Sep 29, 2009 (09:09 AM EDT)
Global CIO: Ballmer Blasts IBM For All The Wrong Reasons

Read the Original Article at InformationWeek

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If Steve Ballmer really believes his comments that IBM has short-changed its shareholders by selling off low-margin hardware businesses, and that IBM's product line is more "narrow" now than ever before, then Ballmer's strategy as laid out in his "New Efficiency" letter this morning makes absolutely no sense.

Now, I certainly understand that competitors compete, so I'm not shocked that Ballmer's clearly trying to try to cast IBM as an old fuddy-duddy that keeps its cash stuffed under its mattress and its punchcards in its shirt-pocket. But at some point, doesn't the approach of "my competitor's a bozo" routine get more than a little tired? Does Steve Ballmer really have such a short list of great things to say about Microsoft that IBM-bashing becomes a strategic talking-point?

Such an approach is dubious at any time, but for Ballmer and Microsoft it is particularly bad policy right here right now as only a few hours ago Ballmer sent out a letter to customers and developers called "The New Efficiency" that describes how "a new generation" of IT products and services and capabilities can help companies "do more with less."

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It's a spirited message of IT's potential to move out of the back office and help companies move faster, make better decisions, and focus on higher-value work, all with less cost and complexity. And Ballmer's message was intended to provide the strategiec context around the launch of Windows 7 plus other key Microsoft products that my colleague Paul McDougall covers nicely in the news article that's linked above.

But how does Ballmer reconcile the strategy that he carefully lays out in his "New Efficiency" piece with his broadside at IBM, which itself has been going down that same strategic path for the past several years? Ballmer can't possibly have missed IBM's carefully plotted move out of several hardware categories—low-margin for IBM and low-value for its customers—and its intensified focus on software, services, and financing. So why, then, did he say these seemingly silly things about IBM as reported yesterday in a New York Times blog post? Take a look:

During an interview last week, Mr. Ballmer, Microsoft's chief executive, was critical of I.B.M.'s decisions over the last decade to dispose of its networking equipment, hard disk and PC businesses. Technology companies must pursue constant market expansion and diversity to stay alive and relevant, according to Mr. Ballmer.

"I.B.M. is the company that is notable for going the other direction," he said. "I.B.M.'s footprint is more narrow today than it was when I started. I am not sure that has been to the long-term benefit of their shareholders."

Is this just about the head-to-head competition for database sales Microsoft SQL Server and IBM DB2? I don't think so.

Or, does Ballmer really think shareholders are eager to have their companies stay locked into low-margin businesses like commodity PCs and commodity servers, particularly as the already-challenged PC is getting squeezed brutally by smartphones and netbooks? No, I don't think so—no one has a better view into the dynamics of the PC market than Steve Ballmer.

Maybe Ballmer is prepping Microsoft for a huge move into business analytics, which is arguably the centerpiece of IBM's growth strategy for the next decade? That's possible, but the cupboard of powerful BI companies available for purchase is pretty bare right now, particularly since IBM has acquired about two dozen such companies in the past several years. That's not exactly the sign of a narrow footprint for IBM, and it's not exactly a tantalizing prospect for Microsoft—so no, that's not it, either.

An acquisition, maybe? Here's one possibility: