The real reason Ballmer left: Board battles, tension with Gates and differences over hardware strategy

gatesballmernadella

The new and old guard at Microsoft. John Thompson, Satya Nadella, Bill Gates and Steve Ballmer

When Steve Ballmer announced his intentions to resign as CEO of Microsoft last August, the hard-charging tech executive noted in a press release that it was simply time to move on.

The decision was surprising, in part because Ballmer had previously expressed a desire to stick with the company until his kids graduated from high-school (around 2017) and he’d just implemented a huge restructuring of the company as part of the One Microsoft strategy.

The fact that no clear successor had been picked to run one of the largest technology companies on the planet added more to the speculation that something was amiss at Microsoft.

Given that, something just didn’t add up with the resignation. Many close Microsoft watchers surmised that a rift had developed between Bill Gates and Ballmer. But what was the source of the conflict?

ballmer2Now, BloombergBusinessweek dives into the issues in a lengthy piece that drills into what was really going on at Microsoft.

The report by Dina Bass, Beth Jinks and Peter Burrows paints a picture of board battles, and missed opportunities around products like the Surface. (Yesterday, a now-retired Ballmer admitted to missteps in mobile, noting in a talk in England that he’d like to “re-do” his past 10 years).

Much of the tension arose over Ballmer’s desire to acquire Nokia, a deal which Gates and Nadella initially opposed.

Bloomberg reports on a classic Ballmer blow-up — shouting that could be heard outside the conference room walls — when he learned in June that the board wasn’t backing the Nokia proposal. The board later came around to Ballmer’s strong will, though damage had been done in that battle. The report notes of the board:

They were frustrated by his tendency to talk more than listen, the people said, and his reaction to the pushback on Nokia was for some the last straw. The board rejected the first deal as too expensive and complex, including not only the handset division but also a mapping unit Microsoft didn’t need. Even without maps, Fitch Ratings called the price “excessive” in a note yesterday, citing a deterioration in the user base for Windows-based phones.

For more than a decade, directors gave Ballmer what he wanted. Then two outsiders who joined the board in the first half of 2012 — Thompson, a former Symantec Corp. CEO, and Steve Luczo, CEO of Seagate Technology Plc — teamed with others to challenge him. They pressured him to move faster to compete with Apple, Google and others dominating mobile technology, fearful Microsoft would be locked out and left with the shrinking personal-computer market

The report also digs into Mulally’s run for the Microsoft job, and how the Ford CEO refused to go through a formal interview process, thus helping to torpedo his chances. Others like John Donahoe of eBay and Paul Maritz of Pivotal said no.

Perhaps the most interesting aspect of the report is the growing rift among longtime friends Gates and Ballmer. That rift really accelerated over hardware, since Gates at the time didn’t think Microsoft should make its own mobile phones.

The report is very much worth a read. Check it out in full here.

  • clibou

    GW 2014: “Motorola hadn’t proved to be the strategic fit Google had hoped.”

    GW 2016: Nokia hadn’t proved to be the strategic fit Microsoft had hoped?