Monthly Archives: August 2010

Ballmer’s opportunity cost

Comments on: “Ballmer Dismisses Android. Oh, This Will Come Back to Bite Him”:

While this is mostly just a take-down piece about Ballmer and his lack of vision, there is some new insight here that I’m not sure I’ve read elsewhere. At least not written explicitly:

bq. “…when he’s [Ballmer] done nothing but extend their old business, Windows and Office, which is fine, but there are a lot of other CEO’s who could’ve done that just as well or better. Businesses don’t last forever. It takes someone special, a visionary, to create new growth opportunities in the company.”

Some time ago, there was a little storm around how poorly Ballmer had done as Microsoft CEO, mostly because of the flat-line stock. There were some good rebuttals showing growth in profits under his direction, which seemed to shock everyone in to believing that maybe he didn’t do all that badly. Everyone seemed to kick the dirt and say, “Well, we all know stocks aren’t the best indicator of success or failure of a company. While Microsoft is doing fine from financial perspective, Wall Street simply doesn’t recognize it.”

But let’s back up a moment and realize that Wall Street isn’t interested in what you’re doing today. Stocks are bought and sold based on what people thing you’re going to do tomorrow; next quarter; next year; five years from now.

Apple’s recent growth can be attributed, in large part, to iPad sales. This is a new market. Speaking from Microsoft’s market perspective, this is money that, at best, would not have been spent elsewhere. At worst, it was money that consumers might have spent on a netbook. I’ve seen research both ways, and honestly, neither side is terribly convincing.

The bottom line is that while Ballmer has managed to squeeze a little more life out of Windows, he hasn’t moved Microsoft forward. That’s inexcusable for a company with the engineering and capital resources Microsoft has.