Ballmer’s Folly: Windows Phone

In an interview with Business Insider, Steve Ballmer expressed some reservations about Microsoft’s efforts in Mobile.

Seriously, Steve?

I had put the company on a path. ~ Steve Ballmer

You sure had, Steve. Let’s recap the path that you put Microsoft on.

1) Microsoft Windows Mobile was a fine operating system for its time. Its fatal flaw, of course, was — like all Microsoft products of that time — it attempted to squeeze the desktop version of the Windows operating system onto the phone form factor.

If you don’t cannibalize yourself, someone else will. ~ Steve Jobs

Not only did Microsoft not attempt to cannibalize Windows, they did just the opposite. Windows was Microsoft’s sacred cash cow that had to be protected at all costs.

The best CEOs try to make their companies a safe place for those with wild ideas, and a wild place for those with safe ideas. ~ Dr. Mardy

A nascent equivalent to the iPhone could never have matured at Microsoft during Steve Ballmer’s tenure. Ballmer would have strangled it in its crib.

2) Apple iPhone was announced in January of 2007. Ballmer, famously, laughed at the iPhone and dismissed it out of hand.

There’s no chance that the iPhone is going to get any significant market share. No chance.

Would I trade 96% of the market for 4% of the market? (Laughter.) ~ Steve Ballmer

The irony is palpable.

Instead of laughing at the iPhone, Steve Ballmer should have rushed to the best designers he had and tasked them with creating a viable iPhone competitor. You might well say such a rapid change of direction was terribly unrealistic, and I agree with you. It was terribly unrealistic. But that’s exactly what Google did with the Android operating system.

3) Google Android was, and is, a fine operating system. The iPhone was, and is, a stunning technological achievement. However, I think that, even today, industry observers fail to realize it was not the iPhone’s technological advances, nor Android’s engineering prowess, that disrupted Microsoft’s mobile efforts. It was Google Android’s business model that did the damage.

Disruption is about business models, not technology. ~ Ben Thompson (@monkbent)

Products don’t get disrupted, businesses (and people) do. ~ Horace Dediu (@asymco)

Incumbents are rarely disrupted by new technologies they can’t catch up to, but instead by new business models they can’t match. ~ Aaron Levie (@levie)

The Microsoft of 2007 was quite capable of creating software that would have been competitive with the iPhone, but the Microsoft of 2007 was quite incapable of modifying its licensing business model in order to compete with the Google Android business model.

The whole reason it’s a dilemma is that given your business model and internal incentives you are incapable of responding ~ Ben Thompson on Twitter

An old technology is easy to abandon. An old business model is hard to abandon.

4) Windows Phone 7 was Ballmer’s response to the iPhone and Android threat. There was nothing technologically wrong with Windows Phone 7. It was very well constructed. Very well conceived. It even included a fresh new take on the smartphone user interface.

There were many, many reasons why Windows Phone 7 failed. It was late to market. It was not differentiated enough to make it stand out against its competitors. Its “hook” to the Windows desktop operating system wasn’t nearly as big a draw as Microsoft imagined it to be.

Of course, Microsoft’s unbridled hubris didn’t help. Microsoft thought all they had to do to win the smartphone wars was to show up. This type of thinking was exemplified by the “funeral” Microsoft held when they released Windows Phone 7.

CAPTION: Microsoft workers celebrated the release to manufacturing of Windows Phone 7 last week by parading through their Redmond campus with iPhone and BlackBerry hearses. ~ Microsoft Employees, Microsoft, 10 September 2010

Once a problem is solved, you compete by rethinking the problem, not making a slightly better version of the current solution. ~ Benedict Evans (@BenedictEvans)

5) Nokia Purchase

I had put the company on a path.

The board as I was leaving took the company on a path by buying Nokia, they kind of went ahead with that after I told them I was going to go. The company, between me and the board, had taken that sort of view. ~ Steve Ballmer

The purchase of Nokia was, of course, an unmitigated disaster.

Things are never so bad they can’t be made worse. ~ Humphrey Bogart

In July 2015, Microsoft announced that:

As a result of the 7,800 planned job cuts, it will record an impairment charge of approximately $7.6 billion, in addition to a restructuring charge of between $750 million and $850 million. The job cuts come on top of the 18,000 positions Microsoft announced it would eliminate last year. ~ Barb Darrow, Fortune

And of course, the bleeding still hasn’t stopped.

Microsoft’s attempt to fix the ailing Windows Phone 7 by purchasing Nokia reminds me of an old joke:

The two fishermen sprung a leak in one end of their boat. ‘Not to worry,’ said one to the other, making a hole in the other end of the boat, This will let the water out.’.

The Android business model had undermined Microsoft’s ability to license mobile software. Ballmer’s response — the path he set Microsoft on — was to attempt to change from a licensing model to a model where Microsoft made and sold both the hardware and the software as a single product. In other words, Ballmer wanted to go from competing with Android to competing with the iPhone.

In the Art of War, Sun Tzu said “The way is to avoid what is strong is to strike what is weak,”. Ballmer proposed to do the exact opposite. He wanted Microsoft to compete directly against Apple where Apple was strongest — in integrated smartphone hardware and software.

Ballmer’s proposed solution to Microsoft’s Windows Phone woes was to jump out of the Android frying pan and into the Apple fire. Instead, Ballmer’s plan got panned and Ballmer got fired.

The worst place to develop a new business model is from within your existing business model. ~ Clayton Christensen on Twitter

Reversing Course

(Satya Nadella) needs to have a clear path forward. ~ Steve Ballmer

Guess what, Steve. Nadella has a clear path forward and it consists, in part, of undoing the damage done by you. In fact, if I have one criticism of what Satya Nadella has done in mobile since he took over from you, it would be he hasn’t gone far enough to reverse the course you had charted for the company.

Microsoft continues to sell smartphones, continues to lose market share, continues to lose money, continues to drag its feet in mobile. Why?

Microsoft should just declare victory and get the hell out.

We are not retreating – we are advancing in another direction. ~ Douglas MacArthur

A New Path

For years and years, I’ve been agitating for Microsoft to get out of hardware. Whenever I do, I’m told I must hate Microsoft. On the contrary. I’m trying to help Microsoft. It’s the people who are telling Microsoft to stay the course in smartphone hardware that don’t have Microsoft’s best interests at heart.

“But, but, but…”, I hear you say, “Microsoft NEEDS to be in mobile handsets.” Well, you better hope you’re wrong, because Windows Phone is dead, dead, dead.

Microsoft Windows Phone Headed Toward Zombieland?

It’s game over for Windows Phone as device sales hit an all-time low

Windows Phone is dead

Let me put this another way. If I’m wrong, and Microsoft does need to sell smartphone hardware in order to ensure their future in computing…

… then Microsoft is totally screwed.

Conclusion

Steve Ballmer has a lot of well-wishers. They would like to throw him down one.

Steve Ballmer got fired (yes, fired) because of the ‘path’ he set Microsoft on. Nadella got hired, in part, to undo the damage Ballmer had done. Steve Ballmer is the last man on earth Microsoft would turn to for advice on how they should be handling mobile.

In the future, if Steve Ballmer has any advice for Microsoft…

…he should just keep it to himself.

No vice is so bad as advice. ~ Marie Dressler