What Forced Ballmer Out at Microsoft?

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Aug. 23 (Bloomberg) -- Eros International Chairman Hussein Kanji and Bloomberg Contributing Editor Paul Kedrosky discuss Steve Ballmer retiring as Microsoft's CEO. They speak with Cory Johnson on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

A shareholder in the company.

Let me start with you.

When you look at steve ballmer tenure, what do you get the sense of what pushed him out today?

We are going through a major generational change in the industry and over the last decade or 13 years he has presided over something and he has kind of missed the boat on a number of different fronts, the smart phone industry, tablets, and computing even though microsoft has efforts in all of those.

There were a string of product launches they really did not work, windows 8 being the most noticeable.

The board probably made the decision that is time for him to go.

Kinross key, your thoughts on why this happens now?

-- paul kinross key, your thoughts -- paul kedrosky?

In the wake of a poor windows 8 launch with poor results around the tablet platform, he became almost a laughing stock.

I was with another venture investor and whenever a meeting would pitch, they would say what if microsoft launches a product like that and now it's almost a joke.

What if microsoft launches?

Who cares.

That's a real fundamental change in how the market now views microsoft as result of missing all of these major shift and and that is quite a condemnation for his tenure.

In the last segment, we talked about the emergence of google, vmware, even salesforce.

Throw-in amazon web services.

Any one of those could have been a great area for microsoft.

Except for his work, have not pursued any of them.

-- except for a zure.

With a dominant position they had in the browser market.

That was the gateway drug for them to be exposed and they managed to lose two thirds of their market share in the browser market over the subsequent decade from whenever it peaked.

And no brueghel chrome now dominates.

-- and now google chrome now dominates.

There are more increasingly more options on the web.

Running a product organization, they looked at what are the channels, what you can push through, and what you can sell it a best priced through the channels and steve jobs nailed it in the recent biography where he made the comments that the problem that companies like microsoft and ibm have is that they end up being run by sales guys and it's exactly what we saw at microsoft.

Indeed.

53% of the people who worked at microsoft were dissatisfied with his leadership of steve ballmer but that was better than it was two years ago.

I think it was an increasing frustration on the company.

One of the organizational challenges is that the middle tier never had room to move up anywhere in the company.

It was built why folks in the late 1980's, most of them are still young guys am far from retirement, like ballmer, who would not leave the company and you have a young generation who arm to more switched on and embedded in technology who have no room for growth in the company and it is itself missing out on a lot of the opportunities that you would see.

It is very rare that you are unable to build a product.

Usually you are able and it is just the unwillingness.

That's exactly what was happening and microsoft.

They spotted these trends but there was not room in the leadership for the next generation to come in and punch out with breakthrough products.

You have guys like steve who is maybe thought of at one point to be a successor.

He left and is now a venture capitalist.

Paul maurice was there and he left to start vmware.

Hussein, when you look at that , did the good people leave?

Are they're still great people there who could run this better?

Looking at the bench inside, one thing ballmer did very well was replace almost every single divisional head during his tenure.

People were rotated out, around.

I don't know how big the bench actually is inside the company and a lot of the really great company among the guys who were formative and building it into what it is today, they have all retired and the next generation has left it is there's no room at the top for them.

The only person i can think of inside the company who might be a good candidate is nadella who runs the cloud business.

The rest are guys who have probably been there a little too long.

I think that's really the problem.

There's also a corrupting influence.

Having been inside for too long, there is an absence of fresh blood at senior levels of the organization.

These are people who can survive under steve ballmer's tenure, so do i want them in the first place?

This text has been automatically generated. It may not be 100% accurate.

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