This was because in the process of fixing the pricing program complexities, a lot of clients discovered they were underpaying and suddenly were faced with huge surprise bills to Microsoft. I believe that paying these, and dealing with the personal problems associated with massive budget overruns, did a lot to launch the Open Source and Linux movements while damaging Microsofts image seriously.
I can recall chatting with a Senior VP at IBM while I was there about why he didnt fix the obvious problems we both were facing. His response was that fixing them was riskier than leaving them in place because the complexity of the organization would likely bring to surface an even bigger unknown problem, and that problem could be a career killer. In short he, and Ive seen this with many top executives, saw more personal risk in fixing a problem then leaving it alone.
Steve Ballmer has an additional problem. Had he been brought in to turn the company around like Carol Bartz has at Yahoo he would have a year or two where he could make massive changes and even take losses to reform Microsoft into something he could better manage.
This is what Steve Jobs did at Apple when he took the firm over and still, turning the company around was a very close thing. In the end Apple was redesigned specifically around Steve Jobs strengths. This goes a long way toward both the pain the firm experienced right after Jobs came back and its success today.
Microsoft continues to generate a massive amount of cash and any major change would likely adversely impact this while the firm was being restructured. As a sustaining manager Steve is measured quarter to quarter and isnt given the leeway a turnaround manager is given.
In short there are only a relatively small number of changes he can make, leaving the company largely structured around Bill Gates old skill set and not Ballmers.
Companies need to be massively restructured from time to time to face a changing world. But a sustaining manager who isnt a founder is not given the latitude to make those kinds of changes which is why so many tend to fail and why turnaround managers are in such demand.
Finally, another advantage a turnaround manager has is a lack of attachments to the existing staff. Someone that comes up from inside has as friends the very folks he, or she, must push out of the firm. They know their spouses, their kids; they may have had dinner at their homes and attended family functions.
Firing or demoting people like this is incredibly hard, I know because Ive had to do it from time to time, and this too goes to why most sustaining managers run into trouble if they like their people. And they typically dont get the job if they dont. They often cant bring themselves to make the critical choices they need to make. These are friends and they want them to be successful.
Turnaround managers have little of this loyalty. They look at folks very objectively (some would argue too objectively at times) and can quickly cut those that need to be replaced by better assets. They dont have the deep loyalty and can make the hard decisions.
But realize this loyalty works both ways and often a turnaround manager loses critical company assets during the process and the firm doesnt recover. Suns turn around wasnt successful, for instance.
Microsoft wouldnt have been as successful as it is without Steve Ballmer, who personally drove much of its corporate success. Most thought Microsoft could never be a corporate player and without Steve it is my belief it never would have been. Something that Google may want to consider given Netscapes failure.
Following an iconic founder is nearly impossible to do successfully. Novell after Ray Norda, IBM after Thomas Watson Jr., HP after Hewlett and Packard, Intel after Grove, all showcase that being the CEO after an iconic founder has left is nearly impossible to do successfully.
If you look at Microsofts results compared to other firms like Sun, Novell, Apple after Steve Jobs left, and a variety of Japanese companies (Sony, for instance) youll likely find that Microsoft is actually doing better than most. The bar isnt what the founder did; its what anyone can do after an iconic founder has left. Could Steve do better? Sure, but now name someone who has in a similar situation and I think youll find the list is incredibly short.
In the end, I doubt they can find anyone that could do the job better than Steve Ballmer does it and that, were he to step down, wed likely find out really quickly how fast things could get much worse. Such is the nature of a company like Microsoft and why Id never envy someone getting the top job after an iconic CEO has left.