Ballmer dismisses idea of breaking Microsoft up, talks Windows 8

By Tom Warren, on 15th Nov 11 6:46 pm with 48 Comments

Microsoft CEO Steve Ballmer

Steve Ballmer, Microsoft CEO, took to the stage at the company’s 2011 annual meeting on Tuesday.

Ballmer discussed a range of subjects related to Microsoft’s performance over the year and fielded questions from shareholders during the meeting. “There’s nothing that I see in creating fundamental value in splitting the company up,” Steve Ballmer said in response to a question splitting Microsoft up to unlock value in the company. CNET News.com reports that Ballmer discussed the benefits of Microsoft. “The company doesn’t invest in things that are idly independent,” Ballmer said. “Drawing a set of arbitrary boundaries is quite hard.”

Ballmer also praised the Xbox games console that celebrates its 10th birthday on Tuesday. The Xbox 360 currently holds the number one selling spot in U.S. sales for the whole of 2011. “Last year, we introduced the Kinect for Xbox, and everything has changed,” Ballmer said. “Now, not only do we have the Xbox upstairs, but I was instructed to bring games home for Grandma and Grandpa for Thanksgiving this year,” Ballmer added.

Ballmer also briefly discussed Windows 8. “We’ve got broad Windows initiatives, driving Windows down to the phone,” he said. “With Windows 8 you’ll see incredible new form factors powered by Windows.” Ballmer drove home the message that there’s no need to compromise on end user experience using Windows 8. “We’re seeing to it that no one has to compromise on the experience they want,” Ballmer said. Todd Bishop’s GeekWire reports that Ballmer also discussed the idea of a “post-PC” era. “We are in the Windows era — we were, we are, and we always will be. … We are in an era in which the range of smart devices is continuing to expand. That’s a fantastic thing for Microsoft.”

  • http://twitter.com/BasKoene Bas Koene

    • Guest

      FO troll

    • Anonymous

      TROLL

  • http://techin5.com Jubbin Grewal @Techin5.com

    Phew.

  • Guest

    Steve’s against doing anything different. The only problem is that what MS is doing hasn’t worked out for shareholders for more than a DECADE. It’s really sort of amazing that he’s so dismissive. I’m not sure a break up is the best plan per se. But then neither is a continuation of the status quo, obviously.

    • Anonymous

      curious what would you like MS to do?

    • Guest

      That’d be a long discussion. But I’d halt buybacks (except to keep shares OS from growing) because they haven’t worked and inflate EPS (making management look like they’re doing a better job than they are), withdraw from several areas (they’re spread over too many fronts to do world-class work in all of them), take a serious look at the way R&D works and whether MS has the best process in place there (doubtful given that they spend 8x Apple but are now smaller and growing at 1/8th the pace).

      I would absolutely be looking for a way to grow beyond Windows rather than saying, as Steve did today, that Windows is the past, present and future of MS. No product lasts forever. Imagine IBM if they had said “Our past, present and future is mainframes”. Or Apple is they had said our past, present, and future is iPods. Or even Oracle their RDBMS. And I wouldn’t dismiss out of hand strategically offloading certain businesses like Xbox and Search. Xbox is still only marginally profitable (really bad margins actually compared to anything software-related), and search is proving to be even more costly and long haul than imagined. It might be better to let the market help fund that in a separate vehicle, possibly combined with Yahoo.  MS needs to improve its focus and especially its agility, particularly as they compare to Apple and Google. And to do that it needs less layers of management and less distractions. 

