Is a new Microsoft
being born? That's one of the questions being raised following news that CEO Steve Ballmer will be stepping down within the next 12 months.
The announcement was made Friday, and the company said Ballmer would continue as CEO until his departure. "There is never a perfect time for this type of transition," Ballmer said in a statement, "but now is the right time." Ballmer became CEO in 2000, taking over from Gates.
A special committee has been appointed by the Board of Directors to find a successor. The committee is chaired by John Thompson, the board's lead independent director, and also includes such board members as Microsoft co-founder and former CEO Bill Gates, former Bank of America CFO Charles Noski, and Seagate CEO Steve Luczo. A leading executive recruiting firm, Heidrick & Struggles, will work with the committee.
Given that Ballmer has said for some time that he intended to retire when all his children had completed high school, which reportedly will not take place until several years from now, a key question is whether Ballmer's departure was his own decision.
In his statement accompanying the announcement, Ballmer noted that the company needs a CEO "who will be here longer term" for the company's ongoing transformation from being primarily a software company to becoming a "devices and services company."
The company said that both internal and external candidates will be considered, which raises the possibility that a CEO from the outside could help reshape the company. Internal candidates include Julie Larson-Green, who oversees devices and entertainment, and Tony Bates, ex-CEO of Skype and now head of business development.
Ballmer has been criticized during his leadership on various fronts, not the least of which has been Microsoft's inability to obtain a leadership position in the critical mobile market.
Neither the Windows Phone smartphone platform nor Windows-based tablets have assumed anywhere near the dominant market positions in their respective environments that Windows has enjoyed for years in the desktop and laptop world. Additionally, Microsoft-watchers are debating the reasons why the Windows 8 operating system has not received a stronger reception.
While Microsoft has enjoyed substantial success with its Xbox gaming console, it is also struggling to maintain its traditional position of strength in the enterprise -- in part by moving into the cloud, which has become the major new battleground in the business world.
In July, the company undertook an executive reorganization so it could better operate as a coordinated effort instead of competing divisions. For instance, Terry Myerson moved from becoming head of the group that handled Windows Phone to becoming responsible for Windows on all platforms.
Charles King, an analyst with Pund-IT, told us that Ballmer's departure "gives the board a chance to choose someone with a significantly different perception of how the company can achieve its goals," which include expanding into new markets. But the biggest challenge, he said, is that Microsoft "faces what are essentially cultural" challenges.
Any large corporation develops a "corporate culture," he said, while many of the companies successful in new markets are significantly different, smaller and more nimble than Microsoft has become. King pointed to retired IBM CEO Louis Gerstner's transformation of that company as a successful example of a large corporation changing itself to address its challenges.