The news comes at an interesting inflection point for Microsoft, which has seen its market cap become stagnant even as the company has attempted to radically overhaul its product line. Ballmer has overseen a steady period of growth during his tenure, relying on consistent streams of revenue from Microsoft's Windows and Office suite of software, yet his success has been largely overshadowed by competitors Apple and Google, which have disrupted Microsoft in mobile and left it looking like an afterthought in the technology space.
During his time as CEO, Ballmer introduced a dramatically redesigned version of Windows, propped up the company's mobile business with Windows Phone, began making hardware with the Surface tablet, ferried along a compelling line of Xbox products, and further enhanced Microsoft's Internet businesses, whether on the consumer side with Bing or on the enterprise end via acquisitions of services such as Yammer.
According to a statement released today, Ballmer "has decided to retire as CEO" within the next year "upon the completion of a process to choose his successor." Ballmer will continue as CEO until a special committee, which has been appointed by the board of directors, chooses an heir to his role. "There is never a perfect time for this type of transition, but now is the right time," Ballmer said in a statement, and in an email to employees. "We have embarked on a new strategy with a new organization. My original thoughts on timing would have had my retirement happen in the middle of our company’s transformation to a devices and services company. We need a CEO who will be here longer term for this new direction."
Microsoft has indeed embarked on a new direction, but one that many critics would argue that Ballmer lagged behind in pursuing. The company failed to see the sea change in mobile, as Apple and Google launched iOS and Android, and soon came to dominate the market. (Ballmer notoriously once laughed at the prospect of consumers wanting to purchase an iPhone.)
While Ballmer tried to push through mobile changes at the company, especially with the dramatic redesign of Windows 8 and the introduction of Windows Phone 8, the products have largely been considered duds. Windows 8, while an elegant service, has been far from the success that Microsoft had hoped for, and its Windows Phone operating system still owns just a minor market share, lagging far behind Apple and Google.
Perhaps the biggest bet made by Ballmer was the Surface tablet, the first Microsoft-manufactured PC in the company's 30-year history. However, this also proved to be a flop, with Microsoft having to take a recent $900 million write-down on the product related to unused inventory.
Upon announcement of the news, Microsoft's stock jumped roughly 8% this morning.
It'd be hard to say Ballmer's tenure was a failure, but it certainly wasn't a resounding success. He was never the product visionary Microsoft needed—he was more of a salesman. In fact, during my reporting for Fast Company's feature on Microsoft, sources told me he wasn't even involved in the Windows 8 redesign.
As the late Apple CEO Steve Jobs once said:
I have my own theory about why decline happens at companies like IBM and Microsoft. The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of product becomes less important. The company starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company. When the sales guys run the company, the product guys don’t matter so much, and a lot of them just turn off. It happened at Apple when Sculley came in, which was my fault, and it happened when Ballmer took over Microsoft. I don’t think anything will change at Microsoft as long as Ballmer is running it.
[Image: AP Photo | Lee Jin-man]