NEW YORK • Microsoft CEO Steve Ballmer, known as much for his zany personality as his business discipline, will leave a legacy of mixed results and a monumental challenge for his yet-to-be-named successor.
Ballmer announced on Friday that he plans to retire sometime in the next year. He has worked for the company for 33 years. After helping founder Bill Gates transform Microsoft from a tiny start-up into the world’s most valuable company, Ballmer took over for Gates in early 2000.
The new millennium marked a dark period for Microsoft. As smartphones and tablet computers began to eclipse personal computers, detractors say Ballmer didn’t take early threats from Apple and Google seriously enough. Ballmer consistently pooh-poohed Google as a one-trick company and in 2007 declared: "No chance that the iPhone is going to get any significant market share."
Ballmer’s jeers proved premature. Google quickly made important inroads in Internet video, online maps, email and mobile computing and contributed to the damage that Apple’s iPhone and iPad have done to Microsoft and its partners in the PC market.
Microsoft, along with other companies that thrived in the era of personal computers, is scrambling to transform its business as people increasingly come to rely on smartphones and tablets.
Although it derives some three-quarters of its revenue from sales of software and services to businesses large and small, Microsoft has failed to capture the imagination of consumers who have become more enamored with mobile gadgets than PCs. Response to the newest version of its flagship Windows operating system, Windows 8, has been lukewarm.
As Microsoft Corp.’s stature diminished its market value followed. When Ballmer took the helm in January 2000, the company was worth more than $601 billion. Today, its value is less than half that amount, at nearly $270 billion.
"There is never a perfect time for this type of transition, but now is the right time," Ballmer, 57, said in a statement released by the Redmond, Wash., company.
Microsoft did not name a successor, but it’s certain that the person who takes the reigns will need to push the world’s largest software company further into mobile devices and step up its competition with faster-moving rivals.
Microsoft said Friday that it’s forming a search committee, which will include Gates. Ballmer will stay on until a replacement is found.
After the news broke, Microsoft’s stock shot up as much as 9 percent shortly after the markets opened. They came within two dollars of their 52-week high.
Ballmer’s announcement comes less than two months after the company unveiled a sweeping reorganization of its business in an attempt to catch up with Apple and Google.
In his statement, Ballmer noted that Microsoft is moving in a new direction and needs a CEO that will be there for the longer term.
Microsoft, he added, "has all its best days ahead."
Ballmer met Gates in 1973 while they were living down a dormitory hall from each other at Harvard University. He joined Microsoft in 1980 to bring some business discipline and salesmanship to a company that had just landed a contract to supply an operating system for a personal computer that IBM would release in 1981.
Ballmer, a zealous executive prone to arm-waving and hollering, did the job so well that he would become Gates’ sounding board and succeed him as CEO in 2000. He has worked at Microsoft for 33 years, matching the tenure of Gates, who left the company in 2008.
"It’s a tad surprising, but every other business head has been rotated out," said BGC Financial analyst Colin Gillis. "They swapped out all their segment heads over the past few years. The only one they haven’t changed is the CEO."
Though investors cheered the news on Friday, Gillis cautioned that it could be a "tough 12 months" for the company.
The obvious successor — former Windows head Steven Sinofsky — got booted by Ballmer, he said.
Sinofsky left the company shortly after the launch of Windows 8 last year. He recently announced that he joined the venture capital firm Andreessen Horowitz.
Veteran executive Julie Larson-Green, the head of Microsoft’s devices and studios engineering group, has been floated as a potential successor. She was promoted to her most recent position in July, after being tapped in November to lead all Windows software and hardware engineering.Next Page >
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