After a few years of letting his company slowly but steadily morph from an indispensably strategic IT leader to a B-list supplier of dependable products, Microsoft CEO Steve Ballmer has fired a lightning bolt into the very heart of the company with a sweeping and unconditional promise to transform Microsoft into an end-to-end cloud-computing dynamo.
This is more than one of Ballmer's bits of showmanship, and it was more than an attempt to string together some sound bites in order to be perceived as on board with the latest cool thing. This is something other than a superficial attempt by Microsoft to buy a little time in the hope that it could somehow find a shortcut and appear once again to be competitive.
This is a fundamental repositioning of a big, great, and potentially indispensable company at a time when the entire software industry is seeing long-time business models stumble, long-time technologies wither, and long-time customer relationships turn sour. This is, as Ballmer himself said, nothing short of a bet-the-company move.
It's Ballmer's chance to step outside of the long and potentially crushing shadow of Bill Gates by offering customers new types of products, services, and value that Gates no doubt dreamed of but did not deliver. It's Ballmer's chance to restructure the company to fit his vision for the cloud-centric IT world we are entering, instead of trying to retrofit the Microsoft of the past to what has become a very different world.
And perhaps more than anything else, it's a chance for Microsoft to become once again a leader: a fearsome competitor, a valuable partner, a trusted supplier, and a source of inspiration and market leadership across the industry.
Ballmer and Microsoft didn't have the luxury of sitting back and waiting—just take a quick look at how four other major software companies have reoriented themselves in the last several months:
**Oracle's now a systems company. Oh heck yeah, it'll continue to sell lots and lots of software, but it'll never be the same and its product set, technology roadmap, selling approach, and value proposition will all change—significantly.
**SAP's got new co-CEOs who promise to revive, unlock, accelerate, and liberate innovation. They also promise to put customer needs at the center of their business—again, massive changes that will fundamentally remake the company from top to bottom.
**Hewlett-Packard's driving its software business toward the cloud and toward being an essential part of the comprehensive, end-to-end infrastructure stack the company's creating. One of HP's top software developers last year began offering a presentation called "Everything as a Service" as a partial vision for how HP's software and hardware could combine to do things no competitor could match.
**IBM's also made an unconditional commitment to cloud computing for 2010 and beyond but is capping that off with a parallel effort to become the world leader in business analytics and predictive analytics. That combination gives IBM capabilities unrivaled in the industry.
Against that backdrop, it's easy to say that Ballmer and Microsoft had no choice—the competitive realities forced Ballmer to push all his chips to the center of the table and declare "all in" on the cloud. Yes, that would be an easy analysis, but it would also be wrong. Because it would have been a lot easier for Ballmer to do nothing.
Windows 7 is being received fairly well, its new mobile strategy's creating some buzz, it's got Office Online coming in June, it's got some new tricks coming out around Bing, and its phenomenal installed base continues to make it a highly profitable company that no one could even hope to dislodge anytime soon. It's on track to invest more than $9 billion in R&D, a figure few if any companies are daring to match.
In that context, Ballmer could have stood pat, keeping the fundamentals strong, the financials good, the company stable, and customers generally happy.
And a year from now, the company would have been in desperate straits: