On Friday, August 23, 2013, Steve Ballmer, Chief Operating Officer (COO) of Microsoft® announced his intention to resign his position within the next 12 months, subsequent to a replacement coming on board.
A lot of pundits expressed opinions on this event. Microsoft’s stock price went up by over 6%. So markets appeared to react positively to Mr. Ballmer’s decision. But from what we’ve read on this topic, we don’t think these pundits and their audiences are focusing on the right drivers forcing this change at the top of one of the largest ISVs in the world.
We think it all comes down to a radically transformed market for office automation solutions across large organizations in the private, public and not for profit sectors.
These markets have turned the corner, once and for all, away from large, internal on premises data centers, proprietary client server applications, and the large staff of internal IT professionals required to support all of this apparatus.
They have a burning need for a new set of ISVs, capable of providing Infrastructure on demand, and application services on a Software as a Service (SaaS) basis across a new ubiquitous wide area network represented by the enormous Ethernet networking plant already in place, which is commonly referred to as the Cloud.
In this environment it is exceptionally difficult for Microsoft® and its peers (Oracle®, IBM®, HP®) to figure out how to make money. So new leadership is needed to demonstrate how Microsoft® can proceed further on its own evolution to better service this new market, but in a highly profitable manner.
So we think all the talk of missing out on the iPhone, and iPad, etc, is off target. The profitability of consumer markets pale when compared to enterprise business markets, where ISVs, in the past, could sell literally thousands of seats for proprietary software by simply closing one complex sale.
With the cloud and SaaS, the old sales methodology must be replaced. We congratulate Mr. Ballmer on a tremendous achievement. We watched Microsoft® enter the enterprise business market in the mid 1980s. We knew they’d win the desktop OS battle, but were surprised at how they won the rest of it, including placing SharePoint, Exchange, and Lync with customers who would otherwise be using IBM’s Notes product.
To reiterate, we don’t think it’s as much a matter of transforming Microsoft® into a competitor for Apple® and Google® in the consumer markets as it is a matter of finding a leader who can keep Microsoft® at the top of the list of preferred enterprise ISVs, and highly profitable, albeit for SaaS and cloud services for the enterprise.
Ira Michael Blonder (https://plus NULL.google NULL.com/108970003169613491972/posts?tab=XX?rel=author)
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