How Microsoft's Delayed Reorganization Is Fixing the Loyalty Gap

Word's out that Microsoft is poised to reorganize itself as a 'device and services' company. CEO Steve Ballmer has been trying to do this for a decade, but executives disloyal to him--or still loyal to Bill Gates--often got in Ballmer's way. But Redmond's successes, including Azure and Office 365, suggest this culture may finally be changing.

By Rob Enderle
Fri, June 07, 2013

CIO — When the rumors of the coming Microsoft reorganization broke this week, my response wasn't like most. I wasn't surprised at the direction—that Microsoft planned to become a "device and services company." I wasn't surprised that it would likely change Microsoft massively. I wasn't even surprised that there was a leak in the first place.

I was surprised this hadn't happened a decade ago.

More than a decade ago, right before Steve Ballmer took over as Microsoft CEO, he told me this was the way he knew the company had to go. Had he acted sharply on his own vision, Microsoft would now be leading to the cloud rather than chasing Amazon and Google to it.

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This had me thinking back to Microsoft's other big failures over the last decade: Zune, Windows Phone, Windows Tablet and even Portable Media Center. These weren't failures in direction; they were failures in execution. They reflect a very unique problem Ballmer had when taking over Microsoft one—and it's one I don't think we've ever really explored.

Microsoft Wasn't Ready to Replace Gates

While Ballmer was clearly favored for the CEO roll, he wasn't the ideal candidate. Nor was he mentored. He and Gates are nearly as different as Tim Cook and Steve Jobs and possess very different skill sets.

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Microsoft had been designed around a leader who was a coder. Now, Gates wasn't a great coder, but he was good enough to know when people were giving him a load of BS, and his vision was largely technical.

I met Gates shortly after he passed the torch to Ballmer and asked him his vision for the future. Rather than describe some imaginary Microsoft-centric utopia, he spelled out what sounded like a topology for the data center of the future. Gates had no real connection to what you or I might want; rather, he was describing a geek heaven of fast bits and bytes.

Microsoft after Gates was tuned to favor someone who knew technology intimately and, by and large, distributed power to like-mined geeks. In other words, it was not at all a company that someone with Ballmer's background and capabilities could run.

From Zune to Windows 8, Warnings Aplenty

Zune should have been the big warning. This was Ballmer's idea. He wanted was a better iPod—and, on paper, Zune was exactly that. The first Zune hit the iPod in all its weak spots. The iPod was fragile; the Zune was hardened. The iPod couldn't do video; the Zune had a huge video screen. The iPod forced you to buy all your music; the Zune had a subscription plan—something Apple can't even do well today—and even let users legally share music.

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