    • Devon Garner

      You are caught in the moment! Apple is only doing well in a few markets and do you really see any of them lasting the next 10 years. They were overtaken by Android in smartphones in two years. They have basicly said the past, present, and future is the iPod. There is nothing fundamentally different with their “new” products. The iPhone is the iPod touch now or vice versa how ever you want to phrase it. The mp3 market is shrinking and the tablet market is getting crowded by credible competitors. Google only has services that could change quickly. MS is poised to do well in several other markets in the next few years. They have hit 3 homeruns in the past few years (xbox, kinect, Windows7) that cannot be disputed. The only reason it gets bad press now is because they are not the cool company anymore. It could be said that MS should scale back on R&D but it coould also be said that Apple should pay a dividend. Why do you think they do not pay one? MS revenue has steadily grown in the past 7-10 years. Apple has done a few things right and should be given praise for what they are doing but MS should not be criticized for Apple’s success. When MS was thriving Apple was not criticized nearly as much, thye were rooted for because of the underdog status. There is plenty of room as well as money for both at the top.

    • Guest

      @google-b9b06886ce6004ca9caa1117656bfd04:disqus 

      “It could be said that MS should scale back on R&D but it coould also be said that Apple should pay a dividend. Why do you think they do not pay one?”

      Two entirely separate issues. Growth companies generally don’t pay a dividend. That’s why Apple hasn’t. If you made 30% this year alone, or 1500% over the last decade, would you be complaining about not getting a 2-3% annual dividend? 

    • Anonymous

      that was a pretty wordy respone to not actually say anything. You pretty much contradicted yourself throughout. you say:
      “withdraw from several areas (they’re spread over too many fronts to do world-class work in all of them), ” So you are an advocate for shrinking down to their money maker windows…. then you go on to say ” would absolutely be looking for a way to grow beyond Windows” but wait a minute aren’t we supposed to be shrinking down and focusing and avoiding being spread too thin. But ok so lets focus on growing beyond windows….just a few lines later you again turn around and say “And I wouldn’t dismiss out of hand strategically offloading certain businesses like Xbox and Search”.  Those are BIG areas and huge growth areas if we are trying to grow beyond windows…why would we dump these?

      What I’ve drawn from your comments on this post are that you have no earthly clue what you are talking about. You just hate balmer and are going to criticize him no matter what. That’s fine… but if you are going to act like you know what’s best…at least take some time to think through your suggestions to make sure they make sense. I’m pretty sure if you rambled that nonsense to balmer and the MS board they would eat you live with their questioning.

    • Anonymous

      Windows is still the future I don’t want to get into a discussion as well but if you look at Windows 8 etc its actually Windows. I read an article comparing Android, WP and iOS. Think about iOS and Android UI as doors you see an icon on the front of the door but you have to open it to see all the good stuff. While Windows is actually a Window. Metro UI lets you see whats going on in the application before going into it.

      IMO MS should focus on their strong points Business and Gaming and their services Live, Zune, Skype, Bing, Skydrive if they can fine tune their services to match their operating systems and business ecosystem they are going to do great. Shareholders arent buying because of the Google and iOS hype lets get better ads out there and MS should be back where it belongs.

    • Guest

      @jibba_jabba:disqus 

      Your inability to read != my lack of content. There’s no contradiction in withdrawing from several *current* areas while embracing a future that isn’t Windows-centric. MS is still involved in numerous areas that are unprofitable and have no chance of ever becoming a major contributor to overall revenue and profit. And the future beyond Windows might just be found by rethinking current legacy markets. Indeed, given that enterprises are responsible for the majority of software sales, there’s every reason to believe that MS’s next big market could be found right where it’s already focused. Case in point: IBM getting rid of legacy PCs while focusing on software and services to the same market.

      What I’ve drawn from your comments on this post is that you can’t read or frankly lack sufficient business background to actually discuss strategy at any informed level. So instead you resort to ad hominems instead.

    • Anonymous

       Guest – which areas are MSFT involved in that will “never” become profitable?

    • Anonymous

      But it’s not the status quo. MS has been on a roll. Their current product line up is quite good and reviews for their current and future products have been positive. They need to fine tune their products a bit, get the OEM on board to produce quality hardware and stop cutting corners, and do a much better job at marketing. They need to rebuild their image. They are not the creators of buggy, virus plagued software anymore. Too many people still have this view. 

