Despite
Microsoft’s remarkable financial performance, CEO Steve Ballmer failed
to understand and execute on the five most important technology trends of the
21st century: in search – losing to Google; in smartphones – losing to Apple;
in mobile operating systems – losing to Google/Apple; in media – losing to
Apple/Netflix; and in the cloud – losing to Amazon.
Microsoft left the 20th
century owning over 95% of the operating systems that ran on computers (almost
all on desktops). Fifteen years and 2 billion smartphones shipped in the 21st
century and Microsoft’s mobile OS share is 1%. These misses weren’t in minor market areas – missing search, mobile and the cloud were directly where
Microsoft users were heading. Yet a very
smart CEO missed all of these.
It wasn’t
that Microsoft didn’t have smart engineers working on search, media, mobile and
cloud. They had lots of these projects. The problem was that Ballmer organized
the company around execution of its current strengths – Windows and Office
businesses. Projects not directly related to those activities never got serious
management attention and/or resources.
For
Microsoft to have tackled the areas they missed – cloud, music, mobile, apps –
would have required an organizational transformation to a services company.
Services (Cloud, ads, music) have a very different business model.
They are
hard to do in a company that excels at products.
