“The decade since Steve Ballmer took over as chief executive at Microsoft from his Harvard pal Bill Gates has not been kind to Microsoft: The company saw its stock price plummet, it made ill-advised acquisitions, demonstrated poor capital management and suffered a significant loss of market share,” Barry Ritholtz writes for The Washington Post. “The once-dominant software giant lost its way.”
“The firm, considered the mac daddy of technology at one time, missed every major tech innovation of the new millennium,” Ritholtz writes. “The Zune, its foray into portable music players, was an embarrassment. It let Apple gain a toehold on the consumer desktop, which Steve Jobs then leveraged to show consumers a superior alternative to kludgy Windows software… Microsoft failed to recognize the impact of nearly every worthwhile development. It missed the rise of touch-screen technology and the mass appeal of social-networking sites… Perplexed by tablets, it lost more than $1 billion in that venture… It blew its early lead in smartphones by failing to understand their significance. And it certainly never threw the same weight behind them as it did its mainstay PC business.”
“Ballmer oversaw ill-advised acquisitions. He missed the tectonic shifts in technology,” Ritholtz writes. “Gates’s true genius was not as a tech visionary. It was his business acumen in leveraging a monopoly position in operating systems to become the dominant U.S. tech company… Microsoft’s true genius was in its license agreements of MS-DOS (and, eventually, Windows) with PC manufacturers… Microsoft had its deal with the devil: Its lightning in a bottle was not some awesome technology or brilliant breakthrough – it was a clause in a contract that led to an enormously profitable monopoly. It then pre-installed Office in new PCs, creating a second monopoly and billions more in profits… Ballmer oversaw a decade of missed opportunities, and he very well may have hastened Microsoft’s decline. But it might have been inevitable. The truth is that for all its claims of innovation, Microsoft never generated much in the way of profits by innovating. ”
Read more in the full article here.
[Thanks to MacDailyNews Reader “Thumper” for the heads up.]
The same fate awaits Samsung. Samsung’s idea of innovation is a zunewatch, ugly colors and all.
Samsung defines no innovation… excellent components maker, but is truly a follower in design, UI, and vision.
What are you saying? Did you really not see the innovation in the Galaxy Gear, which had supposedly “10 years” worth of advance technology in it? And what does it do? Same as every other smartwatch already in market. Innovative :p
Typo…they had 10 *weeks* of advanced *notice*.
I wouldn’t sell samsung short for trying. they have the wherewithal to eventually, possibly make a difference.
Yes but, so did Microsoft
But they didn’t did they. They just don’t have it in them.
It’s hard to describe and even harder to implement (if it was easy everyone would be doing it) But it is reality easy to spot in those organizations that have it.
And Samsung defiantly doesn’t (and like Microsoft it is very unlikely that they ever will)
Samsung is different than MS. MS dominated because of some licensing deals.
If MS fell, who fills that vacuum? Apple or some other consumer device company?
Apple could if they licensed iOS and the Mac OS. Samsung could possibly because they are already a consumer products company and could probably come up with an alternative.
The future isn’t PC’s as we can all see. The future is content and access to content. The best computer is the one you don’t realize you have because it is in something useful to you. Maybe Samsung could realize that and they have a lot less to risk losing than MS.
‘What’s behind Microsoft’s fall from dominance?’
Ballmer’s ego.
Right on the money. Microsoft was never an innovator, just a clever copier like some other company in South Korea we know. Though some kudos are due for some versions of Office. Not much else though. Oh yeah that brown Zune & the Kin DOAH! (dead on arrival in hell), oh wait…
In a word, Microsoft.
Yes, Microsoft (Ballmer) was behind their own fall from dominance. Microsoft’s only strategy was to react (a few years too late) to what others were doing. The only reason Microsoft did not go bankrupt is because the huge profit from Windows funded the mistakes.
Now, the latest mistake is Windows itself. No one wants Windows 8. What does Microsoft do now? Of course… They make a $7.2B mistake and buy Nokia’s mobile phone business.
Not defending microsoft by any means, but they did make a gaming console that was pretty strong in the market for a time. It was trying to be innovative with the Xbox 360, of course it’s definitely not seeings its best days coming soon.
Yup! Red ring of death was a great innovation!
