The End of Chairman Bill?

1billgatesReuters started the ball rolling earlier this week saying 3 of the top 20 Microsoft shareholders raised the question of whether Bill Gates should be replaced as Chairman of Microsoft. Now Bill’s 5% holding of Microsoft stock is the largest but the 3 dissident  shareholders have a combined holding that is slightly larger. And because Bill Gates is selling a scheduled 80 million shares per year, his holding will go to zero in early 2018.

Then yesterday tech pundit Mike Elgan  followed up Preston Gralla’s Computerworld article – Is it time for Bill Gates to retire as Microsoft chairman? with his own Datamation  story that asked effectively the same question – Why Microsoft Should Fire Bill Gates, Too.

Mike’s essential argument is that Bill Gates and Steve Ballmer have been closely entwined as  Chairman and CEO. So the sins of one had the implicit approval of the other. And the sins cited by Mike for the 10 year static valuation of Microsoft stock form the basis for Mike’s argument that  Bill Gates  should not be continued as Chairman of Microsoft.

Needless to say this article provoked a torrent of comments on both Datamation and Google+ [347 +’s, 185 comments, 65 shares on Google+ alone]. Here is the crux of Mike’s indictment of Bill as Chairman for the last 10 years:

* Missing every Internet opportunity, until it was way too late, including search engines
* Failing to maintain the lead in browsers with Internet Explorer
* Failing with AutoPC, Microsoft’s play for the automotive market
* Pushing pen computing as a layer on top of bloated, expensive Windows
* Believing Microsoft Bob and Clippy were the solutions to Microsoft’s overly complex and confusing interfaces.
* Pushing OEM partners to embrace Origami, the Microsoft-led mobile initiative that failed catastrophically
* Making Steve Ballmer, Gates’ incompetent college pal, CEO
* Keeping Ballmer in charge even after years of obvious failure
* Shipping Windows Vista and not knowing it would harm the company
* Failing to understand how complex Windows versioning options hurt the brand
* Launching Zune, Windows Phone or Microsoft Surface RT years too late to make a difference

We see it slightly differently – the fundamental problem that Microsoft is confronting with replacement of Steve Ballmer is Carpe Diem – the inability of the company to seize the day in major new markets. Microsoft,  despite early prototypes, key patents and technology purchases has failed to produce market leading devices or software for the past 10 years. This happened   despite substantial early leads on tablets, gaming devices, touch screens and pens, Internet dominance in the formative 2000-2005 era, phones merging onto media handhelds, etc. This is problem No 1.

It is  strange and revealing  that Redmond has not been able to produce one killer, “must-have”  app or game  exclusively for the Windows 8 Metro interface. Nor has it been able to integrate the Metro interface  well into the great Windows  Golden Goose – all those many  millions of X86 Desktop  Windows programs.  This is Problem #2.

Problem #1 and Problem #2 define Problem #3. The Redmond programming troopers have become distinctly and clearly less agile. First and foremost, no killer Windows 8 apps from Redmond. As well,  Windows Phone 8.1 is way late. Windows 8.1 itself  is distinctly less than what could be desired. IE is falling behind and is updated at 1/3 of the pace of Chrome and Firefox.

But more broadly,  pursuing innovative software ideas and approaches in Redmond  a) has to be sold to an  increasingly discordant group of programming staff and b)has to fit into a proprietary framework which is the source of the power of the  “Only on Microsoft  API”. This is the way that Redmond extracts allegiance from outside stakeholders to the 1 Microsoft Way. But there is also the question of proprietary.

The Rise of Proprietary

After a decade of emergent Open Source, Proprietary is resurgent. It is now a given that Apple has been super successful by being  first entrant and also being super-proprietary. think iTunes, App Store, perpetual runtime fees for iOS and now MacOS and all the special Apple-only connectors plus  device add -ons.   Even  Google is moving away from Open and towards ever more effectively proprietary technologies. Look at  Dart, Blink, Wopf, and the whole “works best in Chrome or only in Chrome web strategy” [ irony – this has been Redmond’s motto for the proprietary Windows API]. Thus to counter the competition, expect Microsoft to recruit a Proprietary Task Master rather than a visionary because a)proprietary pays big dividends if you secure a monopoly share in an emerging technology market and b)Redmond’s turns with software visionaries like Ray Ozzie or Anders Hedberg have been very mixed. Finally, who know manipulating proprietary best in Redmond?

So I am betting on a Stephen Elop-like clone as the next CEO for Microsoft working with Chairman Bill for the next 3-5 years. Whatever the case this succession story is sure to be a Harvard Business School case study in the coming years.