Ballmer in 2010: Should He Stay or Should He Go Now?

Will 2010 be the year the Ballmer era ends at Microsoft?

That subject has been swirling around the tech media world after Newsweek predicted that Ballmer will get the boot in 2010. In addition, Ballmer didn’t even make it on Harvard Business Review’s top 100 CEOs list (Who was No. 1? Surprise, surprise: Steve Jobs)

January will mark Ballmer’s tenth anniversary as Microsoft CEO. It’s been a decade of ups and downs for the software giant as its old school desktop dominance slowly gave way to the new school of Google, RIM, Apple, salesforce.com and other innovative companies that have redefined Web-based and mobile computing.

Meanwhile, Microsoft’s stock has plunged 50 percent during Ballmer’s tenure. On top of all that, the general public doesn’t seem to like him very much.

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Ballmer did, as Newsweek writes, “miss every big new tech market of the past decade.” But at the same time, it’s a mistake to call Ballmer a complete failure as CEO. In many ways, he had to play the dusty hand he was dealt by Bill Gates, as new and unforeseen technologies popped up all around him.

In 2009, in fact, Ballmer did a lot to redeem himself: He (somewhat) gracefully laid off 5,000 employees to trim swelling costs; he orchestrated a search partnership with Yahoo (instead of paying $50 billion to buy it) that could pay off big; and he oversaw the roll out of Windows 7, which has pleased critics and users and put an end to the Vista negativity.

Because Ballmer’s record at Microsoft cuts both ways, here are three reasons why he should take a hike and three reasons why he deserves to stay in charge.

Three Reasons Why Ballmer Should Go in 2010

Microsoft’s Stagnant Stock Price

As the Newsweek prediction states upfront, “Microsoft stock has dropped by nearly 50 percent on Ballmer’s watch, lagging not just other tech companies but even the Dow Jones industrial average.” Widespread cost-cutting from its 2009 layoffs and an increase in Windows 7 enterprise deployments will help, but Ballmer must find new ways to keep Wall Street happy in 2010.

He Let Microsoft Fall Behind New Technologies

Criticism of Windows Vista was a big, bloated distraction that took Ballmer’s eye off the ball starting in early 2007. Since then, Google has continued to soar in search, and Apple has dominated with MP3 players and online music services, not to mention a little thing called the iPhone. Microsoft’s Windows Mobile OS is on life support and Zune, though a respected media player, has been so poorly marketed that it is risking obscurity.

[ For complete coverage on Microsoft’s new Windows 7 operating system — including hands-on reviews, video tutorials and advice on enterprise rollouts — see CIO.com’s Windows 7 Bible. ]

The pressure is squarely on the Bing search engine. Ballmer is committed to search. He plans to spend $5.5 billion to $11 billion on Bing during the next five years and a search partnership with Yahoo is on the horizon. But can Microsoft ever really compete with Google on search? Ballmer’s job may depend on it.

He Let Vista Happen

Windows 7’s successful release and hopeful future has put the negative perceptions of Vista in the rearview mirror. But although Vista may be gone, it’s not forgotten and its name will be forever linked with the man in charge: Steve Ballmer. The early complaints of Vista’s slowness, and application and driver incompatibility led to anger and mockery that never stopped. Even after service packs stabilized Vista, it was too heavy — i.e. slow and bloated — for its time.

Three Reasons Why Ballmer Will Stay in 2010

Windows 7 Momentum

Ballmer may also become linked with a happier Windows story: the redemption tour that was Windows 7. After more than a year of build-up, Windows 7 lived up to the hype with mostly positive reviews and excitement from consumers and businesses. It is as flexible as Vista was rigid and is a better fit for the diverse array of PCs in the current marketplace. If PC sales keep making gains in 2010, as Gartner predicts, and if Windows 7 drives IT spending, as Goldman Sachs predicts, then Captain Ballmer will look like a rock star.

Microsoft Is Leaner After Layoffs

Nobody likes to hear about layoffs — except maybe Wall Street vultures — but Ballmer and his executive team laid off 5,000 Microsoft workers in 2009. How the company came to that is another story, but the layoffs and other cost cutting reflect well on Microsoft in the eyes of investors and shareholders. Wall Street hears mass layoffs, and they think leaner and more efficient.

Ballmer could be known as the guy who trimmed the fat at Microsoft in 2009 (granted, he allowed the company to pack ’em on) and created a more nimble and focused company in 2010.

Friend Bill Gates Would Have to Fire Him

Ballmer and Microsoft board chief Bill Gates go way back — to the early ’70s, to their Harvard days, to the days when the personal computer was just an idea. Gates showed he has a lot of faith in Ballmer by making him CEO 10 years ago.

Firing Ballmer would be a reflection on Gates’ own choices. And to fire your friend of more than 30 years, he’d have to be a disaster. Despite what many think of Ballmer, he is not a disaster. But if shareholders keep grumbling about Ballmer’s leadership, Gates may have to make a tough decision.

Shane O’Neill is a senior writer at CIO.com. Follow him on Twitter at twitter.com/smoneill. Follow everything from CIO.com on Twitter at twitter.com/CIOonline.