These days, it is Microsoft’s turn to fend off the upstarts as it
struggles to compete in a computing world that is increasingly mobile
and based in a “cloud” of Internet-connected computers to which many
customers gain access at the same time. It’s all part of the inevitable
life cycle for technology companies.
“Getting disrupted is the defining characteristic of this industry,”
said Aaron Levie, the chief executive of Box, an online data storage
company. “You can even have a near monopoly like Microsoft did, and then
everything gets redefined.”
Mr. Ballmer will not have to take Microsoft into the future; last
Friday, he announced that he would retire within a year. But young
executives like Mr. Levie are not gloating over Mr. Ballmer’s exit. They
know well that one day — if they are lucky to be as successful as Mr.
Ballmer — they could face the same problem.
“It just feeds my already-healthy sense of paranoia,” Mr. Levie said.
The rare tech company manages to thrive from one generation of
technology to the next. Only a few of the big ones — I.B.M., Intel and
Apple — have done it. And it is not yet clear if Microsoft has a clear
path to joining that list of multigeneration kingpins.
Mr. Ballmer was closely identified with the personal computer
revolution, and later with corporate software running on computer
servers. Those innovations brought Microsoft the cash and talent to
adapt to the early Internet with the Explorer browser, and diversify
into online gaming.
What it could not buy Mr. Ballmer, the younger generation in tech says,
was a clear vision of the future.
Apple and Google have led development
of smartphones and a long list of companies like Amazon.com have led the
development of cloud computing. Microsoft, meanwhile, has often had to
play catch-up.
“All technology aspires to be legacy,” said Scott Dietzen, chief
executive of Pure Storage, a data storage
start-up. “It’s that or
obsolescence.”
“The most powerful factor,” he added, “is that the very best talent is
drawn to doing something disruptive to the legacy, something new and
fresh. And in this business the best are so much more productive than
anyone else.”
During Mr. Ballmer’s tenure as chief executive at Microsoft, the company
had considerable growth. Mr. Ballmer led the creation of the Windows
Phone operating system, which received good reviews but has struggled to
gain traction in the market, and Microsoft’s efforts in cloud
computing. Also under his leadership, the company acquired Skype, an
Internet communications service, for $8.5 billion, and paid $1.2 billion
for Yammer, a social network for business.
But the breakthroughs, whether they were in Internet search, smartphones
or Internet-based software, have usually happened somewhere other than
Microsoft.
Mr. Levie, 28, grew up near Microsoft’s headquarters in Redmond, Wash.
Several of his schoolmates’ parents worked for Microsoft. Few of his
generation, he said, followed their parents there. Among those who did,
he said, few stayed.
“I think about being 40 or 50 and being disrupted,” said Mr. Levie,
whose company was founded in 2005. “You can be a visionary, and have a
great business model, but no tech company can avoid it. There is no
quick way to transition into the next thing.”
The closest to a safeguard, he said, is to be “like Amazon: race to the
bottom on prices ahead of your competition, keep profit margins low and
make things tough for them.”
Mr. Ballmer joined Microsoft in 1980, and its breakthrough software,
Windows 3.0, was released in 1990. Its stock peaked in December 1999,
shortly before Mr. Ballmer replaced Bill Gates, Microsoft’s co-founder
and his close friend, as chief executive. Since then, Microsoft’s shares
have fallen about 33 percent.
Microsoft is 38 years old, three years away from the age at which
Digital Equipment and Wang disappeared. Novell, which was founded in
1979, was acquired in 2011 by the Attachmate Corporation, an investment
group.
“He took a company with $20 billion in revenue and turned it into a $78
billion company,” Mr. Levie said. “But you can never count on more than a
decade on top.”
That feeling that real success lasts a decade or so haunts even the most successful of the new breed of tech executives.
Aneel Bhusri, the co-chief executive of Workday, a cloud-based business
management software company with a market capitalization of $13 billion,
recalled sharing a beer a few years back with Marc Benioff, the founder
and chief of Salesforce, a $25 billion company offering sales and
marketing software via the cloud.
“It was early days, but we were confident about cloud computing,” Mr.
Bhusri said. “Marc said we had about a dozen years, then something else
would come along.”
Mr. Bhusri didn’t suggest what that something else could be. That is the
problem: When you’re caught up in running your business, it’s difficult
to foresee the shifts that could upend it, Mr. Bhusri said.
In an e-mail, Mr. Benioff recollected the conversation, and added this
thought: “Technology is a continuum — it is constantly getting
lower-cost and easier to use. The role of the C.E.O. is to ride that
continuum.” The trick is to always respond to the better and cheaper
thing that is coming along.
Some say that although Mr. Ballmer did try to alter Microsoft’s course
and move beyond the personal computer, he failed to fully understand how
broad and deep the changes to cloud and mobile would be.
“Microsoft had phones, Microsoft had tablets, but they tried to put
Windows in them,” said Zach Nelson, chief executive of NetSuite, a maker
of Web-based business software. “They couldn’t leave the PC world
behind, even though they saw the change coming.”
Some Microsoft executives did see the change. Ray Ozzie, Mr. Gates’s
successor as chief software architect at Microsoft from 2005 to 2010,
said in his farewell memo to Microsoft employees that they had to imagine a post-PC world. What, he wrote, would such a world look like?
“How would customers accomplish the kind of things they do today?” he
wrote. “In our industry, if you can imagine something, you can build
it.” Mr. Ozzie, who was reportedly frustrated by the slow pace at which
his innovations were turning into products at Microsoft, also urged the
rank and file to act swiftly.
Late last year, Mr. Ozzie raised $4 million for Taiko, a start-up that
is said to be developing cloud-based mobile applications for social
interaction.
Among Mr. Ballmer’s generation of tech executives, his post-2000 stock
performance is hardly the worst. Shares of Cisco Systems, the biggest
maker of computer networking equipment, have dropped 54 percent. Shares
of Oracle, one of the biggest business software companies in the world,
have fallen 30 percent.
Dell, which is now trying to go private as part of a turnaround, is off
about 70 percent. Sun Microsystems, once one of the most influential
tech companies, was purchased by Oracle in 2010 for $5.6 billion, 88
percent below its value in 2000.
Those kinds of numbers seem to convince the new generation that they
are, indeed, beating the old incumbents. But the lingering question is,
what next?
“You can imagine a world without Windows, but not without the network,
so the cloud feels like it can’t go away,” said Mr. Nelson of NetSuite.
“We’re in the middle of where the world is going.”
“I can’t say it’s the last computing architecture,” he said. “It’s my last. The PC was Ballmer’s last.”





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