Microsoft Corp said on Friday that Chief Executive Officer Steve Ballmer would retire within the next 12 months, once it has selected a successor, sending its shares up in early trading.
The following is reaction from analysts to the move.
Trip Chowdhry, analyst at Global Equities Research
"To be successful in a technology company, first and foremost, you need to earn the respect of software developers and engineers. And Ballmer failed to do that in the past 15 years.
"Ballmer should have left Microsoft at least 8 years back.
"Never buy the argument 'we have 100,000 people in the company there is a huge depth of management talent.'"
"There more 100,000 in Dell, HP, Apple, and has there been any executive close to the likes of Gates or Jobs?
"A good CEO would be Vic Gundotra at Google. He left Microsoft for Google. He has the most respect of the engineers and developers both at Microsoft and Google. Vic is probably the only executive, who can bring the much-needed fresh perspective to Microsoft, while still having a deep understanding of Microsoft Culture.
"He is a perfect blend of being a Microsoft Insider and bringing a fresh perspective from Google."
Zeus Kerravala, analyst at ZK research
"A change is definitely needed. Since he took over in 2000, it is fair to say he missed a number of transitions: mobile, tablets, cloud. And Microsoft was very slow with virtualization, it has no place in the software defined data center
"Microsoft continues to live off traditional PC computing. Ballmer's strength is traditional PC computing. He was a great guy for his era but times have changed and a new leadership is needed. It's hard to say his tenure has been a success.
"I'd like to see them get a more forward thinking person who grasps hold of the current trends, thinks mobile first and cloud first. It's hard to be a company that deals in corporate and consumer technology. Rarely has that ever worked.
"Clearly the way it's structured is not been working."
Colin Gillis, BCG partners
"Given that's what happening with the company, change is positive. The stock is up but the pop is fading. If you're buying this for the CEO change, you could have a long hard 12 months in front of you. They are going to do a massive reorg. You tend to do these things if things are not getting better."
"It's the end of the fiscal year for them. You had two of the worst declines in the PC in the PC marketplace There are significant cracks in the entire ecosystem.
"There's changes happening at every level, happening at every level underneath him. It's very reasonable for the board and CEO to sit down and have a discussion about what we are doing here.
"I think the numbers sway the board. The PC market peaked in the absolute sense in September 2011. The No. 1 PC maker sold more smartphones than PCs last quarter - Lenovo."
Sid Prakash, Mcadams Wright Ragen analyst
"This was a surprise, especially considering how close it is to the recently announced strategic overhaul towards devices and services."
Kim Caughey Forrest, senior analyst, Fort Pitt Capital Group
"I'm surprised. My first gut reaction is that it came out of the activist investor effort Value Act. The timing seems very odd.
Regarding the stock rise on the news: "That's a real buzz fill for him. It's not ego boost.
"As much as people would like to blame Steve Ballmer for the fortunes of the company, I think it's the silos. I thought they had great products, but they should have worked better together and leveraged common foundations. Maybe that is his problem that they did it that way. But Ray Ozzie had been brought in to span across the products and that kind of flopped.
Regarding succession: "Looking across the next level of executives, there's a lot of candidates. I would be super surprised if they picked an outside talent."
Andrew Bartels, Forrester research analyst on Microsoft
"There are two aspects to this, the stock price and how the company has actually done. The stock price has been more or less flat since Ballmer's tenure. The board's going to look at that and say we need someone to change that.
"Where Ballmer has been correctly faulted for is the performance of Windows. Like Dell, HP and other PC makers they with Microsoft have been caught flatfooted by the shift to tablets.
"One can argue that Ballmer as CEO was in part responsible for that failure. Then again it is a broad, systematic one. Though Microsoft has been doing better than others (in dealing with the PC decline), where Ballmer does not get sufficient credit for is the other divisions. Servers, xBox, Bing products in general have shown some success. The problem for Microsoft is its revenue primarily comes from sales to business. It should be viewed more like IBM, but is viewed as consumer like Apple.
"According to our estimates about 2/3 of revenue come from sales to business."
Regarding succession: "You obviously want someone who knows the business well and understands both divisions of business and consumer. You also want someone who would be bold enough to split the company, split off windows, run that as one business and keep the other part as a separate business. That's one way a bold CEO could come in and say we are being penalized by being compared to Apple. That's going to be a tough sale especially with Bill Gates as overhead."
© Thomson Reuters 2013