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Why Does Steve Ballmer Still Have a Job?

Why Does Steve Ballmer Still Have a Job?

Courtesy of James Kwak of Baseline Scenario 

Microsoft CEO Steve Ballmer speaks at the Consumer Electronics Show in Las Vegas

So, after questioning the iPad, I bought one.* My primary motivation was that I wanted to be able to watch old TV episodes on the commute to and from my internship this summer, and I think an iPod Touch is just too small. I also bought an Android phone, because my three-year-old Motorola RAZR2 v9m (who comes up with these product names, anyway?) developed a crack in the hinge, and because I wanted the best camera I could get on a phone. (My #2 use for a phone is not email — it’s taking pictures and videos of my daughter.)

Anyway, catching up on the last three years of mobile technology has provided ample food for thought. I have a long post on the Apple-Google(-Microsoft) war rolling around in my head somewhere, which I will hopefully write down later this week. In the meantime, here’s John Gruber‘s verdict on Microsoft:

“Three years ago, just before the original iPhone shipped, here’s what Steve Ballmer said in an interview with USA Today’s David Lieberman:

‘There’s no chance that the iPhone is going to get any significant market share. No chance. It’s a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I’d prefer to have our software in 60 percent or 70 percent or 80 percent of them, than I would to have 2 percent or 3 percent, which is what Apple might get.’

“Not only was he wrong about the iPhone, but he was even more wrong about Windows Mobile. Three years ago Ballmer was talking about 60, 70, 80 percent market share. This week, Gartner reported that Windows Mobile has dropped to 6.8 percent market share in worldwide smartphone sales, down dramatically from 10.2 percent a year ago.”

Steve Ballmer has been CEO of Microsoft since 2000. During his tenure, Microsoft came out with Windows Vista, perhaps the most unsuccessful operating system in modern history (Windows ME doesn’t count, since Microsoft’s core customer base was using NT/2000); it tried a “Microsoft inside” strategy in digital music and, when that failed, launched the Zune, which also failed; it watched Firefox (and Safari and Chrome) eat a large chunk of its lunch in Internet browsers, the application most people use more than everything else put together; it launched Windows Live, a marketing strategy with no noun behind it, which completely flopped at whatever it was supposed to do; it got blown away in Internet search to the point where it had to re-launch as Bing, a plucky underdog;  and in mobile phones, which everyone has known for a decade would be the next big thing, it stuck with its bloated, awkward Windows Mobile for far too long, letting everyone (RIM, Apple, Google, and even Palm) pass it by to the point where it has no customer base left. (BlackBerry rules the corporate market, Microsoft’s traditional stomping grounds.) Recently I saw a headline saying that Microsoft is going to try to relaunch Hotmail to make it cool. Really, why bother?

2010 CeBIT Technology Fair

Sure, Microsoft still has a dominant market share in PC operating systems and office applications, but it’s managed to take that massive competitive advantage and waste it everywhere else over the past decade. It hasn’t even managed to become a major player in enterprise applications, a market that is desperately crying out for new competition, and where Microsoft should have been able to muscle its way in using its existing relationships with corporate CIOs and procurement officers. Is Bill Gates just too loyal to his old friend?

As for the iPad: I agree with Brad DeLong that the biggest problems with the keyboard are (a) hitting the shift key instead of “A” and (b) needing to shift to the numeric/symbol keyboard just for an apostrophe or a quotation mark. I would add the lack of control key sequences. It’s remarkably comfortable to interact with, to the point where I use it sometimes when a laptop would be more efficient, simply because it’s more pleasant. (For one thing, it doesn’t constrain your physical position the way even a laptop does.) It’s also much nicer to have in a non-work part of the house, like the kitchen or living room, even than a laptop, which feels clunky and intrusive by comparison. And my daughter loves Fish School. But using it is still a constant exercise in compromises, largely because of the keyboard (it works, but it takes effort, as opposed to a regular keyboard) and also because some web sites don’t behave properly (and there is the Flash problem).

And there is the whole over-hyped apps model, which will be the topic of a future post that will be more original than this one.

* Although I did say this: “I think it will still be a success, though not nearly as big as the iPod or iPhone. I think so for two reasons: first, the product probably is just better than anything else in the category; and second, the Apple fan base is so big and so devoted that it will have blowout initial sales and then build momentum of its own.” 

****

James Kwak is a former McKinsey consultant, a co-founder of a successful software company, and currently a student at the Yale Law School.  He is not, never has been, and never will be a member of the Yale Law Journal. However, on December 11, 2009, he was named Grand Heresiarch of the Ancient, Hermetic, and Occult Order of the Shrill by Brad DeLong. He is a co-founder of The Baseline Scenario.  He co-authored 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown with Simon Johnson. 


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