    • http://twitter.com/karlcramer Karl Cramer

      You mean like being less proprietary and more standards compliant? You mean like getting rid of multiple divisions that were going after the same markets? You mean like divisions working together to really release great products? Windows Phone is a great example of that shift in MS attitude. You had the mobile division consolidate and Bing, Xbox, Office, and the server divisions all working to support a product.

      This course change didn’t happen as soon as Gates stepped down. Microsoft is a big ship and it takes time to steer but Ballmer’s finally getting them to act as team. Kind of funny because Ballmer does remind me of the stereotype football coach.

    • Guest

      Yes to all. There have been some positive changes lately. But it’s still too little, too slowly, at least as I see the competitive landscape evolving.

    • Joe_HTH

      Window Phone is the example, one that illustrates that MS under Ballmer management was slow to react to a changing market, poorly execution, then creating a product no one wants (unless you talking about the falling market share % WP7 is showing),

  • http://twitter.com/karlcramer Karl Cramer

    Slowly but surely Ballmer is getting the divisions to be more cohesive. Better than the Gates era when you had multiple divisions competing against each other in the same markets.

    • Guest

      This. As much as I consider Bill Gates to be a genius and to have been an icon I believe that Ballmer has really made a difference in Microsoft as far as knowing which markets to direct focus on and how to do so. Under Ballmer we’ve seen the new Windows Phones, revamping of Zune, and the ubiquitously infamous and beautiful Metro UI. He’s really done a fantastic job at making Microsoft products look and work majestically. His only real failure has been his inability to put more money and effort into advertisement. If Windows Phone and other similar products take off we’ll see him being hailed by the tech media like Bill Gates was someday.

    • Anonymous

      I just wish Microsoft would have made a faster transition from Windows Mobile to the Windows Phone platform. 

    • Guest

      Well, recall the lead up. First they arrogantly underestimated iPhone saying it was too expensive and predicting it wouldn’t impact WM “at all”. Then they spent a year trying to deny the success of iPhone and the accompanying implosion of WM. Then another year before conceding that WM7 wasn’t going to get them back into the game and that they needed not just a new OS, but also an entire new management team in mobile. Then finally another year for a new team to take over and effectively write a new OS. It’s actually amazing that Ballmer wasn’t fired over this one development alone.

    • StarDevlopment

      Under Ballmer we has seen the VISTA mess, KIN face plant, ZUNE death, WP7 floundering, BING stagnation, Ballmer = FAIL  

    • http://madebyplast.com Bioran

      But keep in mind that we also saw some very large successes, namely Windows 7, Xbox 360, Kinect, Office, etc. And like the above posters said, under Ballmer MS has also became a more cohesive company. Stuff like Zune, WP7 and Bing are really all a part of a single “three screens-one cloud” strategy, which would likely need a considerable timespan before the effort pays off.

      Though, at the same time, I would say my biggest criticism of Ballmer is simply his inability to get things out (and to a high quality) quickly, and making sure that MS has decent marketing. If MS under Ballmer could have perfected their strategies and products quicker and actually put some effort into finding good marketing agencies, I’m sure they’d be having far greater successes than they are having now.

    • http://twitter.com/karlcramer Karl Cramer

      Vista was developed under Gates, as CEO and chief technologist.  Kin was the brainchild of J Allard, one of Gates’ golden boys. (Who has been let go recently.) Zune devices never sold well but reviewed well. The best tech doesn’t always win. But it’s legacy the Zune service is still with us and was groundbreaking. On-demand streaming music, Spotify? Been there done that.

      If Ballmer has a failing it’s not getting tech pundits and the press to recognize when Microsoft does.

    • Joe_HTH

      Your right, except for legacy products and possible XBox, which was more about a willingness to waste billion and billions of dollars buy some success, Ballmer’s running MS has been failure in the eyes of innovation, more importantly share holder value and market growth.   

      Only the uninformed would support this guy.  

    • Guest

      That was worth a new alias? LOL. Oh, and learn how to spell.

    • Mark

      And under Ballmer Microsoft has recorded double digit growth and incredible revenue and marketshare gains. Take some time and list the Apple and Google failures. You would need a widescreen. It is part of success.  

