back to article Ballmer's billion-dollar blunders: When he gambled Microsoft's money and lost

Less than two years into Satya Nadella's tenure as CEO of Microsoft, he's already had to report a lossmaking quarter. It's only the second time that's happened in the software giant's three decades as a public company, and the $8.44bn write-off Redmond posted earlier this week is the largest in its history. Don't blame Nadella …

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  1. Andy Non
    FAIL

    Hmmm

    I could never understand why Microsoft bought a big well known brand like Nokia then killed the brand name and shut most of it down.

    1. Graham Dawson

      Re: Hmmm

      Simple.

      They saw it wasn't working properly, so they tried turning it off and on again.

      1. macjules Silver badge
        Thumb Up

        Re: Hmmm

        Brilliant. The best explanations are always the simplest.

    2. Destroy All Monsters Silver badge
      Holmes

      Killed with fire

      Once upon a time there was a book with the title "Barbarians led by Bill Gates". Still applies, I guess.

      1. Zog_but_not_the_first Silver badge
        Facepalm

        Re: Killed with fire

        Not to forget The Road Ahead. Bloody potholes, eh?

        Still the lad's done better than me.

    3. Anonymous Coward
      Anonymous Coward

      Re: Hmmm

      Could that be because they never bought the brand in the first place?

    4. Mage Silver badge
      FAIL

      Re: Hmmm

      They bought very little. Only temporary use of the Brand and only a licence for the IP. Some would say they only bought the Distribution as the factories shuttered and almost all the staff sacked.

      But who is / was responsible for:

      1) Windows CE in set Boxes: Died a death. BT even updated existing boxes to Linux.

      2) Original Xbox. Subsidized for years.

      3) Media Centre and it's original inability to be be used sensibly for European Terrestrial or any Satellite. Third party SW has always been better.

      4) Movie maker and it's inability to make European format content.

      5) Office ribbon and other GUI stupidities instead of fixing bugs.

      6) half baked transition to .net with 3 different incomplete GUI APIs, no sensible migration or backward compatibility for VB6, though C# is a good development of J++

      7) So many stupid variations of Desktop Windows. A Workstation and Server version is just about excusable. But three versions of server and four of XP, then the crazy Vista versions debacle.

      8) Vista PCs that could never properly run Vista out of the box.

      1. Steve Todd

        Re: Hmmm @Mage

        To be fair, VB6 as a language was very broken by that point. They needed to fix it, and doing so was always going to break compatibility.

        Backwards compatibility has always been both a strength and a weakness of MS. They were maintaining behaviour in XP and beyond that dated back to bugs in DOS. There comes a time when you have to say "this is too broken, we're going to depreciate it in the next version and remove it from the next". The trick is to do this at a speed that the developers and users can handle.

        1. Anonymous Coward
          Anonymous Coward

          Re: Hmmm @Mage

          The VB6 programming language is still used to this day, 13 years after it was supposedly replaced by .Net.

          Microsoft have just announced "And yes, everyone’s favorite VB6 Runtime will continue to work, too. " in Windows 10.

          It's beginning to look like VB6 programming will outlast dotNet.

          1. Steve Todd
            Stop

            Re: Hmmm @Mage

            I've developed commercial VB code since VB2. I know it was broken, where it was broken and how it was broken (inconstant starting at 0 or 1 anyone? That's just a starter.). I still keep getting agents calling me asking if I'd be interested in a VB6 role, so I know there's still VB6 code out there. In my experience for the most part such code is badly written and could have been created in VB3 for all the use the developers made of newer features. That code seriously needs replacing, and keeping it on life support does no one any favours.

            When it came to .NET MS finally sorted the language out and made it an equal partner in terms of its capabilities to C#. There's a jump in thinking required, but finally you can do things like multithreading without hacks and stability issues.

            Now can anyone here give me a solid, reasoned argument as to why VB6 should have been left in its original form that doesn't boil down to "I was used to it", or "we've got all this legacy code"?

            1. Anonymous Coward
              Anonymous Coward

              Re: Hmmm @Mage

              According to Microsoft only 1 in 3 users of VB6 programming moved to dotNet.

              Clearly another Microsoft blunder. If they couldn't persuade existing users to move it was clearly a marketing failure.

              A better approach would have been an updated VB6 - evolution rather than revolution. Instead Microsoft chose to use C# with a VB-like syntax. The obvious approach would have been to widen the market - an updated VB6 for for the low-end, and C# for high-end. Instead Microsoft chose 2 versions of the same language, both targeting the same market, and in doing so lost two-thirds of their developers. Only true Microsoft fanbois would think they made the right choice.