Say what you will about RROD, the Xbox 360 was a good console. Besides, they fixed the RROD in the third iteration.
They did, however, royally screw up Xbox One.
It was pretty good when it worked, but after having to return my Xbox 360 twice for warranty repair, it is dead again and, now, there is no more warranty. I refuse to give them any more money by purchasing another one. If they had any decency, they should have did a recall on it.
On the other hand, both the wireless and wired Xbox 360 controllers are among the best I’ve ever used and use them on my Mac for gaming.
Microsoft makes pretty good mice and keyboards too.
They have a great future as a top flight peripheral company. Maybe Ballmer will buy Logitech for $10 billion before he leaves. He can tell the stockholders all about “synergies” to justify the price
Regardless of how great the Xbox was or how much it sucked, it really shouldn’t be considered a success or an innovation.
On the success side of things, the Xbox, while now turning in profitable quarters, had years of losses. The result is a net loss to date in the billions. And while you could look at that as a cost of building a foundation that will bring future profits and pay off that “debt”, the problem is that the future of the Xbox (and even consoles for that matter) is uncertain.
As far as innovation, it’s not like as if Microsoft was first to come up with an idea of a gaming console. They leveraged their way into the market, accepting billions in losses over the years and buying up companies along the way. They were really late to market with motion gaming, losing a lot of revenue and customers to Nintendo (and subsequently to the Playstation which was also late to market). Microsoft backed the failed format of HD DVD, losing out on all kinds of potential sales of the console to people who would’ve used it as a Blu-Ray player. The Kinect took off strong, but has fallen flat and faced a backlash on the initial requirement of it on the Xbox One.
What’s pathetic is how easy of a ride Microsoft had on this. They had the cash on hand to buy their way into the market. The whole idea was that the Xbox was supposed to be a pre-configured, consumer oriented, dedicated gaming PC (and later gaming/media PC). They had the developers already…they even bought some of them. They were entering a market with a handful of struggling competitors.
What success they did find, at best, equates to people who bought Xboxes instead of buying their own gaming/media PCs from which Microsoft could’ve made more revenue and at a higher margin.
Easy, it is always the same. Myopic focus from within and Wall St on established products and services. Putting too much focus on the status quo and not nurturing or gambling on future products and services.
“The truth is that for all its claims of innovation, Microsoft never generated much in the way of profits by innovating.”
True for the most part… they were first to go after the tablet market, but mistook the need for a keyboard at all times.
In the end, they would never exist as they do if Sculley hadnt licensed the UI guts of MAC OS. Then again… Jobs getting ousted from Apple ws one of the best things to ever happen to the tech industry….
Indeed! Microsoft was the great integrator, expander of OPI, other people’s ideas, like CPM and the predecessors of the MS Office group.
Then MS was the great “bundler” tying almost all PCs into shipping with their OS & a great % with MSOffice.
After that, almost all efforts have been erecting and defending the fence around Windows & MSOffice. That warps MS thinking and leaves little room for innovation when MS management equates “Innovation” = making Windows & MSO available everywhere by default.
It is Board of Directors and management failure 100%.
“Ask Bill why the string in [MS-DOS] function 9 is terminated by a dollar sign. Ask him, because he can’t answer. Only I know that.”
– Dr. Gary Kildall
In a word?
Ballmer
Nothing more, nothing less.
In a word… Spaghetti Code. Ok, two words
Var stringA=”In word, spaghetti code.”;
Var stringB=”a”;
Correction=Correct(stringA,stringB);
Function correct(a,b){
Return “a in word ghetto cod”;
}
The article mistakenly credits IBM for “[giving] the world its first PC in 1980.” IBM was preceded by numerous companies’ PC’s. It was IBM’s that was blessed by corporate IT departments.
Microsoft was the Mac Daddy?!?! Apple is the Mac Daddy. Microsoft is the Mac copier.
Excellent article! Surprised MDN did not assign “Highly Recommended Reading” status.
Gates was a clever business man! Jobs was a great visionary. Balmer is a flop! Glad his retiring!
Vista was crap! Primary reason I moved to Mac at the time!
Windows 8 is just plain wired! I have both OS X and windows on my Mac. The “modern UI just feels wired on a laptop!
