Is Steve Ballmer in Trouble?

I’m not doing any bashing, just thinking out loud.  I don’t really care all that much about the phone-wars or for tablet computers.  I’m just looking at how others do care about them a lot and how there is a building wave of negative news.

When you’re on the way up, everything you hear sounds positive.  But then things turn.  No matter what you do, momentum just seems to be against you.  Microsoft CEO Steve Ballmer might be in that zone now. 

We’ve been hearing lots of negative things and they seem to be snowballing.  A few months ago there was news that a number of executives in the phone and device divisions had “resigned” and that Ballmer was taking over.  MS was losing market share in these areas.  Xbox 360 is a great games platform but it was thumped by the Wii (as was the PS3 – MS and Sony total sales added together are around the same as the Nintendo platform).  And Windows Mobile … well … what can you say?  Windows Phone 7 (“Series” is dropped from the name, right?) is late to the game and will have a huge challenge ahead to make much of a dent in the market.

MS is way behind in the tablet/slate market.  Apple created a huge fuss over the iPad.  I don’t get it but it’s not aimed at people like me anyway – a contented Windows user.  Amazon has done well with the Kindle by targeting their core customer: the book reader.  They have the sticky factor too by using a bespoke format for their e-books.  MS did play in the tablet market way back but it was with a version of Windows with a few extras.  The hardware in question was expensive and I probably only saw it being used by a couple of enthusiasts.  I thought it would have a market in certain appliance roles, e.g. hospitals, military, warehouses, etc, instead of paper.  But it seemed to disappear – admittedly their is a whole army of MS products aimed at niche markets that most of us, including me, have no idea about.

I cannot forget the blooper by Ballmer in his TechEd NA 2010 keynote.  MS is a cloud company and if you have no interest in the cloud then he wants nothing to do with you.  Someone, somewhere, was wishing he didn’t say that.  The cloud is great but it isn’t everything.  Internal systems (private cloud, if you will) is not going away.

In the last few weeks we read that Ballmer didn’t get his bonus this year because MS did not meet the set objectives for phone and tablet markets.  I was stunned to see how “little” that Ballmer earns, compared to how even Irish executives are paid.  I was equally surprised to see how much these markets were of a concern to whoever sets Ballmers remuneration package.

Last week there was a survey that said 50% of MS employess (from a very small sample) did not approve of the job that Ballmer is doing.  Ouch!  That hurts – I’ve never heard of similar being done by other companies.  Surely the executives at Chrysler do a worse job?  Maybe it is done but I’ve never seen it make the news.

The tablet story is very confusing.  Around the time of TechEd NA 2010 we were hearing stories that there would be a HP Windows (of soem kind) tablet in the stores by Christmas.  Then we heard HP had bought Palm OS and were forgetting about Windows.  This one has changed a few times.  Then there were rumours that the OS wouldn’t be around until mid-2011.  Who the hell knows now?

Looking at the press today and there is not much good news for Windows Phone 7.  Apparently, the launch is today.  That sneaked up on me.  I knew more about the announcement in Barcelona last February, which paled in comparison to what Jobs would do for Apple and was at some God-awful AM time while I was in Redmond, WA.  The press are full of stories about how Windows Phone 7 won’t do well.  I’ve read that Verizon in the USA has no interest in carrying it. focusing more on Android and iPhone.

Do I think Windows Phone 7 will be big?  Unfortunately, no.  It looks nice.  But I just don’t think that this is an area that MS should be in.  For me, they are a client/server company.  I think they make the best desktop/server OS, business applications, and systems management.  If I was a dev then I’d be all over their dev environment.  Whoops: I forgot that MS is a cloud company, so I’d be all over Azure in that case.

The phone OS is an improvement in terms of appearance.  Will it be usable?  I’ve no idea.  I probably won’t ever know because my WIndows phone hardware (bought last December) doesn’t have the required hardware.  I’m not a phone collector – I buy a phone and use it until I need to recycle it.  I make calls and I send texts.  The crucial things for these gadgets for the target market are:

• An app store: Apple own this market.  MS has a lot of catching up to do here.  Can they produce the huge variety of apps?  Can they encourage developers to do the same for a phone OS that every prognosticator says will be a niche player?
• Music downloads: Do kids buy CDs anymore?  I’m guessing not (they are a ripoff in these parts).  The MS answer to music is Zune.  until recently MS shot themselves in the foot by only opening Zune to the USA (maybe Canada too?).  The Zune appliance had about as much impact on global music as my last album, entitled “Rock Classics in the Shower” (available in bargain bins at your local gas station while stocks last).  MS opened up Zune to more markets recently, probably in anticipation of the Phone 7 launch, but it’s still only a few countries.  For example, Ireland is not included.  This is so short sighted.  It makes one wonder if MS is committed or not.  Is this another Windows Essential Business Server, here one minute and gone the next?

What is MS doing well in terms of Xbox, Phone and Tablet?  The Kinect is going to be a market leader in terms of what it is.  It’s a cool little add-on to the Xbox that makes it a Wii- and PS3-beater, by a mile.  I don’t know that it will drive Xbox sales, but let’s face it, that’s not what MS focuses on.  It’s long been thought that MS sold the Xbox hardware at a loss, focusing more on games and Xbox live.  I visited a demo-“shop” last week and lots of the key market (males, teenagers-to-late-20’s) were trying the Kinect and having fun.  I can bet they’re the sort of people that will buy the gadget and the games when they are out.  It’s out in November and I reckon it will make headlines in the Christmas rush.

Phone?  At least HTC and Samsung are on board.  They’re both Android sellers so now their customers will have a choice.  If you are a System Center Configuration Manager customer then you might prefer the Windows option so manage software on your phones, just like you can with PCs.  But that assumes that IT has much say in handset purchases – which it rarely seems to do.

Tablet?  Well, we have no idea.  We’re guessing that Windows Phoen 7 will be ported in some way to compete directly against the iPad OS.   But would that leave it as more of a gadget than a business tool?   This wouldn’t be such a big deal if we were talking about how there’s nothing firm from Apple (who keep everything secret until the launch) or Google (where everything seems to stay in beta for 10 years).   MS is being judged differently because they are putting so much emphasis on these markets and because they are so far behind.  It’s a damned if you do, and damned if you don’t scenario.  Maybe some firm facts from the top would be helpful.  Maybe we’ll hear something more today when Ballmer does the Phone 7 launch.

But back on topic … if Steve Ballmer is being judged solely (and IMO, unfairly just) on the succcess of Phone and Tablet, then I think the bad headlines will only get worse.  Windows Phone 7, based on history only because I’ve not used it, will not beat Google or Apple.  Tablet is owned by Apple and Amazon and MS has nothing to show us.  I’ve no answer.  I’ve just noticed that there’s a lot of negative press about Ballmer and that it is picking up pace.  Only Ireland’s Brian Cowen seems to get more than Ballmer these days and that is not good company to be in.  These things have a tendency to build and build, and if this is the case, then Steve Ballmer could be in a bad place in the not too distant future.