Steve Ballmer and Bill Gates Don't Talk Anymore, Report Says
Image: Ted S. Warren/Associated Press
The recent upheaval at Microsoft has poisoned the decades-long friendship between cofounder Bill Gates and former CEO Steve Ballmer to the point that the two no longer speak, according to a Vanity Fair profile.
'They stopped speaking to each other as a result of the bad blood surrounding Ballmer's resignation,' according to the profile by Bethany McLean.
Though Ballmer was the best man at Gates' wedding in 1994, the enmity between the two goes back at least to 2001. At their wives' request that year, the two had a 'really awkward, terrible dinner,' as Ballmer describes it, that resulted in a détente. At the time, Ballmer had been CEO of Microsoft for a year, but Gates was still a strong presence at the company. 'I didn't feel completely in charge until Bill left [entirely in 2008],' Ballmer says in the profile.
The main cause of the latest friction appears to be a dispute over Microsoft's Nokia acquisition, which Ballmer first proposed in June 2013. The purchase was Ballmer's idea and he expected the board to approve it. Ballmer was so confident that the board would go for the idea that he skipped a post-meeting dinner to attend his son's middle school graduation. The next day, the board informed Ballmer that it was against the idea.
'For Ballmer, it seems, the unforgivable thing was that Gates had been part of the coup, which Ballmer saw as the ultimate betrayal,' the article says.
Ballmer gave the board an ultimatum: Do the deal or I'm gone. The board eventually agreed to a slightly different version of the deal. Despite that, Ballmer handed in his surprise resignation in August.
In the article, Ballmer defends his tenure by pointing out that he made the company terrifically profitable. In 2008, Microsoft was the most profitable company in tech, earning 15% of all profits generated in the category, Ballmer says. In 2013, it was No. 2 next to Apple, but still making 12% of all profits. Overall, Microsoft's profits tripled to $21.8 billon under Ballmer.
But Ballmer admits that during his tenure, Microsoft missed the boat on search and especially on phones. As a result, Microsoft critics charge that the company is in a tight spot since it's still largely dependent on revenues from PCs while all of the growth is in mobile.
Ballmer says his biggest mistake, though, was Longhorn, a software project led by Gates from 2000 to 2006 that never lived up to its grandiose vision. Eventually renamed Vista, the Windows OS was late, lacked key features and paled in comparison to Apple's OS X Tiger.
'The worst work I did was from 2001 to 2004,' Ballmer says in the article. 'And the company paid a price for bad work. I put the A-team resources on Longhorn, not on phones or browsers. All of our resources were tied up on the wrong thing.'
In contrast to the warts-and-all portraits of Gates and Ballmer, current CEO Satya Nadella is described as a 'genuinely nice person, with a wide smile that cannot be faked.' Nadella also comes off as pragmatic, questioning old beliefs at Microsoft and seeking practical solutions. Nevertheless, not everyone sees him as a change agent. Instead, he's characterized as a 'safe choice.' As one unnamed former employee says in the article, 'He's not Genghis Khan when you might need Genghis Khan.'
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