do we really want to grant corporations and marketers such unfettered access into our homes via this game console? I realize that everything we do – surf the web, purchase goods and services, stores we walk into etc etc – is being tracked at some level and many times bundled and sold to entities interested in selling us products and services. However the visual and audio sanctity of our homes remains something that, until now, has been safe from this tracking. Seems to me that this too is under threat.

Is this good or bad? Or should we just accept that privacy is dead and move on!