Steve Ballmer’s Final Shareholder Letter (Full Text)

Rather than over-anaylze Microsoft’s final shareholder letter, I have decided to simply re-post the full text.  Simply read it for what it is.  Remember the audience of this letter is primarily investors, and there are legal implications for everything written in here and must be in compliance with the SEC. The letter includes a new mission statement, since Microsoft did accomplish its first mission “…a PC on every desk…” I have added some emphasis on statements that stood out to me.  Shareholder letter:


This is a unique letter for me — the last shareholder letter I will write as the CEO of the company I love. We have always believed that technology will unleash human potential and that is why I have come to work every day with a heart full of passion for more than 30 years.

Fiscal Year 2013 was a pivotal year for Microsoft in every sense of the word.

Last year in my letter to you I declared a fundamental shift in our business to a devices and services company. This transformation impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses.

This past year we took the first big bold steps forward in our transformation and we did it while growing revenue to $77.8 billion (up 6 percent). In addition, we returned $12.3 billion (up 15 percent) to shareholders through dividends and stock repurchases. While we were able to grow revenue to a record level, our earnings results reflect investments as well as some of the challenges of undertaking a transformation of this magnitude.

With this as backdrop, I’d like to summarize where we are now and where we’re headed, because it helps explain why I’m so enthusiastic about the opportunity ahead.

Our strategy: High-value activities enabled by a family of devices and services

We are still in the early days of our transformation, yet we made strong progress in the past year launching devices and services that people love and businesses need. We brought Windows 8 to the world; we brought consistent user experiences to PCs, tablets, phones and Xbox; and we made important advancements to Windows Server, Windows Azure, Microsoft Dynamics and Office 365. We are proud of what we accomplished this year and continue to be passionate about delivering better devices and services more quickly.

To increase innovation, capability, efficiency and speed we further sharpened our strategy, and in July 2013 we announced we are rallying behind a single strategy as One Microsoft. We declared that Microsoft’s focus going forward will be to create a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most.

Over time, our focus on high-value activities will generate amazing innovation and new areas of growth. What is a high-value activity? Think of the experiences people have every day that are most important to them — from communicating with a family member and researching a term paper to having serious fun and expressing ideas. In a business setting, high-value activities include experiences such as conducting meetings with colleagues in multiple locations, gaining insight from massive amounts of data and information, and interacting with customers.

Microsoft will enable these types of high-value activities with a family of devices — from both Microsoft and our partners — as well as with our services.

As we go to market, we will primarily monetize our high-value activities by leading with devices and enterprise services. In this model, our consumer services such as Bing and Skype will differentiate our devices and serve as an on-ramp to our enterprise services while generating some revenue from subscriptions and advertising. Enterprise services continue to be an area of great strength, growth and opportunity as businesses of all sizes look to Microsoft to help them move to the cloud, manage a growing number of devices, tap into big data and embrace new social capabilities.

Executing and accelerating

In the past year we took many bold steps forward in executing on our strategy.

First, we are well underway in implementing the new organization structure announced in July. The teams are working together in new and exciting ways. The key change we made is deceptively simple but profoundly powerful: Instead of organizing our teams around individual products, we’ve organized by function, including, for example, engineering, sales, marketing and finance. It ensures we have one strategy and work as one team with one set of shared goals.

Second, in September we announced we are purchasing Nokia’s Devices and Services business — including its smartphone and mobile phone businesses; award-winning engineering and design teams; manufacturing and assembly facilities around the world; and teams devoted to operations, sales, marketing and support. This is a signature event in our transformation and will bring together the best mobile device work of Microsoft and Nokia. It will accelerate our growth with Windows Phone while strengthening our overall device ecosystem and our opportunity.

Third, in September, we also announced a new segment-reporting framework. We have five new reporting segments tightly aligned with our focus on delivering innovative devices and services for both our enterprise and consumer customers. This framework was designed to give valuable insight into our progress in the key transformations we are undertaking in our businesses to drive long-term growth.

As I think about what’s ahead, I’m incredibly optimistic about what Microsoft will deliver. We are accelerating as we bring to market Windows 8.1 PCs and tablets with our partners, Surface 2, Xbox One and new phones; advance our enterprise services including Windows Server, Windows Azure, Microsoft Dynamics and Office 365; and innovate on new high-value activities.

Moving forward

With the decisions we’ve made this year, the strategy we’ve put in place, the organization we’ve designed, the world-class talent we have, and the devices and services we are creating, we are well-positioned to deliver growth and world-changing technology long into the future.

We have seen incredible results in the past decade — delivering more than $200 billion in operating profit. I’m optimistic not only as the CEO but as an investor who treasures his Microsoft stock.

