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What if car boss Mulally took over at Microsoft?
Tuesday - 10/8/2013, 4:50pm EDT
AP Business Writers
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 sold or shuttered brands such as Volvo, Jaguar and Mercury, and plowed cash into cars with edgier designs -- such as the Fusion sedan -- even in the midst of the downturn.
He told feuding executives to embrace the new plan --or leave. Most stayed and learned to appreciate Mulally's weekly meetings and focus on cooperation and transparency.
James Schrager, a professor at the University of Chicago's Booth School of Business, says Mulally was a "genius" at "working person-to-person on the management side." The CEO helped Ford figure out "who we really are as a company, where we're going to spend all our time and money and what we really have to achieve to be special to our customers."
HE'S BEEN HERE BEFORE: When Ford hired Mulally in 2006, the company was drifting. Its flagship money-makers --trucks and SUVs -- were suffering as consumers sought more fuel-efficient cars to combat rising gas prices. Similarly, Microsoft's still-dominant Windows operating system faces serious headwinds as consumers switch to tablets, a trend that threatens to scuttle its core business providing operating system software for PCs.
"Once something works, it's hard to change your behavior," says analyst Roger Kay, president of Endpoint Technologies Associates Inc. "Microsoft is in the same position. It's running like a billing machine. At some point, they're going to have to add value if they want to generate some more money."
Mulally is already being compared to Lou Gerstner, the former RJR Nabisco CEO who took over as IBM's chief executive in 1993 and -- despite his lack of industry experience-- helped transform IBM from a money-losing personal computer maker to a profitable technology services company.
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."
Mulally spent most of his career at Boeing in Seattle, not far from Microsoft's headquarters in Redmond, Wash.
Ballmer, 57, has said his father worked for Ford for more than 30 years. And Mulally and Ballmer are friends. Ballmer even spoke with Mulally over coffee about a wide-ranging reorganization that Microsoft announced in July.
As a Top 5 holder of Microsoft's shares, Ballmer's support is essential, and Mulally would clearly have it.
In a 2009 contribution to Time magazine's Time 100 issue, Ballmer praised Mulally effusively, saying his support for the auto chief was "both emotional and rational."