Ballmer's exit from Microsoft's board expected, boosts Nadella's standing, analysts say

The former CEO cited a busy schedule, particularly involving his LA Clippers basketball team, for the board resignation

It's not surprising that former Microsoft CEO Steve Ballmer abruptly gave up his board seat some six months after leaving the top job, and the move should help cement the regime and strategy of his successor Satya Nadella, according to several industry observers.

"I think it's a classy move by Ballmer," said analyst Frank Scavo, managing partner of IT consulting firm Strativa. "It shows Ballmer has confidence in Nadella, allowing Nadella to move forward without worrying about what Ballmer thinks."

In a letter to Nadella released Tuesday, Ballmer cited a number of reasons for leaving the board, including his recent US$2 billion purchase of the Los Angeles Clippers basketball team. "I have become very busy" since leaving Microsoft, Ballmer said.

He has indeed thrown himself wholeheartedly into running the Clippers, which were marred by a public scandal after former team owner Donald Sterling was banned from the league for making racist remarks. On Monday, Ballmer held a rally with fans of the team, during which he displayed his trademark vocal bombast and kinetic enthusiasm.

In his letter to Nadella, Ballmer also expressed confidence in Microsoft's "approach of mobile-first, cloud-first, and in our primary innovation emphasis on platforms and productivity." He also said he plans to maintain his financial position in Microsoft, saying he is the single largest shareholder apart from index funds.

His decision to leave the board came "sooner than expected, but was not unexpected," said Forrester Research analyst David Johnson. "Microsoft under Nadella is a very different company than it was under Ballmer. I don't know how much more Ballmer could really help."

Under Ballmer, Microsoft sought to harvest the "successes of the past" through sales and marketing, while Nadella is much more focused on new innovations, evidenced by efforts such as the new Azure Machine Learning service, Johnson said. "In a way, that's a return to Microsoft's philosophical roots."

Ballmer may have also been smarting from decisions Nadella has made, such as the 14 percent staff reduction last month that focused largely on workers who came aboard through Microsoft's $7.2 billion acquisition of Nokia's mobile phone business. That deal was driven vigorously by Ballmer, who reportedly struggled to gain buy-in on it from Microsoft's board.

Still, it's unlikely that Ballmer "was putting up that much resistance at this point," Johnson said. "I think he was trying to be helpful and give Nadella information. I doubt that Ballmer was the type of person to be an obstructionist."

Microsoft board meetings may not have been especially fun for Ballmer anyway, according to Rob Enderle, principal analyst at Enderle Group. "Once you step down as CEO like Steve did, being on the board and being reminded that you had to step down is like coming to a party after you've been asked to leave it."

Some large institutional investors may be glad to see Ballmer leave the party for good, according to Wes Miller, research analyst with Directions on Microsoft. These players "would like to move beyond the era of Steve Ballmer," he said. "They'll view this as a checkpoint for the new Microsoft."

Some level of orchestration undoubtedly went on behind the scenes given that Tuesday's announcement came just one day after Ballmer's raucous Clippers rally, which seemingly marked a new chapter in his career as head of the sports organization.

But while Ballmer may have left Microsoft's board, he's not going away completely and he made sure the company knows it, Miller said. The fact that Ballmer highlighted his major financial position in Microsoft is important for a couple of reasons. For one thing, "it shows he still believes in the company and wants it to grow," he said. But Ballmer was also sending the message that he still can influence the company, and wants to make sure it goes in the right direction, according to Miller.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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Chris Kanaracus

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