One day in 1983, my dad asked me a question over dinner after a long day at work.
He wanted to know what I knew about a little computer company called Microsoft. It was the brainchild of the son of one of his partners at Bogle & Gates, William H. Gates, Sr.
"Not much," I replied.
But I did tell my dad that I loved using MS-DOS in the computer lab with my friends. I was a card-carrying member of the nerd herd back in the day, so I spent a lot of time there and knew Microsoft's fledgling PC-based software pretty well.
My grandmother Mimi, though, had a different point of view. You've heard me mention her before.
She's the one who was widowed at an early age and became a savvy global investor long before people ever thought to look at the bigger picture.
Mimi didn't care that the buzz was about the MS-DOS language or even about computers. Having grown up in the Depression, she believed that what people would do with the technology was far more valuable.
She said she had confidence that Sr.'s son, Bill Gates Jr., understood this -- which is why she invested heavily in the Microsoft IPO in 1986. Enough said.
Today, though, I think she'd voice an equally strong opinion about Microsoft (Nasdaq: MSFT) CEO Steve Ballmer. In fact, I think she'd fire him. Here's why...
8 Reasons Why Steve Ballmer Must Go
- Ballmer took over Microsoft 12 years ago when the stock was about $60. Now it struggles to maintain $30. Microsoft has $58.16 billion in cash and this is the best Steve Ballmer can do?
- Office and Windows are dying. Once the business world's de facto standard, both are being replaced by cheap, easy-to-operate software, much of which is actually free as well as compatible. This is a big problem considering that, according to the Wall Street Journal, roughly 85% of Microsoft's revenue is coming from just two products: Windows and Office.
- The company isn't innovating fast enough or aggressively enough. What's more, it's attempting to compensate for its own shortcomings with increasingly ill-conceived acquisitions. For instance, Microsoft forked over $605 million for 18% of the Barnes and Noble Nook e-reader and still has no real ability to compete with Amazon's Kindle. It also couldn't seal the deal with Yahoo. Despite a sizable head start using Yahoo's core search technology, Bing has a mere 15% of the search market today. Ballmer waited nearly four years to respond to the iPad and his "Surface" tablet was ho-hum when it could have been jaw dropping. One more: Microsoft paid $8.5 billion in cash for Skype. Apparently the fact that Skype was not profitable didn't matter. Ballmer's track record suggests to me that he buys businesses that nobody else "must have."
- Microsoft's Internet offerings remain wannabes and are highly priced at that. Take Yammer. Microsoft just paid $1.2 billion through the nose to acquire a company that was valued at $600 million last fall when it raised $85 million in a venture offering. Team Ballmer plans to integrate it into Office on the assumption that somehow the Microsoft marriage will endear the brand to customers anxious to socialize business. I think they're delusional. Most Microsoft users I know, including myself, are actively planning to move away from the legacy software we've used for years the first instant we can in favor of software we actually like to use!
- Microsoft spent $26 billion on research over the last three years. Meanwhile, Apple spent $5.54 billion and managed to crank out products light years better than anything Microsoft has come up with. No question which group of shareholders is getting the most bang for the buck.
- Windows 8 is a wreck. Versions I have played with are so unintuitive as to defy belief. There is neither a Control Panel nor a Start menu. It seems to me that very few people actually love their Windows anymore the way Apple users love their Mac OS.
- Ballmer can't do a product launch without jumping around the stage like a Planet of the Apes extra according to Joel Hruska of ExtremeTech. No doubt an apt description if you've ever seen him do his thing-- albeit not a very flattering one. That's a problem. Ballmer doesn't appear to do anything without appearing sweaty and uncomposed. His competitors look calm, cool and collected. The late Steve Jobs wrote the book on creating real excitement for users, not just inwardly-focused developers who give birth to successive generations of questionable products. Who would you trust is the question posed at the end of this video. Not a tough call in my mind.
- Spellbound nerds, once the company's backbone, appear to be an endangered species. If you want to see the future, look at what teens are using and writing. Apple now allows teens as young as 13 to participate in its developer's conference, where thousands of people learn about upcoming offerings (and help take the company to new heights).
Those who weren't acting in the best interests of their shareholders and maximizing their investments had no place in her portfolio.
Nor mine...which is why I don't own Microsoft today and haven't for years.
Further Reading...
Mimi's sage advice has appeared in Keith's columns before. In this article, she reasoned that when an investment or a trend began making the rounds over drinks, it was time to move on. In fact, she used to call it the "country club" test.
