Steve Ballmer Reflects on Phone Moves, Relationship with Bill Gates
By Matt Day. Updated November 07, 2016.
If he could do it over again, Steve Ballmer says he would have pushed Microsoft into the smartphone hardware business earlier.
The former chief executive [pictured above] said in an interview with Bloomberg television that his decision to get deep into the hardware business, with Surface tablets and later with the purchase of Nokia's handset business, caused a split with the company's board of directors and strained his relationship with co-founder Bill Gates.
"Since I've gone, we really have drifted a little bit," Ballmer said of Gates. "He and I had kind of always had what I would call a brotherly relationship, in the good parts and the bad parts, and I just think toward the end that was a bit more difficult" as the company changed course toward building its smartphones and tablets.
"There was a fundamental disagreement about how important it was to be in the hardware business," Ballmer said.
Ballmer was an advocate of Microsoft's move into hardware to challenge Apple in the smartphone and tablet markets, first with the Surface tablet line introduced in 2012, and a year later with the $9.5 billion purchase of Nokia's phone hardware unit. Both caused tension with the board, he said.
"Things came to a climax around what to do with the phone business," he said.
By the time the Nokia deal closed in April 2014, Ballmer had resigned as chief executive and Satya Nadella was running the company.
Nadella would pull the plug on the money-losing phone business, writing off virtually the entire value of the deal and laying off the vast majority of the 25,000 Nokia employees Microsoft took on.
"If executed in a certain way, I think it made a lot of sense." Ballmer said of the Nokia deal. "The company chose to go another direction."
Ballmer said that in retrospect he would have moved into the hardware business faster. Microsoft's comfort zone, the personal computer market, proved a bad road map for mobile phones.
And the time and energy the company poured in to Windows Vista, a poorly received operating system plagued by development challenges, left Microsoft less able to counter its rivals' moves in mobile devices during the middle of the past decade, Ballmer said.
"When you have a lot of your best engineers sort of, in a sense, being nonproductive for a while, it really takes a toll," he said.