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Ballmer Says Google's Growth Is 'Insane'

Posted by Zonk on Fri Mar 16, 2007 09:39 AM
from the doubling-the-doubled-growth-rate dept.
eldavojohn writes "Steve Ballmer spoke to the Seattle PI this week, commenting that Google's pace of employee growth is 'insane,' and the company has few successful businesses outside of Internet search and advertising. He referred to Google's non-search efforts as 'cute.' Google's current number of employees is nearly doubling each year. 'I don't really know that anybody's proven that a random collection of people doing their own thing actually creates value.' Mr. Ballmer went on complain that, in general, competition for good programmers has become an issue. Even 'hedge funds' are looking for skilled coders, making the HR fight between the two companies that much more challenging."

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[+] Microsoft's Ballmer: Google Reads Your Mail 264 comments
Anonymous writes "A piece of video has emerged in which Microsoft CEO Steve Ballmer says of Google, 'they read your mail and we don't.' Evidently, it was part of a lengthy discussion on the future of the software business model, and whether advertising could support free consumer software. Ballmer said it doesn't work, at least when it comes to email. '"That's just a factual statement, not even to be pejorative. The theory was if we read your mail, if somebody read your mail, they would know what to talk to you about. It's not working out as brilliantly as the concept was laid out." Ballmer isn't the first to fire salvos at Google's Gmail privacy policy. Privacy advocates have been critical over the policy almost since the beginning, but the popularity of the service has skyrocketed nonetheless.'"
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  • Let the chair throwing commence (Score:5, Insightful)

    by Vengeance (46019) on Friday March 16 2007, @09:41AM (#18374775)
    As I translate Steve's remarks:

    ROaaarrrr!!!! We are finding ourselves *hoot hoot* having to spend more money to hire quality programmers *scratch*. *Beats Chest* Google BAD!
  • AKAImBatman spoke to Slashdot this week, commenting that Microsoft's CEO is 'insane,' and the company has few successful businesses outside of Windows and Office. He referred to Balmer's stage antics as 'cute.' 'I don't really know that yelling "Developers" and doing your own thing on the stage creates value.' AKAImBatman went on complain that, in general, competition for good stage presenters has become an issue. Even companies like SCO are looking for skilled showmen, making the HR fight between the two companies that much more challenging.


    Ok, joking aside, am I the only one who finds Balmer's complaint a bit hypocritical? It's true that Microsoft has incredible sums of cash. However, Windows and Office are pretty much the only things making Microsoft that cash. Nearly every other portion of the company either contributes very little to the bottom line, or actually loses Microsoft money. I imagine that's part of the reason why Microsoft keeps bundling extra software services with Windows: At least it raises the value of the software package. (In theory, anyway.)

    That being said, I am going to (*gasp*) agree with him on one point. Having a bunch of programmers sitting around does not accomplish anything. They have to be in a full-on creative environment to do the truly impressive stuff. I think that the environment is slowly dissolving as Google loses it cohesion as a tight-knit company. They're growing incredibly fast, and I'm not sure they're really getting a good return on that growth. Obviously, only those inside the company can actually know that for sure, but it's not looking as good as it once did for those of us on the outside.
    • Normally, I'd agree. I think there's a lot to the philosophy of "do one thing, and do it very well." Google, however, does a lot of things... very well. Their maps and apps and whatever else are all clever, clean, and tasteful, not to mention highly effective. Ballmer calling them "cute" is an attempt to damn them with faint praise, which is to say, dismiss them. He can say what he likes, but Google will continue to chip away their market share.

      I do agree with you that their rate of growth is not sustainable, but I also suspect that as soon as it slows, people will immediately go "Google's hiring is down! Are they in trouble? Are they just not good enough to stand up to Microsoft after all?"
      [ Parent ]
    • Re:Slasdotters Say Ballmer Is 'Insane' by Ngarrang (Score:1) Friday March 16 2007, @09:52AM
    • Re:Slasdotters Say Ballmer Is 'Insane' by 99BottlesOfBeerInMyF (Score:2) Friday March 16 2007, @09:53AM
    • Re:Slasdotters Say Ballmer Is 'Insane' by Tablizer (Score:1) Friday March 16 2007, @09:56AM
    • Re:Slasdotters Say Ballmer Is 'Insane' by truthsearch (Score:2) Friday March 16 2007, @09:57AM
      • by daeg (828071) on Friday March 16 2007, @10:06AM (#18375235)
        Investors have a lot riding on the fact that Google will eventually return more than just a very high stock price for them. While stock prices make money short term, the base of investing is long term returns. I have a feeling that, in a few years' time, if Google isn't returning anything, their stock could face a major drop.