Windows Surface was a flop. I found the pro to be a bit interesting at fist. But then again…. 4 hour battery, expensive keyboard, etc… Yeah, I’ll stick to a laptop.
One word answer here:
Stupidity.
Or would the word be:
Insanity.
Didn’t someone define that as repeating the same thing over and over again regardless of getting the same FAIL results?
Zune, Kin, Surface, Vista, 8, etc.
My word would be
Bungling.
Complacency, arrogance and hubris was MS’s downfall. Exactly the same things that will destroy Google and others. Look at every big corporation that has failed (i.e. Kodak, Blackberry) and those three elements are in abundance. Then look at companies that just move along, year after year. None of those elements exist in their corporate culture.
Well said!
What’s behind Microsoft’s fall from dominance?
Steve Ballmer.
Do I win a prize or something?
The article mentioned that M$ (failed to recognize the impact of nearly every worthwhile development)
This IMO isn’t true. MShart did recognize touch computing, tablet computing, pda/phone computing. They just have no taste and make third rate products.
[youtube=http://www.youtube.com/watch?v=mOgOP_aqqtg&w=420&h=315]
This clip is spot on. Seems to appear in a large number of M$ related MDN posts.
Couple the point SJ makes in this clip along with hubris and arrogance and you’ve got the root cause of the disaster at M$.
Hubris, arrogance, market share, the high ground, numerous allies and thrall states, earnest testimonials from loyal subjects and paid reporters; the blessings of the very gods and the testament of the Oracle. But you still still lose your ass if you don’t contribute some damn intelligence of your own. Microsoft dug its own grave with all these instruments of interment, and no one will care to attend the funeral ceremony, unless to urinate on the grave as a gesture of emotional closure.
Let’s not forget how Microsoft started – a very astute business deal with IBM for a derivative operating system called MS-DOS. Business acumen, not design genius, was the key to Microsoft’s birth: true innovation has never been a Microsoft forté.
Microsoft also make their products difficult to use, on purpose. In order to lock in business IT departments, Microsoft created the MCSE programme, requiring significant levels of study, to bind technical professionals to a Microsoft-centric career path.
This tech-centric approach spilled over into consumer products which are needlessly complex: even though I have 30+ years experience as a techo, including MCSE certifications and in-depth knowledge of MS server/networking and desktop environments up to Windows 2003 server (circa 2007), I recently found myself baffled by a Windows 7 desktop which was throwing up error messages which gave me no clue as to what the problem was, or even whether it was serious. After several years of using Mac OS I cannot find my way around Windows 7 for even basic tasks.
If the experience of my friends who use Windows is anything to go by, most Windows users have a very limited grasp of their computers and can only access a small set of functionality. If anything goes wrong they are stumped and have to call for help.
In the business environment teams of “experts” are required to keep PCs running and user access is locked down not just for security, but to prevent users inadvertently screwing up their desktop PCs by fiddling with settings which they don’t understand.
Windows brought graphics to the green-screen corporate environment and ushered in a new age. But the support cost to corporations has been enormous.
When Windows disappears from the corporate desktop, nobody will mourn.
It is interesting to think about the IBM “monks” that ruled the computer world prior to the ibm-pc, and how part of the M$ “strategy” was to co-opt those folks and eventually steal them from IBM using their own invention: FUD.
I had many a M$ IT doofus tell me “I don’t understand the mac and so therefore I hate it”.
Their most consuming fear was that, if the business switched to macintosh, 80 percent of them would lose their jobs.
Shame on Mr. Ritholtz for making such hurtful statements. Mr. Ballmer has accomplished many things, and is the best man to lead Microsoft in the new Millenium. May he be CEO for many years to come!
Complacency has killed Microsoft more than anything else. Their refusal to fix the many flaws in IE6 allowed Firefox to break their browser stranglehold and level the Web playing field, which gave Apple their way back in. They believed they could just force everyone into using their DRM and media formats without providing a decent product built around them, and the resulting MP3 wasteland was therefore ripe for Steve Jobs to exploit.
Their inability to see how Web search could be exploited, how social networks could expand out of text messaging, and finally getting past the idea of the Windows PC when it came to mobile devices. All of these are opportunities they’ve missed because of complacency. They’ve allowed an industry to build itself up then away from them.
It’s too late for Microsoft now. They’re the new Novell or WordPerfect.