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Steve Ballmer ends run as Microsoft's relentless salesman

Microsoft CEO Steve Ballmer gestures during his keynote address at the Microsoft "Build" conference in San Francisco, California in this fil
Microsoft CEO Steve Ballmer gestures during his keynote address at the Microsoft "Build" conference in San Francisco, California in this fil

By Bill Rigby

SEATTLE (Reuters) - Few CEOs wielded more power than Microsoft chief Steve Ballmer.

And yet the company's first and foremost salesman never gained the respect he deserved for his role in transforming Bill Gates' tiny startup in the woods outside Seattle into the world's largest software maker.

Ballmer, who announced his retirement from the head of Microsoft Corp on Friday, had the misfortune to follow megastar Gates at the helm just as the company hit the end of its explosive growth period and faced a resurgent Apple Inc under an inspired Steve Jobs.

The Detroit native, who met Gates at Harvard, was doubly unfortunate that his ascent to the CEO office in January 2000 came just weeks before the bursting of the dot.com stock bubble, from which Microsoft's share price never recovered.

Although Ballmer did treble revenues at Microsoft during his time in charge, and managed to steer the company away from obscurity or crisis that befell other tech firms, he consistently attracted criticism for management miscues.

Under his watch, Apple and Google Inc roared past Microsoft in the emerging arena of Internet search, smartphones and tablets, which made the software company look stodgy and behind-the-times.

"He tried hard. Nobody can doubt his commitment to Microsoft," said Sid Parakh, an analyst at fund firm McAdams Wright Ragen. "The missing element was execution."

His attempt to catch up was a failed $47 billion bid for fading internet giant Yahoo Inc in 2008, a company which is now worth much less. Yahoo's inexplicable decision to reject the deal probably saved Ballmer's job.

Only last month, Ballmer launched a massive reorganization of Microsoft in an attempt to transform it into a 'devices and services' company, but it left most shareholders unimpressed.

Ballmer never lacked passion and energy for the company he helped to build, but he was always more of a salesman and cheerleader than a technology visionary.

"That is the most expensive phone in the world and it doesn't appeal to business customers," Ballmer laughed in a TV interview after the launch of Apple's iPhone in 2007. Five years later, iPhone sales alone were greater than Microsoft's overall revenue.

A clip of a semi-hysterical Ballmer screeching and dancing around the stage to rally Microsoft employees has been viewed nearly five million times on YouTube, gaining him the nickname 'Monkey Boy'. And his hypnotic and slightly unhinged mantra of 'developers, developers, developers', captured at another company conference, made him the butt of jokes for years after.

GATES WOOS BALLMER

A natural math whiz from Michigan, Ballmer met Gates at Harvard before Gates dropped out to co-found Microsoft in 1975. Five years later, Gates persuaded Ballmer to drop out of Stanford Business School to become Microsoft's first commercial manager, and only the company's 30th employee, giving him an 8 percent stake.

As Microsoft's first salesman, rather than a techie, he was viewed with some distrust.

"The first time we met face-to-face, I thought this guy looks like an operative for the NKVD (Soviet police)," recalled Microsoft co-founder Paul Allen in his memoir. "He had piercing blue eyes and a genuine toughness. Though as I got to know him better, I found a gentler side as well."

Allen said that the young Ballmer - a zealous basketball player and jogger - would wake him up at 7 a.m. doing push-ups in their shared hotel room on early business trips.

As Microsoft engineered the personal computer revolution through the 80s and 90s, the sales side of the organization grew in size and importance, led by the charismatic Ballmer - unmistakable on campus and at industry meetings with his shiny bald dome, strapping physique and booming voice.

In Microsoft-speak, employees were either a 'Bill guy', meaning a technology person, or a 'Steve guy', meaning a sales and marketing person.

When Ballmer, known internally as SteveB, took over from Gates as Microsoft CEO in 2000, some saw it as the triumph of sales over technology and innovation, which ultimately ruined the company.

"I have my own theory about why decline happens at companies like IBM or Microsoft," former Apple CEO Jobs is quoted as saying in his biography. "The quality of the product becomes less important. The company starts valuing the great salesmen."

TRACK RECORD BETTER

Jobs was partially correct. Under Ballmer's watch, Microsoft missed the shift to smartphones and tablets, and its share price has been static for the last decade. All the while, Ballmer tended to push out any executives who threatened his power.

"His (Ballmer's) continued presence is the biggest overhang on Microsoft's stock," prominent hedge fund investor David Einhorn said in 2011, as he campaigned publicly for Ballmer's ouster. Microsoft shares rose 7 percent on the news of Ballmer's retirement on Friday.

But Ballmer's record as a CEO was not as bad as many think. People close to him say his loud public persona belied a quietly shrewd business mind, and he managed Microsoft as well as anyone could as the company reached a mature stage.

He boosted Microsoft's revenues and more than doubled its already large profits. He outlasted erstwhile rivals such as Novell and Sun Microsystems, which have now all-but disappeared, and avoided the boardroom fiascos of Hewlett-Packard or dramatic decline of AOL.

"I don't see anybody else on the management team at Microsoft that I think would be much better than Ballmer," said Eric Jackson at hedge fund Ironfire Capital.

(Reporting by Bill Rigby; Editing by Edward Tobin and Bernard Orr)

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