        Something that is scary, though, is that Google has a very unique position in the marketplace. They know trends before they are public trends. With their stats program that is popular with startups, they can see new sites and new ideas before they get big. That is tremendous power, in both terms of capital (buying out early), and could be used for good of "evil" very easily. Imagine if they started selling that data to investment groups. "Based on search queries it looks like MSFT might face a major wave of backlash, you should short their stock." They are in position to even influence the global market through Google News and search results ranking.
        [ Parent ]
      • by Billosaur (927319) * <wgrother&optonline,net> on Friday March 16 2007, @10:25AM (#18375491)
        (Last Journal: Wednesday November 07, @10:09AM)

        Oh, Balmer's complaint is hugely hypocritical. Google also has huge sums of cash from their stock.

        Exactly. When was the last time Microsoft's stock was over $100, let alone $400? Ballmer's more envious than anything -- he keeps wondering why no one at Google is reading the résumés he keeps sending.

        Google will eventually hit a wall if they don't come up with other big revenue streams. And I think that's why they hire so many smart people. Even if only one in a thousand comes up with a great idea it'll all pay off.

        I don't think so. I think they're pushing the wall further and further, making things less profitable for their competitors. The extra ideas they come up with, good or not, aren't hedges against a collapse but part of a strategy to quietly worm their way into every part of the Internet. Face it: Google the search engine is near ubiquitous now. If they come up with other things (mobile phones, operating systems, etc.) that attain that kind of ubiquity, eventually they'll be able to charge for them and people won't give it a second though, since they will have become dependent on them.

        [ Parent ]
        • by um... Lucas (13147) on Friday March 16 2007, @11:12AM (#18376219)
          (Last Journal: Thursday February 21 2002, @02:55AM)
          When was the last time Microsoft's stock was over $100, let alone $400? Ballmer's more envious than anything -- he keeps wondering why no one at Google is reading the résumés he keeps sending.

          No offense, but don't start investing.

          A companies value is NOT reflected by the share price alone. It's the share price TIMES the number of outstanding shares.

          Quick math:

          Googles market cap is 137.43 billion; share price is 441.96; it has approximately 311 million shares circulating.

          Microsofts market cap is 267.23 billion; share price is 27.31; it has appromately 9.7 billion shares circulating.

          It's been argued that one of the main reasons that Google trades at such a high P/E ratio is because they've restricted the number of shares circulating... Like, if they split the stock to match the shares outstanding of other companies, there'd be so many shares circulating that the price would drop, not only just because there'd be more shares as a result of the splits, but because there would actually enough to fill the demand.

          Not trully related to the discussion, but related to your comment...
          [ Parent ]
        • Re:Slasdotters Say Ballmer Is 'Insane' by heinousjay (Score:2) Friday March 16 2007, @11:28AM
      • Re:Slasdotters Say Ballmer Is 'Insane' by Znork (Score:2) Friday March 16 2007, @12:29PM
    • Re:Slasdotters Say Ballmer Is 'Insane' by russ1337 (Score:2) Friday March 16 2007, @09:58AM
      • by _Sprocket_ (42527) on Friday March 16 2007, @10:34AM (#18375609)

        I've often wondered why MSFT see Google as a threat, MSFT make office software and Operating systems. Google dont make OS's (well not yet) and sure Google have a web app that can read office docs, which is really more for convenience, so at least until recently the two companies have been after completely different things.


        The problem for Microsoft is two-fold. Everything Microsoft does ties in to their core business. And that core business is under constant threat.

        Everything Microsoft does points back to their OS. And in turn, their OS is the platform on which they build everything they do. The concept of lock-in is not only about immediate profit, but it also ensures that they have a clear path ahead of them. Its easier to see and plan for the future if you control the present. Anything that does not feed the need for a Microsoft OS stack is a threat to this strategy.

        Why would Microsoft worry about losing control? Ask IBM what its like. Consider a time where IBM seized the microcomputer market - a time where "IBM PC" was a product reference and not a place-holder for a box produced by one of several thousand possible vendors with an unknown combination of commodity components. IBM is still a power-house in the Industry. But they no longer control it. It's hard to not only make money in a commodity market, but it's also hard to control one. And when you don't have that control, it is difficult to determine what directions such a market is going to take. What happened to hardware may very well come to pass for the OS as well.
        [ Parent ]
    • Developers Developers Developers by colonslashslash (Score:2) Friday March 16 2007, @09:59AM
    • Re:Slasdotters Say Ballmer Is 'Insane' by norminator (Score:2) Friday March 16 2007, @10:02AM
    • Re:Slasdotters Say Ballmer Is 'Insane' by 91degrees (Score:1) Friday March 16 2007, @10:10AM
    • by UnknowingFool (672806) <minh_duong @ y a h o o .com> on Friday March 16 2007, @10:22AM (#18375425)

      Remember this is MS. Everything is reverse in MS world. i.e. They are innovating when they copy other companies. The Apple phone doesn't offer any new features. Linux is full of their IP. And it goes on and on.

