Why Steve Ballmer is headed for the exit

If you helped build an American icon, would you want the misery of tearing it down in order to fix it?

InfoWorld has been a vocal critic of Microsoft for many years. But as Steve Ballmer enters the departure lounge, I feel sympathy for him.

Yes, during Ballmer's bellowing salesguy reign, Microsoft was ridiculously late to take mobile seriously and head-slap bungled two versions of desktop Windows. But even if Ballmer and his minions had executed perfectly, it would have taken extraordinary agility for Microsoft to escape the state of siege that Microsoft and most traditional software companies now face.

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Markets are regularly disrupted by insurgents who come in at lower price points. But free? Google Apps and LibreOffice have become viable alternatives to the enduring cash cow that's Microsoft Office. Plus, 20 bucks or less will buy you a great Office alternative for iOS or Android. How does a company that relies on hundreds of dollars per seat for Microsoft Office compete with free, open source, and mobile apps? Microsoft Office 365 is a start, but it still represents a small fraction of Microsoft revenue, it works poorly on mobile devices, and the subscription rate of $60 to $240 per seat per year (the upper and lower limit of various business versions) may not be sustainable.

As for Windows, the real problem isn't the walking disaster of Windows 8, nor is the PC "dying." In fact, PCs running Windows 7 are so healthy why would anyone except a serious gamer want a new one? The upgrade treadmill has finally slowed to a crawl, and for a company that relies on hardware replacement for the lion's share of its Windows licensing revenue, that's a killer. Windows 8 may have been an epic fail, but can you blame Microsoft for thinking it needed something boldly different to provide new incentive to upgrade?

Forging a new agenda

According to John Thompson, former Symantec CEO and the Microsoft board member leading the committee to find a new CEO, "the board is committed to the effective transformation of Microsoft to a successful devices and services company."

That statement means the days of shoring up the traditional software business are numbered and the new CEO must accelerate the wrenching transition, already begun by Ballmer, to the new paradigm. (I assume that by "services," Thompson means cloud services, and by "devices" he means ... well, Xbox, Surface, and who knows what else.)

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