Is Bill Gates, not Steve Ballmer, responsible for Microsoft's decline?

Steve Ballmer has long been a whipping boy for those who believe he's responsible for Microsoft's long, slow decline. But there's another train of thought: Bill Gates, not Steve Ballmer, is the guilty party, with Ballmer doing his best to bail out the company after Gates' mistakes. Who's right?

Gigaom's Barb Darrow argues that Ballmer did an excellent job of trying to right Microsoft after Gates set the company on the wrong path. First, Darrow argues, Gates' business strategies led to the U.S. Department of Justice anti-trust case against Microsoft. Many people argue the company has never recovered from that. Darrow quotes an unnamed ex-Microsoft vice president saying "It took Steve to settle with the DOJ and the EU. Bill never admitted how damaging his own testimony was."

Darrow also lays the blame for the Vista fiasco at Gates' feet as well. She quotes another unnamed former executive saying, "Bill's Vista obsession hurt Microsoft on the mobile side. It lost sight of this huge opportunity and was blindsided by the iPhone in 2007." Darrow claims that Vista hurt Microsoft's relationships with its OEMs as well.

Darrow also faults Gates for keeping on "deadwood employees" past their prime. And she praises Ballmer for building a great sales force.

I've written before that Gates would be the wrong person to take over at Microsoft now, and that he made plenty of significant blunders at the helm of Microsoft. Gates wrote a memo titled "The Internet Tidal Wave" back in 1995 to Microsoft employees saying that "The Internet is the most important single development to come along since the IBM PC was introduced in 1981." But he didn't do much to help Microsoft ride the wave. Three years after that memo, Microsoft was still focused mainly on Windows and didn't have a solid Internet strategy. Google was born that year. If Gates had focused on the Internet, Google would have died in its infancy.

Under Gates, Microsoft had a smartphone operating system and tablet well before Apple did. But Microsoft's strategy was wrong, and Apple eventually built both markets. And Gates developed Microsoft's basic strategy to use Windows as a bludgeon to beat competitors into submission, and gain share in related markets, such as browsers and offices suites. It's a strategy that's still in force today, and that hasn't worked in many years.

All that being said, Darrow is wrong in blaming Gates rather than Ballmer for Microsoft's decline. Ballmer did little but stay on the course set by Gates, continuing to rely on Windows as a bludgeon, and ignoring the key mobile and Internet markets. It was after Gates had left full-time work at Microsoft, and while Ballmer was CEO that Apple released the iPhone and the iPad. Here's what Ballmer told USA Today about the iPhone back in 2007:

"There's no chance that the iPhone is going to get any significant market share. No chance. It's a $500 subsidized item. They may make a lot of money. But if you actually take a look at the 1.3 billion phones that get sold, I'd prefer to have our software in 60% or 70% or 80% of them, than I would to have 2% or 3%, which is what Apple might get."

He was obviously as wrong as wrong can be, given Microsoft's 3.9% market share in smartphones, and Apple's current 16.5%, according to IDG.

Under Ballmer's leadership, Microsoft's Internet strategy has continued to flail, and the company has lost billions of dollars on it. And Ballmer was responsible for Windows 8, which is hurting Microsoft far more than Vista ever did. With Windows 8, not only has Microsoft not gained mobile market share, but the operating system is contributing to the decline of PC sales. Tablet shipments will beat out PC shipments in the fourth quarter of this year, according to IDC, and in the full year of 2015, they'll beat PC sales. Microsoft will have very few of those tablet sales.

So yes, there's no doubt that Microsoft's decline started under Bill Gates. But Bill Gates handed over the CEO reigns to Ballmer in 2000, 13 years ago. In 2000, Microsoft was still riding high. Today it's not. And that's because of what Steve Ballmer did, not Bill Gates.

Copyright © 2013 IDG Communications, Inc.

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