      I imagine that's part of the reason why Microsoft keeps bundling extra software services with Windows: At least it raises the value of the software package. (In theory, anyway.)

      Well some of their divisions really do nothing for Windows. Like the Xbox. Its a huge money loser. It doesn't add to Windows or Office. Xbox is about taking the market from Sony and Nintendo. Period. When other companies lose $4 billion on a division or product over several years, the product gets cancelled or overhauled. What I mean by overhaul is in the strategy. MS did neither. It just followed the same strategy and upgraded the hardware and software specifications for the Xbox 360.

      Having a bunch of programmers sitting around does not accomplish anything.

      Yes but even if they are working, are they actually producing anything worthwhile? MS spends about $1 billion a quarter in R&D. Over the last five years, all they've managed to do is to produce an OS that in my opinion, a woeful copy of OS X. It's not that they don't have good people and that their people don't work. It's that the direction of the company is lacking.

      To me, Microsoft's problem is that their main goal it to compete with anyone who might threaten their monopoly. Their goal is not to make a good product but to beat everyone else. IE was only innovative up until Netscape lost. Then development stagnated until Firefox became a threat. MSN Search was just an ordinary search engine. Then Google showed up. MSN Search was overhauled to compete. Apple conquered the MP3 player market. MS now wants a piece of that market.

      [ Parent ]
    • Re:Slasdotters Say Ballmer Is 'Insane' by YU Nicks NE Way (Score:3) Friday March 16 2007, @11:26AM
    • Re:Slasdotters Say Ballmer Is 'Insane' by lwriemen (Score:1) Friday March 16 2007, @11:32AM
    • So: What is Ballmer Missing? by Alien54 (Score:2) Friday March 16 2007, @11:47AM
    • Re:Slasdotters Say Ballmer Is 'Insane' by nine-times (Score:2) Friday March 16 2007, @01:27PM
    • Re:Slasdotters Say Ballmer Is 'Insane' by sumdumass (Score:2) Friday March 16 2007, @05:27PM
    • Re:Microsoft hires 10% of all US Comp Sci PHD's by Douglas Goodall (Score:1) Saturday March 17 2007, @01:58AM
    • 1 reply beneath your current threshold.
  • What happened to . . . (Score:4, Funny)

    by SpeedyGonz (771424) on Friday March 16 2007, @09:42AM (#18374789)
    . . . the "monkeyboy" tag?
  • Jealous much? (Score:5, Funny)

    by GeckoX (259575) on Friday March 16 2007, @09:43AM (#18374811)
    Steve, your showing off your true traits and motivations again.

    If you really felt this way, you'd sit back and wait for Google to implode, and then hire all the best ex-google-ites for well under what they're being paid now.

    But you're making such a fuss about it...whining really.

    Steve here's a hint for you, it's called competition. Look it up some time.
    • Re:Jealous much? by rumblin'rabbit (Score:2) Friday March 16 2007, @09:51AM
      • Re:Jealous much? by dattaway (Score:2) Friday March 16 2007, @10:07AM
        • OMG by Seoulstriker (Score:2) Friday March 16 2007, @11:20AM
      • Re:Jealous much? by Red Flayer (Score:2) Friday March 16 2007, @10:15AM
        • Re:Jealous much? (Score:4, Insightful)

          by CodeBuster (516420) on Friday March 16 2007, @11:27AM (#18376459)
          While I am no fan of Steve Ballmer I have to agree that he may be right or at least right enough that I would choose not to invest in Google, good company though it may be, at the current share prices, especially considering the relatively meager stream of advertising income compared to the massive inflow of investor monies.

          Why? What's wrong with their business model, why would it fail?

          Nothing, but there is such a thing as an overvalued share price and Google is the textbook example. There are other shares that are worth even more than Google, Berkshire Hathaway comes to mind, but those companies tend to generate a lot of actual real cash value each year. If one discounts the advertising revenue, which is by all accounts meager compared with the current share prices, then it becomes extremely difficult to estimate how much the remaining value, including intellectual property, human capital, and experience may eventually be worth. It is not *zero* to be sure, but exactly how much and when? The answer to that question determines how much you are willing to pay for a share and how much you ultimately earn in that investment depends upon how accurate your initial estimation was. In the meantime your $400+ dollars per share are NOT earning money doing something else. It is a substantial risk and one that not every investor is necessarily willing to take. On, the other hand, "there is a sucker born every minute," or so the saying goes.

