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Bill Bennett


Microsoft disrupted

Microsoft New Zealand chief marketing and operations officer Frazer Scott was a great person to interview for this week’s Microsoft after the iPhone for the NZ Herald.

In the Herald story Scott speaks frankly about how Apple’s iPhone knocked Microsoft off course and how it recovered.

It wasn’t just Microsoft. Apple’s iPhone wrong-footed the entire tech sector. The difference was Microsoft had further to fall.

When Microsoft was number one

In 2007 It was the world’s largest, most visible technology company. It still thought of itself as a software business.

The PC dominated computing. More than 95 percent of PCs ran Windows. Most also ran Office.

In the business world there were few organisations that didn’t have Microsoft software on servers.

Ballmer was boss

A popular narrative says former CEO Ballmer takes the blame for all the company’s post-iPhone stumbles. By extension that line of reasoning says replacing Ballmer with Satya Nadella fixed the company.

Although Ballmer made mistakes, sheeting all the problems back to him is lazy thinking. An organisation as large and complex as Microsoft is never just about one person. Or even two people.

Nadella became CEO in February 2014. Eight months later the company seems back on track. Simple maths tells you the reforms needed to make that happen must have started when Ballmer was still in charge.

Turning the supertanker

Microsoft is like a supertanker. Giant ships need to start turning and braking long before they reach port. Even turning a corner needs planning in advance. A fresh pilot can plot a new course, but there’s a hell of a lot of momentum to deal with.

About one month after Nadella took over, he launched iPad versions of Office apps. It was his first big public appearance as CEO.

Microsoft has smart developers and huge resources, it’s conceivable the company could have whacked out iOS code in a few weeks.

Conceivable but unlikely.

Office on iPad

Microsoft’s iPad Office apps were specially written from the ground up. When they first appeared they were polished, almost flawless. It took a lot of work to get these apps ready for market.

It’s possible Microsoft had sat on them. Perhaps Microsoft was waiting for a lucrative business model to emerge so it could continue to make the kind of software margins it enjoyed in the past.

It may be that Steve Ballmer stopped them from reaching the market and Nadella opened the door.

Either way, clearly those apps started life when Ballmer was CEO. They weren’t a skunk works project. Nadella might have signed off on the free download strategy but Ballmer’s hand had touched the tiller long before the supertanker reached that destination.


The same long-term planning applies to Microsoft’s massive cloud investment. Today Microsoft Azure is second only to Amazon in cloud. The company is ahead of Amazon when it comes to integrating software with the cloud.

That project started long before the Azure supertanker reached port. Nadella was responsible for Microsoft’s cloud strategy before his promotion, but Ballmer would have had a hand in the necessary investment. At some point he was have signed off on the spending.

This isn’t a paen to Ballmer or a dismissal of Nadella. It’s a reminder than a large, sprawling business is the sum of many parts.

For all its faults — and there are faults — the culture and organisation set up by Bill Gates and nurtured by Steve Ballmer proved resilient enough to weather the iPhone disruption.



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