Mimi was also mentioned in Keith's 2009 book entitled: Fiscal Hangover: How to Profit From the New Global Economy
I agree with all eight of your points, and I think you could have ended point 6 with an even more general statement that 'Nobody likes Microsoft'. Yes we were all hooked on Microsoft for years when they were the only game in town, but we didn't love them for it – we felt exploited and trapped. And now even if we haven't yet managed to kick the Windows and Internet Explorer habit, we really don't want to let our abuser get an even bigger hold on us.
So what's your point Keith? It's been apparent for years what a looser monkey boy is, at this stage, in my opinion, it's to late for Microsoft to recover.
The intro of the Surface product defies belief. They might as well have shown everyone a painted wooden slab. They wouldn't hardly even let the journalists touch the devices and they wouldn't let ANYONE use the keyboard/cover which blathered about for the whole 45 minute presentation.
And of course, no price, no battery life and no delivery date. 30 months after the iPad was announced.
I stopped using all Microsoft products in 1999. It was the best I-T decision I ever made. Since then, I have had zero viruses, zero malware, ran zero anti-virus, bought no additional utility or security software, paid zero I-T consultant fees, had almost no downtime, was more productive, and enjoyed computing very much. In fact, using Apple gear from 1999–2009 was like watching my home baseball team win the pennant 4 out of 5 years, including 2 World Series wins (which actually happened to me.) Not only were the products great and paid for themselves almost immediately, but the clinic of genius that Apple put on was just plain entertaining!
These days, I carry an iPhone and iPad everywhere, and I use them to write music and lyrics on the road. I get more and better work done than if I had a giant Windows PC with me, and I carry only 700 grams of tech. I'm in the 21st century the whole time. Over 10 years of Mac OS X and over 5 years of iOS at this point. I'm drinking the milkshakes of my Microsoft-using colleagues and competitors. I did a freelance job at a company and I brought my own Mac and did so much more work than they were expecting (at an all-Microsoft shop) that they started letting some Windows users go. That was like 2007. These days, I easily do 10x the work of a Windows user. It's a SCANDAL. When you watch RIMM and Nokia go out of business, remember they are Windows users all the way. That contributed greatly to them not just being too far behind, but not even knowing it.
If you are using Twitter and FaceBook and Google and YouTube — that is Silicon Valley software, made on Silicon Valley computers. Get yourself a Silicon Valley computer an join the 21st century. (No, I don't mean a Texas-made HP with Washington software.)
I'm in complete agreement about moving to another O/S away from windows. Microsoft is forcing me to make the move. There was a time when I liked windows simply because I was used to the windows system and had no desire to learn a new system. Well it seems Microsoft comes out with a new O/S every couple years now forcing me to learn the system all over again…. so why not move to a free O/S? Microsoft is pushing their customers right out the window. Do I own MSFT? NEVER….
Just to clarify one point you made – Windows 8 does in fact have a control panel. Actually, it has 2 of them – the usual Windows one, accessible in exactly the same place it always was – and a new Metro version, supporting a more limited set of configuration in a more intuitive way directly from Metro. Not sure where you got the idea that control panel is gone?
Yes, controversially, the Start menu as it previously existed is removed, and replaced with the Metro screen (which is now what you see when you use the "start" button on your keyboard or device).
When users move to Windows 8, they will need to either get familiar with the new Metro changes, or use tweaks to restore the old Windows 7 way of doing things such as getting the Start menu back. But don't dismiss it until you really give it a try – sometimes change is good!
WHAT OFTEN HAPPENS WHEN A STAR FADES (and the lights go out).
Microsoft and countless other tech darlings of the go-go nineties and some large S&P companies such as GE have never recovered anything close to the valuations of their former glory days. Similarly, stellar mutual funds like Fidelity Magellan have not regained their performance once held under star portfolio manager Peter Lynch (who coined the investment method called: " Buy What You Know").
Companies whose founder was the primary driver of growth and success often become very mediocre when the "star" leaves the scene. Steve Ballmer simply could not possibly fill the shoes of founder Bill Gates. According to the late, former Chairman of the Board of the former Atlantic Richfield Company, Mr. Thorton Bradshaw, " once a company attains a certain size, the job of the CEO becomes largely one of maintanence").
Anotherwords, successful companies who become very large eventually take-on bureaucratic characteristics. Therefore, Steve Ballmer is a private sector corporate bureaucrat. ( I think Steve Ballmer looks like a dead-ringer for Uncle Fester of the Addams Family).
"Anotherwords"?, did you mean "In other words"?
"MS-DOS language", Dude..