Working at Microsoft has been a thrilling experience — we’ve changed the world and delivered record-setting success — and I know our best days are still ahead.

Thank you for your support.

Source: Microsoft

  • Guest

    Not very impressed by that letter overall. In fact it really glosses over some of the competitive and execution problems during the year. Frankly, it’s like Ballmer was allowed to write his own report card. And that mission statement is really weak. “A PC on every desk and in every home” was at once bold, differentiated, easy to understand, and actionable. “Create a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most” is none of those things.

    • Yuan Taizong

      Unfortunately you are right, Microsoft isn’t doing something new with that mission, it’s literally (just) doing what the rest is doing…

      • Bugbog

        You may think so, but in this new connected world, what needs doing (as passé as it may seem), is to leverage ALL Microsoft’s software & services in finely crafted devices to deliver an all-encompassing experience.

        As we’ve seen from the launch of Windows 8 in 2012, if Microsoft don’t push forwards with well designed iconic devices, the other OEM’s won’t, and with current lack of dedication from these hardware partners, they can’t allow them to further diminish this experience.

        It may seem corny, but if they can deliver on their vision, you will soon be looking at One Microsoft! From:

        Home/Living Room Entertainment: Xbox gaming, leveraging Skype for the advent of telecommunications, home polling, interactive exercising, and so forth. Which will easily communicate with (and be controlled by):

        Home Computing devices: Surface tablets, laptops/desktops that run Microsoft applications and services; IE ,Bing, Skype, Xbox glass, Windows 8, Office home, SkyDrive, etc. Which will communicate with:

        Work/Office systems & devices: Surface tablets, other Win 8 devices, running Windows Azure cloud systems, which communicate with our Enterprise systems applications like Lync, SQL, etc

        Linking all these together will be our personal communication devices:

        Microsoft Lumia/Surface Smartphones: running personal, work, and in-between apps; Here/Bing Maps, Here Drive, Office mobile, OneNote, City Lens, Local Scout, Bing, Cortana, etc

        If this agenda doesn’t provide for an all-encompassing life vision, then I frankly don’t know what else will do!

        • Guest

          Execution is obviously critical. Neither Yuan nor I are debating that. We’re saying the vision as currently defined isn’t sufficiently differentiated. I’d even argue it’s not unique at all. It basically says MS wants to be services (Google, Amazon) plus devices (Apple, Samsung). Indeed you could go down your list and plug in a Google initiative in just about every area. Sure, in some they’d be worse or better positioned than MS today, but the point is it’s relatively easy to do – and it shouldn’t be if MS were on a unique path. Maybe you’re right that vision is overrated and what really matters is execution. The history of MS vs Apple over the past decade provides a certain amount of support for that. But even there I’d argue Apple focused on what made them unique, and skated to where the puck was going to be, not where it was currently.

          • Bugbog

            Firstly, there really isn’t any company like Microsoft! Google may try, but it doesn’t come close (whatever the pundits crow).

            So, to say simply because the sound-bite isn’t ‘stunning’ enough, may be missing the point entirely.

            Secondly, it’s rather fallacious to repeat the mantra of Apple “skating to where the puck was going to be”. This may have been true 30yrs ago when they came on the scene, but hasn’t been true for the last 12yrs; from the iPod to the iPhone, to the iPad. These have all been technologies that were extant in the market that Apple saw the potential of, refining and polishing till the end product was produced.

            So whilst they do deserve the acclaim from such productions, it isn’t a stroke of genius to it’s played out to be.
            (Or are you telling me it’s a stroke of genius to produce the iPad Mini? :) )

          • Guest

            OK, Bugbog. MS is kicking ass and taking prisoners. Apple and Google are capitulating tomorrow. Let me know when you’re ready to have a honest discussion.

          • Bugbog

            Honest? Hmm.., no such thing, I’m afraid. :)

            We all speak through our biases. The only difference is if you can temper them with just the right dash of reality! 😀

            But joking aside, the reason why I’m expounding this much, is to counter the common narrative that Microsoft cannot, and never seems to get anything right.

            Even for the supporters, like us here, Microsoft always has to be seen through the prism of it’s failures, or its “slowness” into any particular field or market.

            It is never seen from the point of view of its successes!

            So MY point of view is to take its new message (at face value), NOT from a negative aspect, in terms of what they haven’t done or been successful at, but to look towards what assets it can leverage towards the furtherance of its new direction & goal!