    • Guest

      Emphasis on slowly. He’s been CEO since 2000.

    • Anonymous

       How long did it take Jeff Bezos to introduce the Kindle Fire after the iPad came out? You are always on Ballmer’s case despite evidence that he’s turned the company around.

    • http://twitter.com/pierrerv Pierre Venescar

      Remember, there was a “kindle” before there was an “iPad”

    • Anonymous

      Better late (or slowly) than never.

      I would agree that they were too slow on certain fronts (WP7), but I wouldn’t say that they are too late. Not with the future of Android (in its current form) still in jeopardy from Apple and Oracle (more so in Oracle’s case).

    • Michamc

      During the late 80′s and 90′s the big call at IBM was to break the company up.  Lou Gerstner believed exactly what Balmer is saying and was preove correct.  Today look at the value of IBM as a whole, the rising stock price and Buffet  just bought 5% of  IBM? 
      Go Steve, No breakup

    • Guest

      Correct. The difference is Gerstner was brought in to fix the previous mess. Ballmer is the original mess maker, and apparently nobody cares enough to replace him.

  • Anonymous

    Amazingly enough by 2015, people might be hailing Ballmer as a genius with MSFT stock at $80/share.

    • Guest

      Okay, let’s hear your premise for an $80/share target by 2015. What is your EPS estimate for then? Or are you just pulling this out of your a$$ like usual?

    • Guest

      (crickets)

    • Zeus2003

      If ms stock goes to %80 a share i get to retire so lets hope for this

    • Guest

      Plan to work for a very long time.

  • http://voguishtech.com Wemberg Carlo Estil

     “We are in the Windows era — we were, we are, and we always will be. … We are in an era in which the range of smart devices is continuing to expand.
    Thank you balmer for setting up the record straight!!

  • blackletter

    The realistic possiblity is that in 5 years Research in Motion will be bankrupt, Apple’s hip-fashion appeal will have dropped significantly, and Microsoft will have grown exponentially into the undisputed global leader of PC software, cloud services, and mobile telecommunications (2 out of the 3 are a reality RIGHT NOW).

    • http://pulse.yahoo.com/_IRBMOIUSXD4CTZQ4ENVJ3JNEBM Snell

      Let’s not forget what happened to Apple last time Jobs wasn’t leading the company… I believe a small company in Redmond was tapped to consider saving the company.  I wont be surprised if in 5 years I don’t see the Microsoft iPhone powered by Metro…. it could happen.

    • Guest

      Ballmer, nap time is over. Time to wake up.

  • http://pulse.yahoo.com/_IRBMOIUSXD4CTZQ4ENVJ3JNEBM Snell

    Not sure why this story made the news – one (or a couple) MS stockholders who lost their shirts in the stock market seemingly want Microsoft to sell off all it’s assets and give a massive dividend to save their lost retirement.

    Sorry pals, blame the short sellers!  I believe it is MS tangible assets from products to real estate that have shielded the company from preditory short sellers stealing the equity of the company like is happening on Wall Street to so many good (and not so good, Read: Netflix) companies.

    The way the stock market is, to survive companies must be in the business of aquisition, and Microsoft has had a great recent track record or acquiring companies that help us all across the board.

    • Guest

      So much nonsense there that I don’t even know where to begin.      

    • Guest

      MS has a very small % short. They have one of the worst stock records over the last ten years of any large technology stock. And their record of acquisitions is exceedingly poor on balance. So you’re basically 0:3 with your excuses.

    • Guest

      oh and just to state my position, I am long on Apple.

  • http://pulse.yahoo.com/_MDXOPY2QLKHNPRUXVN2JJ2ETDY Charlie Bear

    MS needs to pay a higher dividend to get me to buy more stock and to prevent me from selling the shares I have now.  The only positive for the stock investor is -  MSFT is stable for the most part in this volatile market. 

    • Guest

      It has performed worse than the market this year and last. So by definition it’s less stable than the market itself.