Microsoft CEO Steve Ballmer’s gutsy moves deserve credit

Maybe Steve Ballmer finally got the message that Microsoft is drifting toward irrelevance. Monday’s announcement that his company is going after Salesforce.com with an aggressively priced online version of Dynamics CRM was welcome news. It follows on the heels of a series of gutsy decisions he’s spearheaded lately:

• Making efforts to put some version of Windows on the ARM platform.
• Giving the shove to Bob Muglia, head of the Server and Tools group.
• Being willing to take the heat by not announcing a tablet at CES.

[ See why InfoWorld’s Woody Leonhard thinks Muglia’s dismissal is a bad sign of Ballmer’s increased fears of being replaced. | Keep up on the lastest tech business insights with InfoWorld’s Tech Watch blog and Twitter feed. ]

I’m far from convinced that all of those moves will work well, but you got to give the Wild Man of Redmond credit for initiative. When a company has a long-term problem, management has to send the message that business as usual cannot continue. Ballmer has done that.

Still, his reign has been mighty short on inspiration and long on what China’s Chairman Mao Zedong referred to as “monks tolling the bell,” the bell being Windows and Office, of course — two products that represent the vast majority of the company’s revenue and profits.

Since Microsoft is halfway through its fiscal year, let’s give Ballmer a midterm grade of C, up from his usual D+.

If you have nothing good to say… When is it smart to keep your mouth shut? Anytime you have nothing intelligent to say. And when is time to not announce a product? When you don’t have one that’s any good. Microsoft is way, way behind in the tablet market, and that fact is certainly not a tribute to the company’s leadership or strategic planning.

However, facts are facts, and I give Ballmer credit for not playing the smoke-and-mirrors game with a vapor product, as he did the year before at CES. If a product isn’t good enough, don’t launch it. That coda has been a hallmark of the Steve Jobs era at Apple. Maybe the Wild Man of Redmond was paying attention; silence is certainly not his style.

It’s worth noting that one of the big reasons there’s no viable Microsoft tablet is the company’s misbegotten belief that users were clamoring for input by pen. Wrong — what makes the iPad so successful is its multitouch screen, the same technology that makes the iPhone a joy to use. Windows was never designed with touch in mind, and Band-Aid efforts to change that haven’t gone well.

Which brings us to the ARM issue: Ballmer did announce that the next version of Windows would also run on the ARM chip architecture that powers Apple’s iPad and iPhone, the many Android smartphones and tablets, and the forthcoming RIM PlayBook tablet. I don’t think there’s likely to be a PC with an ARM chip instead of an Intel x86 doing the heavy lifting. Indeed, ARM CEO Warren East was clear on the matter, saying: “We never set out to target PCs … It would be hugely expensive for frankly not much gain.” But moving to a system-on-a chip-style platform makes huge sense for mobile products, where Microsoft isn’t a player.

As is well known, Intel can play very rough with partners that flirt with competitors like AMD, so Microsoft’s embrace of ARM certainly raised eyebrows at the apparent tear in the Wintel marriage. But it’s probably not a huge risk, as there’s zero chance that Intel would try seriously to put the hurt on Microsoft. Still, it was a gutsy move in that it made explicit the reality that Windows today won’t work in mobile, and a fundamental change is needed. Given the pathetic past attempts to transition Windows to a mobile platform, working closely with ARM is smart and moves Redmond beyond the Band-Aid approach.

Similarly, putting OneNote on the iPhone is smart, and it’s an example of fresh thinking I wouldn’t have expected. My colleague Ted Samson had it exactly right when he joked that hell has turned icy. If Microsoft wants to extend the Office franchise beyond the PC, it needs to give users a decent way to handle Office docs on non-Windows mobile smartphone. There are already several third-party apps that solve the problem to a certain extent, so it was a serious error for Microsoft to stay out of the game.

OneNote is far from the most popular Office app, so I assume others will follow — smart move.

Wielding the axe to clear out the thicket of inertia I don’t have any inside knowledge on why Muglia was pushed out. As my colleague Paul Krill reported, it may have been over his Silverlight gaffe or frustration with the company’s efforts to catch up with Amazon.com and others in cloud computing.

Muglia’s record running the server group was obviously pretty good. He grew the division’s sales by about 12 percent to $14.9 billion and expanded margins from 31 percent to 37 percent. That’s a significantly lower margin than Microsoft’s Windows and Office cash cows, but it was a real improvement. Unlike the earlier firing of Robbie Bach, who ran Microsoft’s entertainment division, this was an odd move.

It’s hard to watch an older and valued employee get the shove in a rather nasty way, but as I’ve said before, if Microsoft doesn’t break out of its velvet-lined Windows coffin, it will eventually become irrelevant. It has to have new blood with new ideas. Muglia’s release, coupled with the other departures Ballmer has forced in the last couple years, provides that opportunity.

The complacency of being the near-universal provider of the PC operating system and the office productivity suite has gone on too long. The outside world has been flagging this issue for years, as evidenced by the fact that Microsoft shares have been stuck in a rut for a while. And as commentators at InfoWorld.com and other venues have warned, the company is drifting toward irrelevance. I’d like to think that Ballmer has woken up to that danger and will continue to take decisive, and sometimes risky, actions before it’s too late.

I welcome your comments, tips, and suggestions. Post them here so that all our readers can share them, or reach me at bill.snyder@sbcglobal.net. Follow me on Twitter at BSnyderSF.

This article, “Microsoft CEO Steve Ballmer’s gutsy moves deserve credit,” was originally published by InfoWorld.com. Read more of Bill Snyder’s Tech’s Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest developments in business technology news, follow InfoWorld.com on Twitter.