Microsoft CEO Steve Ballmer's Legacy: A Salesman Without Product Vision

Last summer, as Microsoft was gearing up for arguably the most important product launch in the company's history, CEO Steve Ballmer was nowhere to be found. Microsoft had scheduled a mysterious, last-minute event in Los Angeles, flying in roughly a hundred members of the media from around the globe, who were eager to set their eyes on the rumored Surface tablet, Microsoft's first PC device in its 30-year history, which was developed to show off the power of Windows 8, the operating system's most radical redesign in more than a decade. Yet in the days leading up to the presser, as then-Windows chief Steven Sinofsky tirelessly rehearsed his presentation at Milk Studios, Ballmer was a no-show. According to a source present, his role was played by a stand-in until the day of the event.

That's not to say Ballmer was an absentee chief executive, but it's a telling example of the type of leadership he brought to Redmond. Ballmer, undeniably, was a booster of the company; he bled (and definitely sweat) Microsoft. But unlike Steve Jobs, who was involved in every aspect of product launches, Ballmer was never the hands-on leader that Microsoft so desperately needed. Nor was he a product visionary like Jobs was at Apple or his own predecessor Bill Gates was at Microsoft. Instead, Ballmer, who announced last week that he would retire from the company within the next 12 months, is likely to exit with a messy, unsatisfying legacy. He was a salesman who steadily grew the company's bottom line, but one who has left Microsoft in a weaker market position than it has ever been in before.

There are two ways to view Ballmer's tenure. On the one hand, Ballmer's defenders might argue he brought much success. The press release on the day of his retirement is likely to tout how he tripled annual revenue since taking over in 2000, from $23 billion to nearly $78 billion, and goosed net income to $21.8 billion. It would also outline how Ballmer oversaw the launch of the Xbox and Kinect; ushered in the acquisitions of Skype and Yammer; expanded the company's enterprise business significantly; and introduced new versions of best-selling products like Windows 7, which still dominates the PC market. After all, Microsoft is the fourth most valuable company in the world, roughly tied with Google in market cap.

However, Ballmer's mistakes are impossible to ignore. The list of product flops during his tenure are numerous: Zune, Vista, Kin, to name just a few. He invested billions of dollars in Bing, which has failed to make a dent in Google's search market share. And most significantly, Ballmer completely missed the sea change in mobile, losing out to Amazon, Apple, and Google in the music player, e-reader, smartphone, and tablet markets. The PC industry is now in decline; Microsoft's enterprise business is being attacked from all sides; and Ballmer's bets on Windows 8 and Windows Phone have failed to resonate with the public. Only recently, Microsoft was forced to take a $900 million write-down on unsold Surface tablet inventory.

Following the announcement that Ballmer was stepping down, Microsoft's long stagnant share price shot up around 7%. But it wasn't just shareholders who seemed to welcome the news; the tech press lauded the move too. And reports indicate that Microsoft's board, including Gates, who recently criticized the company for a lackluster period of innovation, also agreed it would be best for Ballmer to depart sooner than the company had originally planned.

The problem is that Ballmer was never much of an innovator. A former high-level Microsoft manager describes Ballmer's approach to product: "It really all boils down to the innovator's dilemma," the source explains. "Are you going to have 50 people work on something that's interesting and that could maybe make $100 million in three to four years? Or are you going to use those 50 workers to increase the SQL server sales team, which could generate $1 billion in additional revenue in nine months?"

Ballmer simply wasn't a product guy. As top insiders told me not long ago, Ballmer offered no direction on the features and user interface of Windows 8, for example; he never even got together with the team to green-light the redesign. When asked if Ballmer was ever involved in any product decisions, one longtime designer said "no" flat-out. Another added, "Not at all." As one source said, "I don’t think Steve could even spell the word design."

Ballmer was always, at heart, a salesman. I once saw him actually running to find Yang Yuanqing, the head of Lenovo, at a Microsoft event, yelling at his handler, "Just tell me where he is!" Lenovo is the world's No. 1 PC maker, and therefore a huge Microsoft customer. It was clear that Ballmer, who looked relieved to catch Yuanqing before he left, was in his element talking him up and keeping him happy.

Steve Jobs believed having a salesman at the helm was a big reason for Microsoft's decline. "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," he's quoted as saying in Walter Isaacson's biography. "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...it happened when Ballmer took over Microsoft."

It's the reason why so many sources I've spoken with hoped Microsoft would one day add a chief designer to its ranks, a position that was sorely lacking from Ballmer's recent company restructuring.

Ian Sands, the former senior director of Microsoft’s product long-term vision and strategy, once told me that he believed Microsoft would be a better company if it had someone in that role, as Apple did with Steve Jobs. "I think a lot of people feel like, 'Why don’t we just have a senior VP of design?'" he said.

Still, one former top executive, who worked closely with Ballmer, argues that it's unfair to criticize Ballmer with the benefit of hindsight. No company, the source argues, saw the disruptions coming to the mobile space from Apple, though he acknowledges that the iPhone, which now generates more revenue than all of Microsoft's divisions, caught Ballmer off guard. "All of us were surprised that the iPhone was as successful as it was."

"People give Steve a hard time," the source adds. "But he’s got the hardest job in the world."

Well, for not much longer.

[Image: Flickr user Microsoft Sweden]