              So now Microsoft are nowhere in phone or tablet software. Microsoft missed the biggest growing markets. So-called "Universal apps" only run on Windows 10 desktop (Windows 10 Mobile is DoA).

              Now Microsoft only supply operating systems to 14% of all devices. Microsoft have finally sorted it out indeed.

              1. Steve Todd
                FAIL

                Re: Hmmm @Mage

                First of all provide a link to back that assertion up.

                Secondly the reason that VB had to change was technical, not marketing. It was heavily tied in to COM, and Microsoft were moving away from COM (thank god).

                Thirdly more complex VB code was full of hacks. Anything more than trivial changes to the language would have broken those hacks. It had already become distorted because of the ways that Microsoft chose to extend it in previous versions (never gaining full object orientation for example, only ever supporting interface inheritance). Those distortions and inconsistencies couldn't be fixed in an evolutionary way. It had evolved into the mess it was.

                1. asdf Silver badge

                  Re: Hmmm @Mage

                  >Microsoft were moving away from COM (thank god).

                  Only in rhetoric. You will still find a lot more COM in their product code bases than you will find managed code even in newly developed code for Win 8 and Win 10.

            2. Doctor Syntax Silver badge

              Re: Hmmm @Mage

              "we've got all this legacy code"

              Often translates as: "It's paying the bills".

              That's a powerful argument.

              Note: I am not & never will be a VB6 coder.

              That doesn't matter. You can find legacy code in all sorts of languages paying the bills, including the wage bill of its deriders as they work on all that new shiny - which, if it's good enough, will become legacy code in due course.

              1. Steve Todd
                FAIL

                Re: Hmmm @Mage

                Unless your program is a bill paying package then it doesn't pay the bills. It may provide employment for programmers, and thus allow them to pay their bills, but that's not an aim of most businesses. They want software to solve their business problems that is reliable, easy to use, cheap to maintain and easy to extend. VB6 code is getting progressively less reliable, harder to maintain and more difficult to extend. There's a shed load of old COBOL code out there with the same problems.

                1. Anonymous Coward
                  Anonymous Coward

                  Re: Hmmm @Mage

                  VB6 programming is the definition of reliable, easy to use, cheap to maintain and easy to extend. The same apps that ran on Windows 98 can run unchanged on Windows 10.

                  And no, COBOL is different - they have a manufacturer still updating and supporting the language.

                  VB6 just has Microsoft, who prefer to waste time and money on failures like Vista, Windows 8, Silverlight, XNA, Windows Phone, Nokia, Universal apps, .Net, and many more.

    5. iromko

      Re: Hmmm

      But they didn't buy Nokia *brand*, that's the point - guys at Nokia sold over 20.000 phone engineers to Microsoft, and loaned the brand for limited time. Next year Nokia would be able to sell it's own branded phones again, and Microsoft won't be part of it (perhaps it'd be collecting license fees if those phones would be Android).

      1. John Robson Silver badge

        Re: Hmmm [Going OT]

        @irmoko - (perhaps it'd be collecting license fees if those phones would be Android).

        I've wondered for a while whether Google isn't powerful enough to write a decent ext driver for MSWindows (and macOS?) and ditch the FAT system on Android - it would also allow dedicated cameras/media players to do the same, since the FS driver seems to be the main reason that people stick with FAT.

      2. hardboiledphil

        Re: Hmmm

        Does anybody/anyentity really need 20,000 engineers??? Sounds like too many cooks....

    6. Doug 3

      Re: Hmmm

      because they thought they could purchase the customers( sales channels ) and switch the product those channels were selling at the same time and it would still work. But unknowing to Microsoft's upper management, their software really isn't that good. Switching the Nokia sales channels to Windows Phone didn't work and Nokia already did damage to its channels when they signed the deal with Microsoft to be exclusively Windows Phone OS. Seems like Microsoft turns to stone anything they touch.

      All these examples of Microsoft's failures shows that Microsoft can not succeed when they can not directly leverage the desktop position of the Windows OS.

      1. nichomach

        Doug 3

        As a phone OS, WP is flipping awesome and frankly, any carping about it generally comes from people who've never used it in anger; I've used Symbian, various flavours of Android, Windows Mobile even, and my current Lumia knocks any of 'em (and any fruit-based phone I've seen) into a cocked hat. The *only* flaw is the relative paucity of applications, but anything I want to do, I've found an app for or the functionality is baked in.

        1. Anonymous Coward
          Anonymous Coward

          Re: Doug 3

          So this is something I don't get - they've essentially axed all of Nokia, but (IIRC) Nadella is still going on about concentrating on Windows Mobile/Win10 "hardware" going forward.

          Are they staying in the phone business or not?

