First Posted: 10/8/2013
Back when Microsoft was the biggest name in technology, CEO Bill Gates leveled an attack on the auto industry: If carmakers were as innovative as computer companies, he said, a car would cost just $27.
That was 16 years ago.
Today, PC sales are falling as consumers show a preference for mobile devices, and Microsoft is struggling. Meanwhile, U.S. car companies are resurgent. General Motors, the world’s No. 2 carmaker, is gaining ground on No. 1 Toyota. And Ford, after 16 quarters in the black, expects to see $8 billion-plus in profit this year.
It’s a testament to the changing times that Microsoft is reportedly considering Ford Motor Co. chief Alan Mulally as CEO Steve Ballmer’s replacement when he steps down in less than a year.
Mulally says he’s made no changes to his plan to stay at Ford through the end of 2014. But he hasn’t denied rumors that Microsoft Corp. is courting him. Ford’s board of directors will gather in Dearborn, Mich., starting Wednesday. One of the items on the agenda will be a discussion of Mulally’s future at the company.
Here are the pros and cons of Mulally taking the wheel at Microsoft, a company whose stock price has been stuck in neutral for more than a decade:
HE HAS FRESH EYES: As an outsider, Mulally could correct problems that an insider might not even see, like Microsoft’s culture of interdivisional competitiveness or the fragmentation of its businesses. While its lucrative enterprise-computing services rival its bread-and-butter Windows business in revenue, Microsoft is losing billions chasing Google with its own Bing search engine. The company has also booked hundreds of millions in losses on its Surface tablet computer.
In contrast, Mulally helped Ford become the only Detroit automaker to survive the recession without a government bailout. He forced engineers to start building global cars like the Focus instead of wasting billions making individual cars for each region.
HE’S BEEN HERE BEFORE: When Ford hired Mulally in 2006, its flagship money-makers —trucks and SUVs — were suffering as consumers sought more fuel-efficient cars. Similarly, Microsoft’s still-dominant Windows operating system faces serious headwinds as consumers switch to tablets.
HE KNOWS MICROSOFT AND BALLMER: For a car executive, Mulally has unusually close ties to Microsoft. Microsoft’s Windows Embedded software powers the Ford Sync dashboard entertainment system launched during Mulally’s tenure.
Technology analyst Rob Enderle says Mulally acted on trends that Microsoft was slow to notice. “Of the car companies, they got mobile (communications) first.”
HE’S A SOFTWARE SOPHOMORE: As a trained aeronautical engineer with an MIT management degree, Mulally lacks the programming chops of the troops he would be leading.
HE’S OLD SCHOOL: At 68, Mulally would strike a grandfatherly presence among Microsoft employees. The average age of Microsoft workers is 34, according to compensation research firm PayScale Inc.
HE ALREADY HAS A LEGACY: Mulally has cemented his reputation and could retire from Ford into a lucrative world of speaking engagements and board positions.
“Unless Ford completely collapses, Alan’s tenure at Ford is going to be regarded as one of the greatest CEO stints in corporate history,” says Morningstar analyst David Whiston. “If he goes to Microsoft in a totally new industry and it doesn’t work out, that could tarnish his legacy a little bit.”