Before Steve Ballmer took it over and nearly wrecked the company, Microsoft wielded supreme power in the computer industry.
It must be hard for Generation Y to imagine what Microsoft was like in its heyday in the 90s. Microsoft was the last of the 20th Century monopolies. As Rockefeller's Standard Oil was to petroleum, Microsoft controlled desktop computing. With Apple plunged into mediocrity during the Steve Jobs interregnum, Windows was most people's only choice for a desktop operating system. Microsoft strode like a titan over the digital landscape, and when it wiggled its little toe, competitors crumpled.
Microsoft flattened a series of competitors -– Novell, Borland, Netscape, and more. Even IBM, no pygmy (later to achieve noteriety as Internet Evolution's sponsor), found itself unable to compete with Microsoft. Men like Michael Dell, billionaires and titans of industry themselves, came to Redmond on bended knees to supplicate themselves to Microsoft like medieval kings begging the blessing of the Pope.
Ballmer & Gru
One of them is a cartoon character who roared and bellowed but proved to be incompetent.
The other one was in Despicable Me.
But all that changed when Bill Gates went off to cure malaria and Ballmer took over. Now, Microsoft is a joke. Like an aging bully, it sits on a corner barstool, bloated and blotchy. When it bellows threats, nobody trembles in fear anymore. Everybody just laughs.
And now Steve Ballmer, the architect of Microsoft's senescence, is retiring within the next 12 months. In a press release on its website, Microsoft announced Ballmer's upcoming departure, saying he'll stay on until a successor is chosen.
Microsoft currently faces two big problems...
The death of the PC
Microsoft in its prime excelled at pivoting. Microsoft started as a maker of programming languages for the emerging personal computer industry. Over the years, its mainline business shifted to a command-line operating system (MS-DOS), and then GUI operating systems (Windows). Microsoft pivoted from the consumer market to dominate business software, controlling the enterprise with Microsoft Office, networking software, database and messaging servers, and more.
It stumbled over the Internet, which Microsoft was at first sure was just a fad. But then in 1995, Microsoft did an abrupt reversal and dominated the Internet, too, until finally that dominance caused the US Justice Department to successfully pursue Microsoft for anticompetitive monopoly business practices.
One of Microsoft's existential problems today is the industry is well into yet another fundamental shift, and it isn't keeping up. Microsoft built its business on the personal computer, and PCs are transitioning into niche products.
Steve Jobs understood this –- he said a PC is like a truck. Lots of people have trucks, but not most people. Most people have cars. The car, in this metaphor, is the mobile device, the smartphone or tablet. People use PCs for work, they use smartphones and tablets for everything else. As smartphones and tablets get more powerful, PCs will become less and less common. And Microsoft just doesn't have products that can compete in this market. It can't keep up.
Every big company has a certain amount of infighting. But Microsoft is choked with it. Business units are more concerned with protecting their own domains than with serving customers or making great products. They compete with each other rather than with Microsoft's external competitors.
Orson Scott Card (before he became the embarassing homophobic great-uncle at America's Thanksgiving table) wrote a story about a man who conquered the world in a virtual-reality war game. Just as the protagonist was about to complete the game, with the whole world under his dominion, he had to watch helplessly as another player took over and destroyed his work.
Finally, with his empire vanished, the protagonist confronted his antagonist, and asked why. The antagonist said: Everything that's built is eventually destroyed. Even vast empires, even the Pyramids, even the Earth itself –- it's all temporary. But once you've destroyed something, it's gone forever. Only destruction is eternal.
Steve Ballmer didn't even do that much. He hasn't destroyed everything. Microsoft still has a lot to offer. The Microsoft Surface tablet in particular is a diamond in the rough -– it's building a loyal following among people who need something more than a consumer tablet, and it's lighter than a notebook.
It will be up to Ballmer's successor to attempt to save the empire that Bill Gates built.
Let's now convene to the comments thread below, and share links to insightful articles about this transition, along with our own predictions and prescriptions. Where will Microsoft go from here? Where should it go?
Microsoft Tablets Face Uncertain Future
IT Pros Fight for Microsoft TechNet
Microsoft Sweetens the Pot on Windows 8 & Surface Tablets
— Mitch Wagner , Editor in Chief, Internet Evolution