by V3 Staff - 30 Aug 2013 - V3.co.uk
A week since the shock announcement that Microsoft chief executive Steve Ballmer is to retire and the technology industry is still sizing up what the decision means for the company, and the wider market.
Many are wondering who the successor to Ballmer could be with internals at the firm – and outsiders such as Marissa Mayer, Stephen Elop and even Apple chief Tim Cook – being touted as the sort of heavyweights that might relish the challenge of Microsoft.
But whoever takes over from Ballmer faces many challenges and issues that will need addressing, and quickly, in order to ensure that the firm maintains its position in the market, and to claw back ground from rivals such as Apple and Google, the two firms that have eroded Microsoft’s former position as the number one IT giant.
10. Raise the share price
When Ballmer announced he was retiring the Microsoft share price rose by seven percent. In some ways this sums up everything that the market had come to see as wrong with the company. Investors' lack of confidence in Ballmer meant the company stock price has flatlined for years.
By contrast, Apple and Google have seen their share prices soar, especially Apple, which at one point passed $700, making it the most valuable company on the planet. The price has since dropped, but it remains just shy of $500. Microsoft is just $33.26.
While stock price shouldn't be seen as the be all and end all of a company's success, for Microsoft is has become indicative of its inability to excite and inspire. As such, any incoming executive will need to make sure its price tracks north in order to prove their worth to the company
9. Push for search growth
Search is one area where Microsoft has never really stood a chance, with Google dominating the market. However, Microsoft has made attempts to fight back with its Bing services, and it has out-innovated Google in some areas.
While Microsoft may never overtake Google in this market, it must keep carving out a small piece of the market because web search is never going to wane in importance, and the more Microsoft can do to attract users, the more its brand will grow.
Furthermore, if it hopes to entice people to its Windows Phone platform, the inclusion of its Bing search service must, at the very least, be something that doesn't turn users away.
8. Deal with antitrust issues
Patent lawyers must love the current breed of chief executives at the major tech companies around the world, as each is more than happy to sign off, or possibly just ignore, the huge sums of money they are paying to sue one another.
Microsoft is very much a part of this, embroiled in deals cases, notably with Motorola, as well as being sued on numerous issues, such as copyright for trademarks such as SkyDrive and Metro.
Deciding how to proceed with costly cases that could end up with disastrous decisions is something that’s hard to learn at MBA school, and so whoever takes the helm will have to already be well versed in deciding when to fight, and when to settle.
7. Improve employee satisfaction
Described as a system that encouraged backstabbing and betrayal, one could say that Microsoft’s employee ranking practices are unpopular.
Only becoming common knowledge in August 2012, the system effectively encouraged the best executives to avoid working with each other in order to avoid being ranked against them, instead opting to work with weaker staff members in order to receive a bigger bonus come the year’s end.
Things weren’t great for the hard-working quiet types either, often overlooked by their managers, they would end up being ranked as the worst in their group despite being as solid as their more boisterous colleagues. Far be it from us to judge, but we reckon Microsoft should review this policy.
6. Make innovation a key focus
When was the last time Microsoft did something that truly excited you? Exactly. Sure, perhaps Windows 8 was a surprise, but exciting?
Now think of Google, and think of Apple. These two incredibly mature businesses are still able to wow users year after year with innovative products such as Google Maps, the iPad, Google Glass and the iPhone.
As has so often been repeated on V3 and elsewhere, Microsoft has been playing catch-up for too long in terms of consumer-focused innovation.
The only place we can truly say it’s created such enthusiasm is with the Xbox 360, but its successor, the Xbox One, has not been as well received so far. Microsoft desperately needs to find an area to make its mark in.
5. Maintain enterprise strength
The area where Microsoft has always dominated is enterprise. Generations of workers have known the familiar sights and sounds of Windows, while software such as Excel, PowerPoint and Word is used the world over.
While Windows 8 may still be finding its feet, the company is still signing huge deals with major organisations – ranging from New York State to British Airways' parent company International Airlines Group (IAG) – for its enterprise tools.
While the firm faces new pressure here from rivals such as Google – as ever – it is still the dominant force and deals for firms such as Yammer and Skype prove it is not resting on its laurels. The challenge will be to ensure it maintains this strength
4. Improve the firm's reputation as a brand
If there’s one area where Microsoft has really suffered at the expense of its rivals, especially Google and Apple, it’s that it has never been able to make itself appear cool or desirable.
While Apple products inspire loyalty that borders on the terrifying, and Google is still seen as something of a hip, fun place to work, developing projects such as Street View and Project Loon, Microsoft remains something of a dour company.
This is unfair really, as the company has moved with the times and its new operating system interfaces are fresh and innovative, but the brand remains stuck with associations of grey corporate pencil pushers.
Somehow, the next chief executive needs to shed this image once and for all and inspire and excite a new generation of people to see Microsoft as an equal in terms of brand and cool to the likes of Apple. A new logo would be a start.
3. Improve hardware products for the device market
Recently, Microsoft's been having a hard time in the tablet and PC market. This started with the arrival of the original iPad, another great bit of tech Ballmer laughed off, brilliantly claiming people would still just want a full laptop and would never buy it.
It then continued late last year when the company attempted to release its first ever own-brand devices, the Surface RT and Surface Pro – two devices which are currently listed as having woefully low sales figures.
The Surface tablet-cum-laptop's poor performance has been to Apple's gain, with the firm's new tablets and laptops boasting increasingly strong sales. In fact Microsoft has done so badly in this area, were it not for key manufacturers – such as Samsung's use of Windows 8 for its laptops and convertibles – it is likely that Microsoft's new operating systems would be in the same position as its mobile OS.
As a result, getting Microsoft's designers and engineers to pull their thumbs out and release a decent own-brand device capable of rivaling Apple's iPads and Macbooks is going to be a key challenge for the company's new chief.
2. Improve mobile strength to challenge Android and iOS
For years now Microsoft's been struggling to get a foothold in the mobile market. This is largely because Ballmer dragged his feet in getting Microsoft into it, at one point going so far as to flippantly laugh at the Apple iPhone when it was first released.
As a result Google and Apple have managed to entrench themselves as industry leaders, with most analyst houses listing the two as having a combined share of over 90 percent of the smartphone market.
Since then Microsoft has spent millions on advertising campaigns and partnered with numerous big-name tech manufacturers to boost interest in Windows Phone and increase its market share. But to date, even with this massive push, Windows Phone still only accounts for less than five percent of the overall market.
For this reason the new chief must make continued growth of the firm's mobile platform a top priority to get the company back on track.
1. Solve the Windows 8 conundrum
Perhaps Microsoft’s most pressing issue at the moment is to sort out the mess it has got itself into with Windows 8. Somehow, the world’s largest software company has taken the most popular desktop operating system on the planet and turned it into a product that few of its existing user base wants to upgrade to.
While the upcoming Windows 8.1 update fixes some concerns, these are largely cosmetic changes, and whoever steps into Ballmer’s shoes is going to have to make a tough decision quickly; junk the new user interface and its Metro-style applications, or tough it out and hope customers eventually come to appreciate it.
The first option is probably unthinkable for the Ballmer regime, so perhaps his stepping down is a sign that Microsoft is preparing for a volte-face over Windows 8? If so, the new CEO will have another tough task – that of finding an alternative path to tread for Windows.