One Microsoft CEO scenario is looking likely

In recent months, I have been outlining the idea that Microsoft’s board of directors might be too tied to the company’s current business strategy to accept a new CEO who might advocate any serious changes, such as selling off the company’s consumer products. For example, in Microsoft buys Nokia Devices and Services, Elop is EVP of Devices, I wrote

The Microsoft argument is that the company will be much strengthened working together with Nokia. If so, then why not a year ago when he walked away from a rumored deal? Because at that time Ballmer thought he could build his own devices and sell a lot of them. Instead, he wrote off $900 million in Surface tablets at the end of the last quarter (see Microsoft sees worst stock drop since 2000: Welcome to the post-PC era), and the board (and especially Bill Gates) decided it was time for someone new at the helm of Microsoft. But it seems like the board still believes in the services and devices plan, which is to invest hard and win big in the devices marketplace.

I think this is a huge pipe dream. Nokia has leaked new Microsoft RT-based tablet plans based on Nokia Lumia phone designs, and my hunch is that they believe this is a better table that Surface, just like Lumia is a better phone that anything Microsoft has built. The rumors are that this tablet would be launched in late September.

All along, as the Microsoft disaster has been careening down the hill, I have stated that the future will be in enterprise software: that Microsoft has to find a Sam Palmisano type to turn the company around and drop all the money-losing lines of business, like Bing, phones and tablets. But I also have continued to bet that the company wouldn’t do so until a/ Ballmer was gone, and b/ billions more were squandered. Well, they are an additional $7.17 billion down, and counting.

The big question is whether Ballmer is now going to hand the reins to Elop, and if so, will Elop ride the Microsoft trail as Ballmer has laid it out, right over a cliff? It might be that Ballmer and the board (including Bill Gates) are prepared to spend more time and money in capturing a significant share in the handset and tablet world, even though iOS and Android seem to have closed that opportunity. It might be time to start handicapping who will be CEO at Microsoft once Elop takes his shot, and fails with the Ballmer plan, just like Ballmer did.

In that piece, and others, I have been making a two CEO argument: someone is going to be appointed the new CEO, and more-or-less required to continue the current business plan, which is based on the Ballmer theory of fighting everywhere: the ‘devices and services’ plan he hatched last year and reorganized around. However, that CEO will have to be followed by another CEO, the one that will start making the real changes Microsoft needs to make to become a competitor in its growth area: enterprise software. The board is just not willing to accept the change that the ‘second coming’ implies.

In a piece at AllThingsD yesterday, Kara Swisher suggested that a two CEO scenario is becoming the plan at Microsoft, with Ford CEO Mulally being envisioned as a ‘caretaker’ CEO who’d continue the current plan for the short term, and then transitioning to one of the several internal candidates once they’ve one of them has proven himself. Thos internal candidates would include COO Kevin Turner, Stephen Elop (the former CEO of Nokia and soon to be head of devices at Microsoft), Tony Bates (former Skype CEO), and the new frontrunner in waiting, Satya Nadella. Nadella, notably is the head of enterprise software at Microsoft. And enterprise is the ultimate destination for Microsoft.

So, it appears that Mulally might be the person selected to lose those billions over the next few years and to be compensated enormously for doing so. And then one of the insiders will be the one allowed — at long last — to spin off all the non-viable and non-essential bits of Microsoft — Bing, XBox, Windows, phones and tablets — and turn into a leader in enterprise software.

It may be a long — and costly — few years. ahead.