Chief executive officer, Microsoft Corporation
Nationality: American.
Born: March 24, 1956, in Detroit, Michigan.
Education: Harvard University, BS, 1977.
Family: Son of Frederic Henry Ballmer (manager, Ford Motor Company) and Beatrice Dworkin; married Connie Snyder (public relations executive), 1990; children: three.
Career: Proctor & Gamble, 1977–1979, brand assistant; Microsoft Corporation, 1980–1983, business manager; 1983–1984, vice president of marketing; 1984–1989, vice president of systems software; 1989–1992, senior vice president of systems software; 1992–1998, senior vice president of sales and support; 1998–2001, president; 2000–, chief executive officer.
Address: Microsoft Corporation, 1 Microsoft Way, Redmond, Washington 98052-6399; http://www.microsoft.com.
Steven A. Ballmer joined a tiny startup called Microsoft in 1980 at the invitation of his college friend, founder Bill Gates. In a variety of roles that placed him second only to Gates, Ballmer played a crucial role in Microsoft's growth into the most powerful force in the computer industry. He became Microsoft's chief executive officer in 2001. Ballmer's exuberant, aggressive, and highly competitive personality helped shape the company's strategy and was critical to its success. Many consider him the author of Microsoft's more aggressive and questionable tactics, aimed not simply at strengthening Microsoft but at weakening the competition. Unquestionably, those tactics achieved results—including both dominance of the software market and numerous legal challenges over the years. The most prominent legal challenge was the 1998 antitrust case brought by U.S. Justice Department, which accused Microsoft of abusing its power as an illegal monopoly. Additionally, as of 2004 it faced antitrust charges in the European Union.
Competitive from the Start
Ballmer and his sister, Shelly, grew up in a wealthy suburb of Detroit, where their father, a Swiss immigrant, had a midlevel management job at Ford Motor Company. At Detroit Country Day School, which he attended on a scholarship, Ballmer was perceived as an overachiever. A highly intelligent and enthusiastic student with a talent for math, he earned a 4.0 grade point average, played on the football and track teams, managed the basketball team, and participated in various school clubs. He repeated this experience at Harvard University, where he studied applied mathematics, managed the football team, and worked on the Harvard Crimson newspaper and the university literary magazine. He also played poker with a classmate, Bill Gates, who dropped out in their junior year to start a software company.
After earning a BS degree at Harvard, Ballmer spent a year and a half at Procter & Gamble, marketing brownie and muffin mixes. He entered Stanford University's Graduate School of Business in 1979, and after his first year, visited his college friend Gates in Seattle, hoping for a summer job at Gates's company, Microsoft. Instead, Gates persuaded him to take a full-time job managing the company's operations. Ballmer's earliest role was as head recruiter for the fast-growing firm; although he was not a programmer himself, Ballmer could recognize technical talent. Not long after Ballmer was hired, Microsoft signed a contract to create an operating system for IBM's new line of what eventually would be called personal computers. Under a tight deadline, Microsoft licensed a program called QDOS from a small Seattle company, rewrote it, and renamed it MS-DOS.
The roles of the major players were set: Bill Gates and his partner and cofounder, Paul Allen, oversaw the technical side, while Ballmer handled the business end. In 1981 Ballmer reorganized the partnership into a corporate structure in which Gates held 53 percent of the equity, Allen 35 percent, and Ballmer 8 percent. He also implemented a stock option plan for Microsoft employees, which kept programmers from leaving until their options vested and would ultimately result in the creation of numerous "Microsoft Millionaires." Faced with health problems, Allen left the company in 1983, leaving the team of Gates and Ballmer in charge.
Making Microsoft
During the 1980s Ballmer headed the development of operating systems, the core of the company's business. He was quick to realize that the graphical user interface (GUI) introduced by Apple's MacIntosh in 1984 was a major step toward making personal computers easier to use and more popular. In addition, it was a potential threat to Microsoft's goal of making MS-DOS the industry standard. To stave off the competition and ensure that developers would continue creating applications for the MS-DOS platform, Microsoft announced Windows, a GUI for MS-DOS, in late 1983. Windows was heavily promoted during the two years between its announcement and the product's actual release in October 1985, gaining a reputation as vaporware (an industry term for products announced far in advance of any release, which may or may not actually take place). The Windows interface used the visual metaphor of a desktop and file folders, which was originally created at Xerox's Palo Alto Research Center in the early 1970s and first brought to market by Apple. Although some aspects of the desktop interface were licensed to Microsoft for use in Windows 1.0, Apple sued Microsoft in 1988, claiming that the "look and feel" of Windows 2.0 infringed its copyright. Apple lost this suit in 1992.
