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Let’s try to be fair to Ballmer

By 5 June 2010 4 Comments

David Heinemeir Hansson has laid waste to Microsoft CEO Steve Ballmer in his diatribe “You couldn’t pay me to work for Ballmer“.  The dubious “evidence” he uses is the comparison of Microsoft stock prices of the 1990s to the 2000s.  For one thing, the inflated bubble stock prices of the 1990s were artificially valuated at 2010 levels and were corrected back to normal trend lines in the crash of 2000.  The other problem with Hansson’s analysis is that Bill Gates remained at Microsoft nearly full time for much of the 2000s.

Hansson used the following chart to illustrate his point:

Chart by Erik Pukinskis of Sprout Robot

But if we compared Microsoft stocks the other tech titans of the industry like Cisco and IBM and the S&P 500 (chart below), Microsoft is right around the industry average.  Apple’s performance has simply been unusually good as they experienced two massive rebirths with the success of the iPod and then the success of the iPhone under the reign of Steve Jobs.

To be clear, Microsoft has some serious problems to tackle and the somewhat recent loss of Bill Gates was certainly detrimental to the company.  They’ve lost much time and market share in the smart phone space and now they might be losing the TV space as well.  Having Bill Gates and Steve Ballmer at the helm doing the things they do best is obviously better than just having Steve Ballmer at the helm, but that’s a reality that Microsoft has to deal with.  Someday, Apple will have to face the inevitability of losing Steve Jobs and Apple stocks probably shakes every time Steve Jobs coughs.

This isn’t to say that Steve Ballmer is the perfect CEO for the job.  He was wrong to initially oppose the Xbox which was one of the few success stories for Microsoft over the last decade and he was wrong on Windows Vista in believing that the company could allow OS performance to slip due to improving hardware.  But Microsoft is capable of learning from its mistakes and they did that with Windows 7 and they seem to be doing the necessary house cleaning to maintain their competitive edge.

Update 2:40PM – Ed Bott has some great analysis here as well and writes:

“Meanwhile, it takes a certain amount of panache (and perhaps some amnesia) on the part of M. Gassée to criticize Ballmer’s performance. This is, after all, the guy who left Apple in 1990 to found Be Inc. Six years later he turned down Apple’s offer to buy the company, reportedly for an amount between $110 million and $200 million. In 2001, Be Inc. closed its doors, and Palm, Inc. wound up buying the company’s assets for $11 million. Now that’s a lost decade.”

4 Comments »

  • Digital Society » Blog Archive » “For everything there is a season” said:

    [...] In a post earlier today, George comments on the silliness of assuming that a company’s stock price should rise inexorably and that if it does not then it must be the CEO’s fault. [...]

  • Inyou Crash said:

    Steve’s main accomplishment is that some of his best quotes is easy to make fun of. For him and his amount of energy, he will be known to me as the Dancing Monkey Boy. Personally, I think with Microsoft, their entrenchment in the desktop and office suite is the only thing that keeps them in business. The Xbox 360 may have been a success by sales and market share, but at what cost? Billions in repair costs as well as several customers who had to deal with red rings of death that is second in notoriety only to the blue screen of death.
    I think one major misstep of Microsoft is and continues to be the mobile market. Just a few years ago, they almost had the total market share. Palm had even changed over to Windows Mobile. Then out of nowhere, Blackberry obliterated their market share on the business side. Then Apple of all people showed that the consumer market could benefit from a smart phone as well and so now we have Microsoft being a bit player in a market they once dominated.

    Next we can talk about IE which is another product that had almost 100% market share and lost it. While they still dominate the market, they continue to lose their grip on the market. IE 8 has made some major milestones away from IE6 and IE7 as far as security, but breaking many of the features which I can’t argue as needing be be broken, but for far too long. But even so, IE continues to cut Microsoft’s market share.

    Then we have Apple who in the same time as Microsoft continued to hold their market value steady, successfully repositioned themselves as a multimedia company while Microsoft continues to be just a software company with a few multimedia devices. Microsoft can’t even sell HP on the Slate. HP gave up on working with the product, dumped the OS and decided to buy Palm instead. If that isn’t a blow to the ego of Steve Ballmer who demoed the device for the world, what is?

    I am curious to see what will continue to happen to Microsoft as Bill Gates slowly distances himself further and further from the company he founded.

    In closing on this rant about Microsoft, I have to remember fondly when Steve Ballmer was quoted saying that people will someday look back and remember Vista fondly and miss those times.

    He should do stand up.

  • Blad_Rnr said:

    Xbox ix a success story? It lost billions and had one of the worst consumer recalls in the history of technology. You give Ballmer too much credit. MSFT can’t decide if they are software company, a search company, a cloud services company or an electronic devices company. And after ten years Ballmer still can’t decide. They have blown through a hundred billion dollars only because they still have two dying cash cows: Office and Windows. Show me a MSFT product that is making any kind of real money outside of Office/Windows.

    Now take away the Mac from Apple, and you have the iPod, iPad, iPhone and iTunes making money hand over fist. That’s vision. And Steve Ballmer has none.

  • Nick Brown said:

    Presence does very well, but it is an enterprise product.