          Their revenues are increasing, and search-related advertising is hardly going to disappear -- never mind their expansion into other types of advertising.

          Yes, but see above for why this does not necessarily a good investment make...

          As for rate of growth, define growth. You mean rate of employee growth? Sure, exponential growth is unsustainable. But with gross profits over 6 Bn on revenue over 10 Bn, I think they've got pockets deep enough to continue to hire freely -- never mind the cash reserves of 11 Bn.

          I think that he meant employee growth, but even employee growth must be justified in terms of additional value created for the business. It does not matter if the company has a bankroll of $10 x 10^4 or $10 x 10^7 dollars. If the business cannot earn at least $1 plus prime interest rate or 10 year treasury rate (4.45% currently) then that dollar should be returned to the shareholders in dividends after all of the expenses have been paid. Reinvestment is not always a good idea, it depends upon the current economic climate and the potential returns. The fact that Google has 11 Bn cash reserves is immaterial to this point.

          Think about it. If they pay $200,000 annually (incl benefits) for good employees, they can still hire 30,000 of those people while still turning a gross profit.

          The company is generating money based upon advertising revenue and EXPECTED future revenues in the form of inflow of investor money, but this does not necessarily mean that each employee is generating a gross profit by their direct efforts.

          Assuming, of course, that their revenues don't drop off, which would run counter to almost every analyst's predictions.

          If you are an investor in Google right now, especially if you didn't get in real early (and who but the insiders did?), you had better hope that not only does revenue NOT drop off, but that growth doesn't slow either because you are going to need some pretty powerful revenue growth to come out ahead at $400+ per share on P/E ratio of 40+.
          [ Parent ]
    • Naaahh he is only jealous... by xtracto (Score:1) Friday March 16 2007, @09:59AM
    • Re:Jealous much? by Dystopian Rebel (Score:2) Friday March 16 2007, @01:57PM
    • 1 reply beneath your current threshold.
  • Hedge funds (Score:5, Insightful)

    It is true. I took a job with an automated trading firm over Google. Partly I wanted to work for a smaller company. Google's dream 20% time looked like a myth when I actually interviewed there (none of my interviewers used their time because they had too much work to do on their normal projects). Also, there's something satisfying about directly measuring the success of your software in dollars. If it makes money, you run it.
  • In soviet Russia... by mikecardii (Score:2) Friday March 16 2007, @09:44AM
    • 1 reply beneath your current threshold.
  • Next week news: (Score:5, Funny)

    by Vexorian (959249) on Friday March 16 2007, @09:44AM (#18374833)
    Novell agrees that google's growth is insane.
  • Are you kidding me? (Score:3, Interesting)

    by phoenixwade (997892) on Friday March 16 2007, @09:45AM (#18374841)
    (http://phoenixfestivals.com/)
    The CEO of the largest software company in the world is Whining about some other Co's hiring rates?

    I wonder if this is more telling about a potential waning of MicroSoft than anything else. Or is it that Balmer is still trying to step out of a shadow... Gates has had a number of exceptional sound bytes over the years.... Positive ones. Balmer, not so much.

  • by 8127972 (73495) on Friday March 16 2007, @09:46AM (#18374863)
    .... Jealousy
    • 1 reply beneath your current threshold.
  • Google is insane? (Score:5, Funny)

    This is coming from the guy who ran around a stage [google.com] screaming and flapping his arms about.
  • He may have a point (Score:5, Insightful)

    by Weaselmancer (533834) on Friday March 16 2007, @09:49AM (#18374905)

    Throwing more resources at a problem isn't always the best way to solve it. For crying out loud, if anyone should know that it's Ballmer.

    A business I worked at several years ago did the same thing. Grew too fast and outpaced the market. Wound up running out of cash and having to lay off all those new hires. One guy was an employee for two weeks. I helped interview the guy, too.

  • Microsoft jokes aside, (Score:5, Interesting)

    by LibertineR (591918) on Friday March 16 2007, @09:50AM (#18374917)
    Ballmer is completely correct.

    Disclaimer: I worked for Microsoft

    Google's approach to growth right now resembles something like a gold rush, assuming that they know where the gold really is. I dont think they do exactly, but are hedging their bets on a number of ideas. The search engine makes money, but Google knows that they will need to do more, and I hope the phone rumors are true, but even so, just gathering a lot of great programmers together under one unbrella does not guarantee innovation.

    I think Microsoft proved that good programmers dont necessarily make great programs. Every one of Google's businesses are cases of doing someone else's idea better. Cant wait to see what is coming, but for the moment, I cant see the fault in Ballmer's logic.