If you think Microsoft Corp. is a chaotic mess, don’t expect much to change. That’s the underlying message in this weekend’s Wall Street Journal report that says the software giant is having a hard time finding a new CEO because of candidates’ concern of having to deal with outgoing chief Steve Ballmer and founder Bill Gates.
To be more specific, the Wall Street Journal reports, CEO candidates are worried about the totality of chaotic boardroom dynamics. Gates, chairman and largest shareholder, still has tremendous influence over products and development. Ballmer, though retiring, will remain on the board of directors. And soon, Microsoft will get an activist investor on the board, ValueAct, to push for faster change to meet the challenges of competitors like Google Inc. and Apple Inc.
Ballmer surprised many in August 2013 when he announced his retirement and intent leave the company within 12 months. Over the last five years, analysts and investors have openly expressed it was time for Ballmer to go, but he and his chief ally, Gates, resisted. In his announcement, he said it was the right time to go.
What made Ballmer’s retirement more surprising is that it came just weeks after he initiated a reorganization, Microsoft One — a move backed by the board to bring the various operating divisions into closer alignment and focused on a singular direction. And Ballmer initiated the takeover of Nokia just weeks after making the announcement.
Microsoft’s board, according to reports, wanted a new CEO in place by November. But one after another, leading candidates have dropped out. The Wall Street Journal speculates the leading reason is Ballmer’s changes and continued influence. The new CEO will be forced to maintain the status quo put in place by Ballmer, or contend with a board member who does not want to see his legacy tampered with.
When it comes to Gates, the concerns are more about the products and technical direction. Gates remains Microsoft’s spiritual leader; few challenge his influence or advice, and that’s a problem for a company trying to contend with a new generation of competitors. Candidates worry Gates’ legacy and influence could hamper efforts to change the company’s technology to compete with rivals.
The problem could get even more complicated for the next Microsoft chief. Other reports indicate Ballmer could overtake Gates as the company’s largest shareholder in 2014. Gates, who retired in 2008, spends most of his time doing philanthropic work through the Bill and Melinda Gates Foundation. Gates, once again the world’s richest man, has been shedding Microsoft shares to pay for his charity activities. Ballmer, as the single largest shareholder, would have tremendous influence over management decisions.
While Microsoft is making strides to recover from missteps in recent years — the Surface tablet is finally selling well, Windows 8 has developed a foundation and business products are thriving — it remains severely challenged by rivals, most notably Google. Solution providers say Microsoft remains an important company, but is increasingly less channel-friendly. As a result, OEM partners and resellers are diversifying their supplier relationships.
Look no further than the Consumer Electronics Show (CES) in Las Vegas this week, where Lenovo and Hewlett-Packard Co. are unveiling PCs based on Google’s Android operating system. And Google is beginning to take market share away from Microsoft and Apple with its Chromebook PCs based on the Chrome OS.
The underlying message of the Wall Street Journal report: Change will not come quickly or easily to Microsoft, at least under current circumstances.