Bill Gates, Steve Ballmer and the Management of Microsoft

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Case Details:

Case Code : BSTA114
Case Length : 11 Pages
Period : 1990 - 2004
Organization : Microsoft Corporation
Pub Date : 2005
Teaching Note :Not Available
Countries : USA
Industry : Software

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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In 2004, Microsoft the world's largest computer software company was at the crossroads. Growth had slowed down while the competitive environment was changing. Longhorn, Microsoft's new operating system had been delayed.

The Linux threat was intensifying. A new Microsoft seemed to be evolving under the joint leadership of Bill Gates (Gates) and Steve Ballmer (Ballmer).

Could Microsoft maintain its awesome competitive position in the global software industry? That was the issue which analysts debated as 2004 drew to a close.

Background Note

In the early 1970s, the computer industry focused on hardware. Software was considered less important. However, Gates and Paul Allen had their own vision of what software could become. They wanted to develop software that would make personal computers (PCs) an all-purpose machine. This was an ambitious goal because PC software did not exist at the time. Indeed, there were no PCs.

Effectively, two young men were trying to build a software business when the software industry itself did not exist. But the bet paid off. By 1990, Microsoft had become the undisputed leader of the software revolution. Software dictated the pace of innovation in the industry. Software was also hugely profitable unlike hardware where most manufacturers struggled to earn thin margins in the face of intense competition...

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