It’s all about Style
Microsoft Corp. (MSFT) needs to seek out more artistic thinking to compete with Apple Inc. (AAPL), rather than relying on the analytical style of Bill Gates and Steve Ballmer, said Rick Sherlund, a technology analyst at Nomura Holdings Inc.
“It’s a cultural issue: Microsoft has always been more on the analytical side — sort of left side of the brain — and you need some artists, you need some right side of the brain people there that really drive creativity, innovation,” Sherlund said today in a radio interview on “Bloomberg Surveillance.”
“They’ve just not shown that spark of innovation that Apple has on the consumer side,” keeping Microsoft shares mired in a slump for the past 10 years, Sherlund said. With tablet computers, Microsoft labored for more than a decade with little result, while Apple’s iPad allowed it to seize the market.
Sherlund started covering Microsoft after the company’s 1986 initial public offering when he was at Goldman Sachs Group Inc. (GS), where he was the top-ranked software analyst by Institutional Investor magazine from 1989 through 2005. In the early years, he had unique access to Gates, including one-on-one dinners with the Microsoft co-founder. Sherlund left Goldman Sachs in 2007 after 25 years.
Microsoft has been shaped in the image of Gates and Ballmer, its current chief executive officer, Sherlund said. That’s created a culture where more analytical types have prevailed over creative executives and engineers, he said. Apple, under the leadership of the late Steve Jobs, has been the opposite in many ways, Sherlund said.
‘It’s About Style’
“It really reflects the personalities of Bill Gates and Steve Ballmer, who are mathematically inclined, and as Jobs has said it’s about style,” Sherlund said. “There’s probably something in the gene pool at Microsoft that is self-selective and has been left side of the brain, and it needs to be complemented by some right side of the brain.”
Ballmer attended math camp in the summer as a middle- schooler and went on to be a math major at Harvard University in Cambridge, Massachusetts. Gates also went to Harvard, where he enrolled in the college’s most advanced math course as a freshman. He dropped out to start Microsoft.
Besides adding more creative types, Microsoft needs to focus on software for touch-controlled tablet devices, Sherlund said. The Windows 8 operating system, which the company demonstrated in September, will help those efforts, he said. Still, management changes may be needed, Sherlund said, without elaborating.
“There’s going to be an opportunity to try to improve the level of innovation in the company, and it might start with some management issues that probably need to be addressed,” he said.