Steve Ballmer steers Microsoft from Windows to ‘devices and services’
Considering that Steve Ballmer has been chief executive of Microsoft for more than a decade, it might sound strange to say this. But the sweeping reorganization announced Wednesday made it clear that Microsoft is now his company.
Whether that’s for better or for worse, we’ll see.
But in the various memos and news releases, the company emphasized that while Windows remains crucial to its future, it’s no longer the way Microsoft wants to define itself. The company is now about “devices and services,” Ballmer said in a memo.
“Ballmer has definitely placed his stamp on Microsoft, meaning the ‘Gates era’ has come to an end,” said Patrick Moorhead of Moor Insights & Strategy. “He is fundamentally shifting the company from an operating system company to services and devices company. In a world where operating systems are free, as in the case of Android, iOS and Linux, Windows is a lot less important.”
To accelerate that shift, Microsoft is collapsing the number of divisions from eight to four. Ballmer wants to promote more collaboration at a company often seen as internally fractious.
It’s a radical push to remake the company. But there’s no arguing that the reorganization is the capstone to one of the most remarkable years of transformation we’ve seen at a technology giant.
Under Ballmer, Microsoft has engaged in a historic upheaval of nearly every part of its massive product line.
Much of that has been documented in bits and pieces. The biggest news was the redesign that came with Windows 8. But there’s also the launch of Outlook.com, the new Windows Phones, the new Xbox One coming later this year, a new cloud-based version of Office.com. And the list goes on.
And, of course, there’s been the push to build its own tablet, the Surface. In the announcement, Ballmer promised to continue working with third parties as it has traditionally done, but also to keep looking for ways to build more of its own devices.
Many of these moves have come in for heavy criticism. Sales of the Surface have not been stellar. Windows 8 has failed to stem a steep decline in PC sales.
But from the point of view of the new Microsoft, all this matters less than you think. With the new guiding philosophy, Windows is not the sole benchmark by which to measure its success or failures. Rather, the company wants to be given credit for the enormous breadth of things it does for both consumers and enterprise, and how well all of those things work together.
Indeed, while some of the consumer offerings have failed to catch fire so far, the enterprise side of Microsoft has been growing quite nicely in recent months.
So much so, that investors seem, at least for the moment, to be optimistic that this new, post-Windows Microsoft, has a fighting chance. The stock in mid-day trading Wednesday was up $0.67 or 1.93% to $35.37. The stock has been on a decent run this year, up more than 24% and coming close to the $36 per share mark it last reached in 2007.
Of course, for all the major surgery at Microsoft, it remains to be seen whether this will translate into a company that can grow at the pace investors want over the long term. Or whether it can regain any sense of leadership in the fast-moving worlds of mobile and cloud technologies, where so far the company has been outflanked by rivals such as Apple and Google.
Ballmer’s legacy is now firmly tied to these remarkable changes. Whether he’s remembered as a transformative corporate visionary or a bumbling, misguided chief executive will depend more on what happens in his second decade running the company than his first.
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