Partners Hail Microsoft Leadership Change

Reaction from the sprawling Microsoft Corp. channel community over the planned retirement of longtime CEO and sales leader Steve Ballmer are generally positive. Solution providers have complained about Microsoft leadership becoming increasingly conflicted in its channel strategy as Ballmer directed the vendor into strategies that brought it in conflict with partners.

Ballmer, who has run Microsoft since founder ’ retirement in 2000, announced he would step down within 12 months. A special committee of the Board of Directors, led by Virtual Instruments CEO John Thompson, is searching for a replacement.

“There is never a perfect time for this type of transition, but now is the right time,” Ballmer said in a statement Friday.

Partners are generally approving of the coming change, saying new leadership is needed to smooth relations with OEM, distribution and reseller partners that have been strained in recent years by Microsoft’s strategies to catch up with competitors such as Inc. and Apple Inc.

In recent months, Microsoft reseller partners have told Channelnomics of their frustration in working with Microsoft. Despite the company’s continued profession for being a channel-centric company, solution providers say Microsoft is plain hostile in its channel strategies and operations. Worse for Microsoft: the growing perception that it’s outright apathetic to channel needs and interests. Policies such as the haphazard roll out of the tablet as a direct sale, then a restricted channel product, has angered many solution providers.

Microsoft’s deteriorating position in the channel is evident in the recent 2nd  Report by The 2112 Group, in which the vendor ranked second only to in poor channel management practices and abilities.

Resellers are the only ones frustrated with Microsoft. OEM partners are equally piqued by Microsoft’s policies and practices. Microsoft missed the tablet revolution, giving longtime manufacturing partners such as and Dell help in competing against Apple and Google. The introduction of the Surface tablet further alienated OEMs.

The release of was supposed to spur a new generation of PC adoption. Instead, Microsoft’s first touch-interface operating system was followed by steep market declines in desktop and notebook computer sales. While Microsoft can’t be blamed for falling PC sales, observers say the company missed opportunities to capitalize on and market trends.

All Things D correspondent Kara Swisher reports Ballmer’s departure is anything but planned and orderly. Her sources say Ballmer’s departure was hastened by increasing internal frustration, Microsoft’s poor performance and a looming proxy fight with investor ValueAct. Ballmer was planning on retiring in 2017 or 2018, and had recently started a massive reorganization called “One Microsoft.” The decision to leave earlier than planned was most likely because Ballmer was increasingly a focal point for all things wrong at Microsoft, she reports.

The Ballmer era is marked with many missteps, missed opportunities and outright failures. But he didn’t do entirely wrong. did correct many of the ills in the flagship operating system. Trustworthy Computing did reverse many of the security woes that plagued Microsoft products. And Microsoft has 16 billion-dollar businesses under its umbrella.

While Ballmer can take credit for growing Microsoft’s revenue and profits, he’s also responsible for halving that company’s overall value. When he took over in January 2000, Microsoft was worth more than $600 billion. Today, Microsoft is worth $290 billion. The stagnant stock has been a source of contention with shareholders for years. When news broke of Ballmer’s retirement, Microsoft’s stock shot up 7 percent as investors looked forward to a changing of the guard.

Some people in the channel have suggested that Microsoft’s next CEO owes the channel an apology. For a company that helped build the modern channel, Microsoft’s policies and operations in recent years warrant an admission of regret. Microsoft may have done wrong, but apology isn’t the answer. What solution providers want is action. They want channel-friendly policies, innovative products and open-minded and receptive channel and executive management to work toward mutual success, they say.

Industry analysts are already pointing to Microsoft’s need for an outsider to come in and shake the company out of its complacency in the way Alan Mulally at Ford after he left Boeing. An outsider, they say, will keep Microsoft from focusing on its past success and force it to innovative for future market opportunities in the way Steve Jobs did when he returned to Apple.

To blame Ballmer for all things wrong at Microsoft would be a mistake, but he is a large contributor. Microsoft is hardly an unhealthy company. The problem is that stress lines are evidence as competitors are eating away at its core strengths. At the same, Microsoft is finding it harder to lay claim to leadership positions in technology segments it once dominated.

New leadership will may be the answer. But it won’t come quickly or painlessly. This drama has much more to play out.

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