Five years of Ballmer--the effect on Microsoft

Five years ago Thursday, Bill Gates surprised the tech world by handing his CEO title to Steve Ballmer. Has the company changed?

In the five years since Bill Gates surprised the technology world by announcing he would give up his title as chief executive at Microsoft, has the company changed?

Yes--and no. While CEO Steve Ballmer has clearly retooled some parts of Microsoft to more closely mesh with his hard-driving style, the world's largest software maker still faces many of the same challenges: open source, legal skirmishes, and slowing growth in some of its core businesses.

The eventual shift of power to longtime friend and colleague Ballmer was expected, but the announcement itself, five years ago Thursday, on Jan. 13, 2000, was something of a shock.


What's new:
Five years ago today, Microsoft's Bill Gates handed the CEO reins to longtime friend Steve Ballmer.

Bottom line:
Ballmer's hard-driving style (can you say, "Developers! Developers! Developers! Developers!"?) has been quite a switch from Gates' more introverted approach. Still, though Ballmer has reworked the company to some extent, the software titan faces many of the same problems it did under Gates.

More stories on Steve Ballmer

The ever-boisterous Ballmer presents a decidedly different face for the company than that of Gates, the more introverted techie who had headed the company since founding it with Paul Allen in 1975.

Ballmer reorganized the company into separate business units, changed the way workers are compensated and moved toward a broad strategy to expand on Microsoft's core products by slicing and dicing them in new ways.

"It's clearly Ballmer's company from a business perspective," said Directions on Microsoft analyst Matt Rosoff. "The seven business units were largely his deal. It probably wouldn't have happened under Gates."

Another Ballmer-inspired change: fostering a kinder, gentler image and greater trust among both customers and partners. Ballmer issues annual missives to his troops calling on them to build products that are more useful for customers and to be more responsive to customer needs.

Ballmer tackled Microsoft's image problems almost from day one. In one of his first public appearances after taking over the CEO reins, he talked about the company's dilemma. "Microsoft is a company that, in my opinion, is not very well-understood. For some people, we're the Windows company...we're known mostly by our stock market success. We're also, I think, to some extent viewed as the scourge of Silicon Valley. Unfortunately...we're known as a legal defendant," he told the Commonwealth Club of California back in February of 2000.

Gates, meanwhile, has become the brain trust behind some of Microsoft's most complex--and risky--product strategies, such as the new Longhorn release of Windows and the company's move into home entertainment.

Trying to measure the success of the Ballmer era is tricky. Since the announcement, Microsoft has seen its fortunes fluctuate. Sales have grown from just less than $23 billion in fiscal 2000 to $36.8 billion in fiscal 2004, and the company's cash balance has more than tripled. At the same time, Microsoft' stock has foundered, dropping from $47.80 on the day Gates announced his plans to around $27 a share.

Many of the issues, though, that Microsoft has faced in recent years--security issues, slowing tech spending and the rising popularity of open-source software, are things that any Microsoft CEO would have had to face.

"It's a little hard to separate the changes that would have happened anyway from the changes that happened specifically from Ballmer

Featured Video

Your Black Friday shopping survival guide

Ready to battle for deals? Bridget Carey helps you plan your strategy with tips on smartphone apps, where to find the best deals, and when to avoid the stores.

by Bridget Carey