Cantillon: Ballmer’s exit a smart move for Microsoft
Microsoft founder Bill Gates (left) and chief executive Steve Ballmer, who is to step down within a year. Photograph: Ramin Talaie/Bloomberg
During his 13-year tenure Ballmer bet big on PCs. And lost. PC shipments fell about 11 per cent in the second quarter this year, for a record fifth straight quarter of declines. Ballmer never quite adapted to the shift from PCs to mobile devices and that perhaps has been his biggest failing.
His last big gamble was on Windows 8 in the hope the latest Windows operating system would let Microsoft hold on to dominance in a market the firm knows well. What it showed was that the tech giant is now fighting to retain home ground rather than seizing the initiative in new markets. It could have been very different. Microsoft had a smartphone operating system, Windows Phone, when the iPhone took to the market. Somehow that slipped by the wayside and now Apple’s IOS and Google’s Android control the lucrative smartphone market. Meanwhile, its latest Windows Phone 8 is proving a harder sell than anticipated.
Ballmer took over as chief executive in 2000 from Bill Gates, his schoolmate at Harvard. He has made a fortune from his early involvement with the firm – and remains its fifth largest shareholder.
A Vanity Fair article in June 2012 placed the blame for the firm’s lacklustre performance squarely at Ballmer’s door. With the cover blurb of “How
Microsoft lost its Mojo” it referred to Ballmer’s tenure as “Microsoft’s lost decade”. It portrayed Ballmer as a businessman with a background in deal-making, finance and marketing. “He was not the product guy”.
Last month’s reorganisation of the business into a functional structure rather than the divisional system introduced by Ballmer in 2002 perhaps signalled his race was run.
Ballmer’s successor faces the tough task of refocusing Microsoft towards the changing face of tech. It needs to look not only at improving its offerings in the tablet market but at leaping into the realm of wearable and in-car technologies.
His era may come to be defined as one of increased internal bureaucracy and betting on the wrong devices.
A happy ending for Datalex?
The seemingly never-ending story in recent years of the Irish small-cap technology sector has been: is somebody going to buy Datalex?
The listed travel technology firm, which sells software to help airlines maximise their ancillary sales, will present its interim results next week. Goodbody analyst Colm Foley is forecasting an 11 per cent rise in half-year revenues to $17.5m (Datalex is Irish, but reports in dollars), and is generally bullish on the stock. The company has guided earnings growth of at least 25 per cent.
Okay, so Datalex isn’t quite CRH in scale. But to some market observers, while small, it appears beautifully formed. With high fuel prices having turned aviation industry economics upside down, Datalex has the perfect solution for airlines that see their future as “flying shops”.
In its chief executive, Aidan Brogan (uncle of the Dublin GAA stars Bernard and Alan), it also has a steady pair of hands on the tiller.