Looking Ahead

Sayonara

With the initial frenzy around the great Ballmer succession sweepstakes slowing down, lets look ahead at how things may play out:

Timing

I can’t believe this will take 12 months to resolve or that the company can afford to let it drag on that long. If the board can’t find a new CEO in three months, they’re never going to find someone. My guess is they shoot for an announcement around November with a January start date for new guy. Overlap between old and new CEOs is fraught with issues, so my guess is Steve will get an extremely well-deserved and complete summer vacation next year. UPDATE: the fact ValueAct doesn’t get its board seat until early next year is another impetus to get this decision made before then.

Candidates

I speculated discretely a little here, but am stunned at some of the crazy names in play. How does a company like Ladbrokes stay in business if this is an example of their handicapping skills? Does anyone know how to arbitrage this insanity? And where is Harold Stassen in this race?

I said earlier there was really only one internal candidate. After more thought, I now think there are two but the second one is not showing up in all the speculation (which is really surprising because this puts him in the minority it seems of Microsoft employees).

The Re-org

I maintain my earlier (and evidently not safe for publication) claim that the ongoing functional reorganization is batshit crazy. It was crazy with Steve, but it is barking mad with an unknown new leader showing up at some indeterminate time in the future. But the company can’t go back to the old model at this point and has to keep marching ahead in the absence of any other option. I guess they keep implementing this re-org until the new CEO unveils the next re-org. In the meantime, between a lame duck CEO and the groping-in-the-dark of the current re-org, Microsoft is largely on hold strategically (which makes it all the more important to find the new leader quickly).

Breakup

The uncertain transition period and ongoing re-org to greater centralization actually make it harder to break the company up into the “Svelte Steves”, but this is still the right solution for Microsoft’s existential plight. Hopefully the board will realize after interviewing a bunch of candidates that there isn’t anyone likely to manage the sprawling software conglomerate that is Microsoft today any better than Steve and they should break the company up, create a more focused set of companies and unlock substantial value.

Layoffs

I hate to say it, but these seem almost inevitable upon the arrival of whoever comes next. Every new CEO wants to get bad news out of the way while they can still implicitly (or explicitly) blame their predecessor. And I think one of the big motivations for the recent re-org was to “increase marketing efficiencies”. Microsoft laid off a couple hundred marketing people last year, but rumor is the original target was ten times higher. This has implications for local hiring and the Seattle real estate market if nothing else.

Executive Departures

Just as we saw an exodus of “Bill guys” after Steve took over, there are some “Steve guys” that it is hard to imagine being part of any new regime. Kevin Turner would be one (and for anyone wagering on KT as the next CEO of Microsoft, I will take the other side of that bet for every penny you want to put down). Mark Penn, who still lives in the other Washington, may  suddenly discover Hillary’s 2016 campaign is ramping up (perhaps they will have forgotten his prior contributions). And there are some of Steve’s Pro Club basketball buddies with their brogrammer bonhomie (except they lack even brogrammer-level programming chops) whose career trajectories could be impacted. Who else is busy updating their LinkedIn profile (beyond every marketing employee at the company)?

NBA Basketball Returning to Seattle

Steve can get busy on this front, just as our archenemy the hated and despised David Stern exits the scene. Steve would be a great owner (and cheerleader – every home game will like MGX to him), a la Mark Cuban. Others have suggested Steve could also help salvage his home town of Detroit.

What else should we expect on the Microsoft front as this transition plays out?

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