<<ken, u r finally making some sense. i'm worried.>>
hey 'twit' - I bet you will not think that this makes any sense. when of course, it makes a lot of sense
Today's Wall Street Journal suggests that Microsoft may have a threatening blind spot.
Ken Wilson
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January 17, 2000 - Wall Street Journal Manager's Column
Will the Internet Break Windows?
by Randall E. Stross, author of "The Microsoft Way" (Addison-Wesley, 1996) and "eBoys: The First Inside Account of Venture Capital at Work" forthcoming in May from Times Business.
Steve Ballmer, Bill Gates's longtime understudy and Microsoft's newly appointed CEO, has a theatrical style that could not be more unlike that of his predecessor. Mr. Ballmer is emphatic about all he does and says; he seems wholly unacquainted with ambivalence or reluctance. He hides the smarts of a Harvard math whiz, favoring the persona of a football lineman. He has the round physical size for the role, as well as a voice whose volume seems capable of penetrating the upper reaches of a large stadium. At an all-company meeting held in the Seattle Kingdome in 1991, he shouted so loud for so long that he needed throat surgery.
In matters of substance, however, the Steve Ballmer story is indistinguishable from the Bill Gates story, which should make for a smooth transition -- and a problematic long-term future for the company. Twenty years ago, Mr. Gates persuaded his college buddy to come up from Stanford Business School for the summer to take care of organizing the mess that was Microsoft, which then had 30 employees. Mr. Ballmer never returned to school, and today the oversight of 33,000 employees will entail the same
division of labor. Mr. Gates will continue as master of the big strategic questions, and Mr. Ballmer is to deal with the details. Mr. Ballmer also will now be the public voice of the company.
Mr. Ballmer has served in roles ranging from the wide-ranging fix-it guy (at first he was "assistant to the president"), to manager of developers (leading the ill-fated group that brought us Windows 1.0), to manager of the sales force (a sales guy at heart, unlike Mr. Gates, Mr. Ballmer relishes time spent with large corporate customers).
'Windows! Windows!'
Underlings reminisce about Mr. Ballmer's emphatic management style with a mixture of awe and fondness. One woman
remembers the first time she met him. He had come into her office, asked the rhetorical question, "Do you know what you need to know?," and then immediately answered with: "You need to think of only one thing: Windows! Windows! Windows!" With each syllable, he banged his fist on the door so hard that chips of plaster fell from the ceiling.
One of the most salient qualities of Steve Ballmer is loyalty -- to Mr. Gates, to Microsoft, and to Windows. But he appears unable to see that undying loyalty to the first two does not necessarily require the same to the last. Nothing in Mr. Ballmer's past suggests that he has once asked himself, since the dawn of Windows, whether the company's conception of the software business should
be understood as anything but a Windows-centric business.
How can he be expected to rethink one form of loyalty when the other forms have served him so well? Mr. Ballmer's holdings of some $25 billion worth of Microsoft stock are not his merely by dint of longevity at the company; there was a critical moment of decision in early 1989, when IBM had announced its determination to claim its due, control of the PC operating-system business, Apple had won an important ruling in its look-and-feel lawsuit, and Microsoft stock had declined sharply. Many pundits were predicting a rather bleak future for the company. Loyal in his very marrow, Mr. Ballmer stepped forward and bought as many shares as he could. His investment of $46 million turned out rather well; it's worth more than $10 billion today.
Suppose, however, that the Internet poses a strategic challenge unlike any Microosoft has encountered before. The threat doesn't issue from the question of which browser occupies the desktop. Nor does it involve a single competitor. It takes the form of millions of de facto challengers, some in the form of Web sites that increase the number of hours you and I spend within browsers and simultaneously reduce the number of hours we spend working with desktop applications tied to an operating system.
The lessons drawn from the past, when Microsoft bested IBM, Novell, Apple, Lotus, WordPerfect and Netscape, are irrelevant. Indeed, Apple's recent resurgence owes much to all that time we are spending within browsers, which renders moot the comparative lack of Macintosh applications software.
Microsoft has shown no sign of understanding that the answer to the problem posed by the Web and by the just-beginning
explosion of small computing devices is not to serve up more Windows, in new shapes and sizes. First, the company tried with dismal results to cram a version of Windows called CE into devices that would compete with Palm Pilots, which are equipped with a fast, elegantly thin operating system with no kinship to Windows. Tomorrow, the company promises us, it will insert new Windows-related "services" (read: proprietary code) as a new software layer in the heart of Internet services. Why? Because we do Windows, that's why!
What in Mr. Ballmer's long tenure within the notoriously insular culture of Microsoft will help him to step out of the Windows box, to see things afresh? He should hop over to the corporate library video library and view, if he's forgotten it, a funny and subversive parody of what was then called the "digital superhighway," produced by an internal creative-services group within Microsoft in 1993. A narrator mockingly intoned in the earnest baritone of a 1950s television announcer: "See, Mom, Windows for Radio means
more enjoyment and greater ease of use for the whole family!"
As the principal architect of the company's ingeniously designed, well-oiled recruiting machine, Mr. Ballmer is the one man most responsible for obtaining what hitherto has been Microsoft's most valuable asset: its army of young software developers, the best and the brightest computer science graduates. To Mr. Ballmer, the game is still governed by the maxim "He who hires the most smart developers wins." Hearing news of the America Online-Time Warner merger last week, he could not help sneering that
AOL "didn't acquire a lot of software engineers."
What would be heretical thinking on Microsoft's Redmond, Wash., campus, however, is becoming commonplace in many parts of Silicon Valley and elsewhere: The game, from now on, will be less about having thousands of engineers on your payroll than about harnessing the contributions of tens of thousands of volunteers through an open-source model, as Linux does.
Software Subscriptions
Mr. Ballmer also must face another little matter: the need to blow up the existing business model, discarding software applications in favor of subscription-based services. The company has taken some timorous experimental steps in this direction, but a $20 billion revenue stream, blessing though it is in other respects, makes radical change an extremely difficult thing to accomplish.
The Internet's challenge to Microsoft's Windows franchise has only begun. The diffusion of inexpensive broadband service and small Internet-aware hardware devices will make the threat more manifest. But the past tells us that established computer companies enjoy very long lives, even if paralyzed. If Messrs. Gates and Ballmer were both to resign today and leave their posts vacant, sheer momentum would provide the company with still-growing revenue and rosy profits for as long as we can see out into
the future.
That reflects the astounding success of Microsoft, built in no small measure by the stalwart efforts of Mr. Ballmer. How
unimaginably difficult it must be for him to ask the really hard question: Are we in the Windows business or the software business?
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