Microsoft became a publicly held company in 1986, making Ballmer a multimillionaire before he turned 30. But Gates and Ballmer were not solely motivated by wealth; their ambition was for Microsoft to control every aspect of the software market. They were particularly successful with the Microsoft Office suite of applications, comprising word-processing, spreadsheet, and presentation software (Word, Excel, and PowerPoint, respectively). By 2004 Microsoft Office had achieved a 90 percent market share. Windows 3.0, released in 1990, had finally resolved many of the technical problems of earlier versions. In 1993 the company introduced Windows NT, an operating system for mainframes and large networks, to compete with UNIX. Ballmer was ahead of Gates in recognizing the importance of the Internet in the early 1990s, and in 1995 the company launched the Microsoft Network and its own Web browser, Internet Explorer, to compete with Netscape, one of the earliest browser programs. The launch of Windows 95, another long-delayed upgrade to the operating system, became a media event.
Legal Troubles
But increasing criticism mirrored the company's growth. Many industry observers expressed the view that Microsoft dominated the market because of its success at crowding out smaller competitors by any means available, not because of the quality of its products. Microsoft's aggressive business practices resulted in a number of legal challenges in the 1990s. One lawsuit came from Sun Microsystems, which had created the platform-independent Java Web programming language. Microsoft had licensed Java from Sun in 1995, and in 1997 Sun sued, claiming that Microsoft had created a version of Java that was incompatible with non-Windows platforms. The suit was settled in 2001.
The most serious charges came in 1998, when the U.S. Justice Department and 18 states joined to prosecute Microsoft on antitrust charges. The case focused largely on the "bundling" of Internet Explorer with the Windows operating system, making it difficult to use competing Web browsers such as Netscape, and on other illegal anticompetitive actions. The government accused Microsoft of being a monopoly and of using that monopoly power to illegally expand and protect its Windows operating system. In 1999 a district court judge ruled that Microsoft was a monopoly and in 2000 found the company had violated the Sherman Antitrust Act. In June 2000 the judge ordered that Microsoft be split into two companies. Microsoft, of course, appealed, and while the appeals court upheld the monopoly and antitrust rulings, it threw out the order to split up Microsoft. A tentative settlement that would keep Microsoft intact but restrict its activities was issued in November 2001. In May 2003 Microsoft settled with AOL Time Warner, owner of the competing browser Netscape, in a deal that included a $750 million payment to AOL Time Warner and plans for the two companies to work together. However, litigation continued: in 2004 the European Union rejected a settlement offer in its long-running antitrust case against Microsoft that focused on the bundling of Media Player, its audio and video software, into Windows. Ballmer, always a passionate, outspoken advocate for the company and its products, vigorously defended Microsoft in the media, declaring that the company's only goal was to provide the best possible products to its customers.
A Key Player Plans for the Future
From 1980 to 1998 Ballmer headed several Microsoft divisions, including operations, operating systems development, and sales and support. In July 1998 he was promoted to president, and in January 2000 he was named chief executive officer, a position Gates had held since the company began. The concerns he faced as the new CEO included Microsoft's tarnished reputation as a fair and ethical competitor; escalating attacks by hackers pinpointing vulnerabilities in Explorer, Windows, and other products; and the growing popularity of open-source operating systems like Linux. Ballmer also found a need for internal changes at Microsoft. Under Gates, who was more of a technical visionary than a business manager, the company had been highly centralized. As CEO, Ballmer divided the company into seven operating divisions, worked to create systematic procedures for everything from product development to strategic planning to employee and management evaluation, and revamped the compensation plan by eliminating stock options in favor of outright grants of restricted stock.
By the early 2000s Microsoft's strategy had shifted away from the PC-centered approach to focus on Microsoft.net, an architecture based on XML technology, which would enable the integration of data and applications. Ballmer viewed this focus on interoperability as a major shift in the information technology industry, comparable to the introduction of the graphical user interface in the 1980s. As ever, he energetically promoted Microsoft's role as the dominant player, setting the standards and selling the software behind the next big thing in computing.
Since 1980 Microsoft's growth has been driven by Ballmer's fierce loyalty and managerial talent. Although he was described as affable and easygoing, he was best known for a loud, boisterous style, and a high-energy personality that dominated most interactions. Such exuberance had its price: in 1991 he damaged his vocal cords at a meeting in Japan by screaming "Windows!" But the defining characteristic of Steve Ballmer was his passionate belief in Microsoft Corporation.
Sources for Further Information
Maxwell, Frederic Alan, Bad Boy Ballmer, the Man Who Rules Microsoft, New York: HarperCollins, 2002.
Schlender, Brent, "Ballmer Unbound: How Do You Impose Order on a Giant, Runaway Mensa Meeting? Just Watch Microsoft's CEO," Fortune, January 26, 2004, p. 116.
Shepard, Stephen B., "Steve Ballmer on Microsoft's Future," BusinessWeek, December 1, 2003.
—Sandra M. Larkin