          • Guest

            Nothing wrong with taking a glass is half full vs half empty perspective. I prefer it myself. But there’s a difference between being positive and simply refusing to accept reality. Even MS, who for too long maintained everything was working great even as evidence mounted that it wasn’t, is now conceding the need for major change and a different strategy. They put a more positive spin on it for the shareholder letter, but in other venues they’ve been much more candid about it. I applaud that recognition and wish it had occurred years ago. I’d just prefer that it clear, focused, and differentiated, not muddled.

        • SategB

          Maybe all encompassing life vision is not the answer maybe a few great products people WANT to use is …maybe?

  • Yuan Taizong

    It’s sad to see Ballmer leave, he had an awesome vision that might get endangered if the next C.E.O. will listen to rebel shareholders…

    • SategB

      You bring up a very salient point Yaun. Ballmer gets pushed out right after he announces a Herculean restructuring with a significant new strategy and sizable acquition while by the way we are going let some new guy be responciple to execute. Who may or may not be in agreement or have the ability to pull it all off.

      Hold on friends it is going to be a bumpy ride.

      • nohone

        You have said Ballmer was not fired, he was fired, he was not forced out, he was forced out, now you are saying he was pushed out. Can you please decide upon one consistent attack in your public hatred of a man you do not know, please?

        • SategB

          A concept that may be difficult to understand by who obviously full of a great deal of anger, I don’t hate Ballmer.
          I simply understand the fact he did a poor job of managing MSFT to have a successful future.

          He presumed an extend and defend strategy for quarterly profits rather then trusting the many great intelligent engineers to create great innovations. He failed the company and I do offer credit for trying hard.

          • nohone

            That is interesting, because just two days ago someone who claimed to be WPhan used that same exact sentence when replying to a comment. I think we found another of your aliases.
            Years ago there was an Apple fanboy, just as yourself, on the MSNBC boards (back then they had commenting forums). He called himself Steve. Then this other guy started commenting named Jack. They would often replying to each other’s comments, whole heartedly agreeing with one another. When it was pointed out they had the same IP address, they found it very interesting. Then after a few months they claimed that they had, just by accident, discovered they worked in the very same office, and sat just a few doors down from one another. Imagine the coincidence! Eventually “they” slipped up, and admitted it was one person, replying to his own comments, and took the name SteveJack. SteveJack still writes on Apple fanboy websites.
            So, SategB/WPhan/…, how many accounts are you using?

      • tomakali

        ya, it looks like he was fired and being recommended to the Board …

  • Asymgo

    Right strategy…7 years too late?

    • Guest

      Still trolling, huh?

    • SategB

      I think Steven Sinofsky said it best on his recent blog post – and most likely talking about MSFT:

      “How did you go bankrupt? Two ways, Gradually, then suddenly.” That is how disruption happens.

      • Not one of SategB’s aliases

        He was talking about Blackberry, doofus. Apparently you can’t read any better than you write. Either that or you’re just lying on purpose.

        • SategB

          And a not so veiled heartfelt intimation towards his former teams… If you too knew the man you would understand

          • nohone

            And you have finally have made your delusions crystal clear. You know him? How well? How much time have you spent with him to know him so well that you can pass judgement on a person. Pleas, inform us of how well you know him.

          • SategB

            See kids what I did there, I made no direct claim I know him . I created the inference that most intelligent readers would see.
            Just as he did by referencing Blackberry but intelligent readers (and his friends) knows he is talking about MSFT.

            I am glad to enlighten you a bit!

          • nohone

            You claim to understand him because he is intimidating his former teams. Then you say that if you know him, then you would understand him. If a == b, and b == c, then a == c. It is called the transitive property of mathematics. Intelligent readers would see.

          • Not one of SategB’s aliases

            Actually, you did. Apparently you failed logic in addition to reading and writing.

          • nohone

            Actually, let’s look at your comment again:

            “And a not so veiled heartfelt intimation towards his former teams… If you too knew the man you would understand”
            You wrote “if you too knew the man.” The word too means in addition to yourself, so you did claim to know him. So do the two of you sit around on the weekends sippin’ lemonade, talking about the tech world, you giving your thoughts on how things be turned around at Microsoft?

          • Not one of SategB’s aliases

            What you decide to read into his comments says more about you and your agenda here – as fk’d up as that appears to be – than it does his thinking. I’m not particularly surprised you’d claim to know him. You certainly demonstrate all the attributes of a fired and disgruntled ex-employee: vindictive, arrogant, inflated sense of your own importance…the list goes on and on. Although it’s hard to imagine MS’s hiring bar has been lowered so much that someone who can’t read or write at even a grade school level can now get hired in the first place…

    • Guest
  • tomakali

    Ok, Sorry… this will sound insane… and against Microsoft’s ethics…

    still, it would be fair in my opinion to run ads on unlicensed/pirated versions of Windows OS [as attached]