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  • Writer's pictureJeff Matthews

Steve Ballmer, on the Blind Side

Microsoft hopes to bury iPhone, Android By Bill Rigby

Last month, a few hundred Microsoft Corp employees acted out their fantasy with a mock funeral for Apple Inc’s iPhone at its Redmond, Washington campus….

—Reuters, October 1, 2010

The iPhone “funeral” Reuters thus reported on—and which we are not making up—included a kilt-wearing bagpiper, a frock-clad minister, and Windows-signboard-wearing pallbearers carrying a mock-up of an iPhone, all trailing a white hearse.

The stunt, of course, is the act of a desperate company. Worse, it is the act of a company that might have learned by now that what kills-off a competing product is not hackneyed publicity stunts, but better products.

Besides, even really bad publicity doesn’t necessarily hurt a great product: does anybody recall the lasting damage from the firestorm that erupted over the iPhone 4’s antenna? No?

Well, that’s because there really wasn’t much lasting damage to speak of, if iPhone market share is any indication.

Now, as deluded antics go, Microsoft’s “iPhone funeral” smacks of no one so much as Steve Ballmer, the former P&G marketing genius who, as Employee Number 24 at Microsoft, helped his friend and fellow genius, Bill Gates, build and enforce the software monopoly by which Microsoft would come to wreak havoc on the lives of millions of computer users through subtle but devious methods such as the strangely insidious “Insert” command, which nobody uses except by mistake.

Indeed, so Ballmeresque is this particular stunt that we here at NotMakingThisUp are willing to bet dollars-to-donuts, as the saying goes, that Ballmer dreamed up the funeral as one way of heralding the imminent launch of a new generation of Windows software for mobile phones—specifically, Windows Phone 7.

The fact that Windows Phone versions 1-6 have made so little impact on the mobile phone market that nobody outside Redmond, Washington particularly cares what the new version looks like, does not seem to have made an impression on Mr. Ballmer, and for good reason: he famously (as previously reported in these virtual pages) does not use Apple products, nor does he allow his children the pleasures of anything so easy-to-use as an iPod, or Google, for that matter.

Lest readers think we are making that up, here is how we reported what Ballmer told Fortune Magazine when asked if he had an iPod, in “Over-Share from Dr. Evil’s Hideaway”:

“No, I do not. Nor do my children…. I’ve got my kids brainwashed: You don’t use Google, and you don’t use an iPod.”

Is it any wonder that Microsoft has failed to replicate the success of both Google and Apple in the various markets with which it has attempted to compete—such as music players and search engines, let alone smart-phones?

But that’s exactly what happens when a heretofore successful company cuts itself off from understanding first-hand what its customers really want, as the former “Big Three” Detroit automakers finally found out, to their chagrin and the American taxpayer’s loss.

The consequences of precisely this kind of intentional blindness are now being felt by Mr. Ballmer and the company he has run with a iron hand since becoming CEO in January of 2000—the literal and figurative peak of Microsoft, if the stock price is telling us anything—and only now does it seem the Microsoft Board of Directors may be coming out of their torpor, if Microsoft’s recently issued proxy statement is any clue.

For the following is how the proxy describes Mr. Ballmer’s latest incentive awards, or lack thereof:

For fiscal year 2010, Mr. Ballmer’s Incentive Plan award was $670,000, which was 100% of his target award. The incentive plan award was recommended by the Compensation Committee and approved by the independent members of our Board of Directors based on his performance appraisal by the independent members of our Board and other information deemed relevant, including: Mr. Ballmer’s performance against his individual commitments; the strong financial year…; the operating income performance of the Company relative to 25 large technology companies; his leadership in continuing the prior year’s disciplined expense management; a series of successful product launches including Windows 7, Office 2010, Bing, Windows Server, and SQL Server; progress pursing new innovations that will position the Company to lead the transformation to the cloud (Azure and Office Web Apps) in active gaming (Kinect), and in other product areas in which work is well underway; the unsuccessful launch of the Kin phone; loss of market share in the company’s mobile phone business; and the need for the Company to pursue innovations to take advantage of new form factors [Emphasis added]. Give Ballmer and Microsoft’s Compensation Committee credit for paying the man a much smaller figure than most hard-charging, long-time executives could chisel out of their pals on the Board of Directors.

Give the company credit, too, for laying out in a public document the reasons for doing so—both the good and the bad.

But instead of watching idly while the CEO is wasting time and money on the kind of stunts that help make their company a YouTube laughing-stock—and doing so before their smart-phone product is actually released, and actually has succeeded in coming close to “burying” their dearest rival—it might be worth the Board’s time to wonder how, exactly, Ballmer’s self-imposed blindness to the wonders of Apple’s new products (not to mention Google’s search engine and its Android smart-phone operating system) have damaged for all-time the company they are charged with caretaking.

Jeff Matthews I Am Not Making This Up

© 2010 NotMakingThisUp, LLC

The content contained in this blog represents only the opinions of Mr. Matthews, who also acts as an advisor: clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, and should never be relied on in making an investment decision, ever. Also, this blog is not a solicitation of business: all inquiries will be ignored. The content herein is intended solely for the entertainment of the reader, and the author.

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