          1. Anonymous Coward
            Anonymous Coward

            Re: Doug 3

            I'm betting that they've shuttered the bulk the old Nokia phone business, you know, feature phones, and they will probably dump all the low end smartphones too. I predict that we are going to see something like a few models of "Surface" phones, high end flagship quality devices and that's it.

        2. Anonymous Coward
          Anonymous Coward

          Re: Doug 3

          >As a phone OS, WP is flipping awesome and frankly, any carping about it generally comes from people who've never used it in anger;

          Oh you mean the rest of us outside Redmond? The Sony Betamax was better on paper too.

        3. Anonymous Coward
          Anonymous Coward

          Re: Doug 3

          And yet I've never been able to buy a decently specced Windows Phone at my carrier. I figured that between Nokia and Microsoft they'd get a wide range of models to market straight away, with all of the carriers on board and market the hell out of them. Instead they kind of dribbled out, with what, only one high-end model in years now.

          I don't even know if I can blame Nokia before it got bought. I suspect that there's a lot more problems going on with Windows Phone than they've ever let on. Manufacturers seem to avoid it like the plague...even when they aren't making any money with Android either.

    7. Richard Plinston Silver badge

      Re: Hmmm

      > I could never understand why Microsoft bought a big well known brand like Nokia then killed the brand name and shut most of it down.

      Because Nokia was 90+% of Windows Phone and the agreement of paying Nokia $1billion per year to keep making WP was going to end. Nokia were already making Android X and would dump WP as soon as it could (having never made a profit from it in spite of $1billion).

      MS never bought the brand name of Nokia, they only had it for a short time.

      It wasn't MS that 'shut it down', it was the lack of sales. When the factory has no sales it stops production and fires the workers. They can try selling below cost (which was a lot of the sales were) but only for a limited time.

    8. SEDT

      Re: Hmmm

      Microsoft didn't buy the brand, just the phone building business. And Nokia are now doing very nicely thanks to Ballmer

      https://www.google.co.uk/finance?q=nokia&ei=W2a3VeGkE8XrsgHGx5W4Dw

    9. Steve Evans

      Re: Hmmm

      Nokia was already in trouble even before they were Elop'ed.

      They had been caught on the hop when the iPhone arrived, and although the iPhone 1 had some serious failings which a mobilecentric company like Nokia wouldn't have made, Nokia had all the maneuverability of an overloaded oil tanker, giving Apple the opportunity to fix the flaws and release #2 before Nokia could really come up with any answer.

      The N97 was a case in point. A knee jerk touch activated symbian phone, which could have been really good (it had battery life which you can only dream of these days), but it was obviously a rush job, and the flaws doomed it to failure. There were some fixes OTA, but with various invisible geographic agencies in charge of update release, you were pretty much screwed unless you knew how to unlock the phone and switch to generic Euro model (which received updates direct from Nokia).

      The support forums were full of Nokia moderator employees with an overdeveloped sense of self importance, complaint posts got deleted instead of solutions offered.

      I remember spelling out to one of the moderators that treating customers badly was not the way to retain those customers, and that without customers they wouldn't have forum posts, and without forum posts they wouldn't need moderators. In short be nice to the customers or be out of a job.

      I got banned for "disrespecting Nokia".

      I dumped the N97 and went out and bought an Android phone.

      6 months later Elop arrived, and the decimation began.

      I laughed.

      So Microsoft (a non mobile company) buys a conceited dinosaur of a mobile company, and they fail to make a success of mobile devices... Hardly a shock.

    10. macjules Silver badge
      Thumb Down

      All very simple really ...

      Gates left Ballmer with a gigantic reserve of billions of dollars when he 'de-coupled' from Microsoft. Not only that he left Ballmer with some bloody awesome ideas.

      Example 1: nearly a decade before Apple released the iPad, Microsoft developed a version of Windows XP suitable for a 'tablet PC', controlled by a stylus. Bill Gates hailed that Tablet PCs would be ubiquitous within five years. Ballmer missed the mark by failing/refusing to see the need for hand-touch technology and user-centric marketing -- two key elements behind the iPad's success, and this despite the success of Windows Mobile in the HTC brand range (aka the XDA on O2).

      Example 2: Gates led Microsoft early to mobile phone market, too. He tried to keep things simple for users by mimicking the look and feel of Windows on what became Windows Mobile and then Windows Phone. Unfortunately after the release of the iPhone in 2007, Microsoft’s share of the smartphone market tumbled from nearly 50% to a point where Ballmer steered Microsoft into a partnership with smartphone manufacturer Nokia .. as dealt with in the article.

