Undoing Ballmer

Steve BallmerI first saw the news in a tweet from my friend Mark Twomey (@Storagezilla): Microsoft have just written off the entire Nokia handset business Steve Ballmer bought – citing this news article on Bloomberg

As usual, Mark digested this news like a surviving wild west gunfighter: shoot fast, shoot straight and without trying to untangle the “fancy talk” in Microsoft’s press release – attributed to CEO Satya Nadella:

We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,” Nadella said. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.

Here’s my take on it:

1) The Windows Phone business is hopelessly behind Apple and Android with no way to catch up. Nadella has known this for some time but has not been able to make this move until now.

2) Windows Phone has been a huge distraction and productivity-limiter inside Microsoft where there was a culture house of cards win phoneencouraging employees to use Windows phones at work – and discouraging them from using Apple and Android phones.  For a company with a strategy to enable mobile computing, this was a major problem because many of Microsoft’s employees were behind the mobile curve using app-deficient Windows phones. This statement is likely inflammatory, but I stand behind it.

3) There are other Ballmer screw-ups that will be under the Microscope, including Surface. This is a much bigger problem because Surface tablet PCs are decent products that have some strong customer loyalty, but have been a big disappointment financially for Microsoft. The bottom line is that nothing has done more to sour Microsoft’s most important partnerships (HP, Dell and all other PC makers) than Surface. Not even the disastrous Windows 8 operating system. Windows 8 will soon be replaced by Windows 10, but the Surface remains as a disincentive for every company Microsoft needs to help bury the memory of Windows 8. As long as this idiotic competition exists, people will question the intelligence and management decisions from Redmond.

4) Microsoft will look at all of its hardware businesses differently, including Xbox. It would not surprise me to see a sale of the Xbox hardware business with the Surface business as a sweetener. Nadella clearly sees the need to focus on dev/ops services, apps and cloud. Hardwarxbox drive repaire, even successful gaming hardware, is a distraction and Nadella knows this. Maybe that will be next July’s bombshell.