I don't know Steve Ballmer. I've only met him once. (I've met with Bill Gates more often than that.) But let's face it, he had tremendous impact as a leader. And it's now a good time for him to step aside.
When Steve took over from Bill as CEO of Microsoft in 2000, the company's revenues were $21B and the business was led by desktop software. Under Steve's guidance, Microsoft made massive inroads into enterprise server software and tools while investing but not really winning in consumer services and certainly not in mobile devices. And in recent years, Steve listened to lieutenants like Ray Ozzie and Bob Muglia to turn the Redmond juggernaut towards cloud computing, mobile devices, and software+services.
At the same time, the world has moved faster than Microsoft's licensed software business model could respond. Apple, Google, and Amazon have become enterprise suppliers. Salesforce.com and Amazon are accelerating the shift to cloud computing. Dropbox has grown from zero to 175 million users in five years. So even as Microsoft's revenue more than tripled to $73B in 2012, things didn't feel good.
I think it's a good decision for Steve to step down and pass control to someone else, probably an outsider. Microsoft will then face its IBM or GE moment: Keep the company together or break it apart? Lou Gerstner kept IBM together and that decision had paid off handsomely. Then again, IBM relentlessly focused on a single enterprise market, shedding its PC and other low-margin businesses.
So what's next for Microsoft? I see three forces colliding to drive that decision:
My colleague and friend John McCarthy and I have just published a new report on the emergence of a new category of vendors we call “mobile engagement providers” that help firms build excellent mobile experiences. I’ll unpack the report in a series of posts over the next few weeks. You can also read a lengthy post in the Wall Street Journal highlighting the report and Forrester clients can read the full report.
Building and delivering great mobile experiences will be the beating heart of your customer engagement strategy for the next 10 years. The challenge of making a simple, intuitive app that fronts a complex system of engagement will stretch the abilities and swamp the resources of most firms. For help, firms increasingly turn to vendors that possess a connected portfolio of engagement competencies and management skills.
The result will be a new market for mobile engagement providers that will grow to $32.4 billion by 2018 (see the Figure 1). No vendor can do all of this today, but suppliers from six categories — digital agencies, management consultancies, mobile specialists, product development specialists, systems integrators, and telcos — are chasing the prize. The payoff for vendors that make this investment will be to earn a seat at your table as a long-term partner in your engagement success.
Pal John McCarthy and I published a report on a new category of vendors that we call mobile engagement providers that have a "complete portfolio of engagement competencies and management skills to help you build and deliver great mobile experiences at global scale." This market will grow to $32.4 billion by 2018.
The Wall Street Journal's CIO Journal published this post from us today. It's long, but captures the key points.
I'll have more say later in the week. But for now, enjoy the post on WSJ!