      Suffice to say Ballmer just seems to have regarded Gates' carefully built up reserves almost as some personal fountain of fortune and it looks remarkably as though that so long as there was cash waiting to be spent then Ballmer could splash out regardless. We occasionally read about how some secretary has gone berserk with her boss' unlimited Amex card, buying huge quantities of useless items and flying all her mates 1st class in a desperate attempt to impress - Ballmer reminds me very much of this.

  2. alain williams Silver badge

    Furniture ?

    Maybe Ballmer should have started selling a line of chairs ?

    1. Bunker_Monkey

      Re: Furniture ?

      Ikea beat them to that already?

    2. lambda_beta
      Linux

      Re: Furniture ?

      You mean deck chairs on the Titanic.

  3. TeeCee Gold badge
    FAIL

    Hmmm....

    I can see MS's mistake.

    Not only were they at home to Mr Cockup when he called, they invited him in and let him run the place.

    1. magickmark
      Windows

      Re: Hmmm....

      "Not only were they at home to Mr Cockup when he called, they invited him in and let him run the place"

      I'm sure Baldric has or had a cunning plan!

      1. 080

        Re: Hmmm....

        Don't you mean Uncle Fester?

  4. hammarbtyp Silver badge

    To paraphrase Reagan...

    A billion here, a billion there, and soon enough you'll be talking real money...

    A few more... Skype, Yammer, Origami

    1. Charlie Clark Silver badge

      Re: To paraphrase Reagan...

      Yeah, they're still sitting on the goodwill. Wonder when their "corrections" are coming. MS was bidding against itself for Skype!

      1. This post has been deleted by its author

      2. Fihart

        Re: To paraphrase Reagan...

        @ Charlie Clark

        Hard to think of a firm that has less goodwill from its customers. Perhaps H.M. Prison Service is slightly less popular with users.

    2. Someone Else Silver badge
      Stop

      Re: To paraphrase the person who **really** coined the phrase...

      A million here, a million there, and soon enough you'll be talking real money...

      ...was originally coined by Sen. Everett Dirksen, a Republican from Illinois (back in the 50's and 60's...long before the Republicans had lost their collective minds). This was back when a million dollars was real money.

      Remember, Ronald McDonald never had an original thought; the only thing he was any good at was reading scripts.

      1. I. Aproveofitspendingonspecificprojects

        good at reading scripts

        Wooden, say that. You can't have perfect diction and an American accent.

  5. Uncle Slacky Silver badge
    Headmaster

    Repeat after me...

    XP came *after* ME!

    1. lambda_beta
      Linux

      Re: Repeat after me...

      Bring back Microsoft Bob. It was way ahead of its time!

    2. Doctor Syntax Silver badge

      Re: Repeat after me...

      "XP came *after* ME!"

      But it never caught me.

  6. John Smith 19 Gold badge
    Unhappy

    Surface RT was a great success for Intel.

    By hosting "not quite" Windows on a low performance ARM they neatly inserted the "AMR can't run Windows" meme in PC users minds.

    Just a little favor for their favorite hardware mfg.

    1. Jason Hindle Bronze badge

      Re: Actually, a success for consumers, I think

      Caused Intel to get off their arses and seriously up their game in the mobile space.

      1. Hi Wreck

        Re: Actually, a success for consumers, I think

        > Caused Intel to get off their arses and seriously up their game in the mobile space.

        Except that Intel has practically no presence what so ever in the mobile (phone) space.

      2. Charles Manning

        Re: Actually, a success for consumers, I think

        Nope. Intel has a parallel tack of acquisition and divestment that is almost as bad as Microsoft's

        They bought StongARM from DEC, developed that into the fantastic XScale range of processors, then sold it to Marvell.

        They developed then dumped a wide range of embedded CPUs.

        The same for flash - both NAND and NOR.

        The same for USB chipsets.

        Now they wonder why the embedded industry is shy about designing anything with Intel in it. As soon as you start shipping, they'll make the parts you depend on obsolete.

  7. Anonymous Coward
    Anonymous Coward

    You haven't mentioned Windows 8 and the dumbing down of the desktop & apps. How much did that cost in lost sales?

    1. Charlie Clark Silver badge

      My guess is that Windows 8 itself probably didn't cost a great deal of revenue directly. In the consumer space the move towards handhelds was already underway. Enterprise customers had already generally said: no thanks, we're still busy with Windows 7. Yes, it was a PR fuckup, but if you look at the EBITDA since then it's been steady.

      In much the same way that the Vista fiasco led to a concentration of minds and a thoroughly reasonable Windows 7, Windows 8 is leading towards Windows 10. The OS available on release date is probably less important than many of us imagine. More important is the general shift at Microsoft towards services and also acknowledging that "if you can't beat 'em, join 'em" with Office and Cortana for Android and IOS. Windows 10 may just end up being one way of getting those services into people's hands.

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