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Who Can Put an End to Microsoft's Lost Decade (and a half)?

Microsoft (NASDAQ: MSFT  ) has been dead money for investors throughout the Steve Ballmer era.

The stock has fallen 52% in those 13 years, while the Dow Jones Industrial Average (DJINDICES: (DJINDICES: ^DJI  ) gained 23%. If you reinvested dividends in both Microsoft and a Dow vehicle along the way, Mr. Softy still comes out eating dust with a 37% drop versus the Dow's 64% climb. And the Dow's numbers would have been even stronger if Microsoft weren't there to drag the averages down.

Former Microsoft senior vice president Joachim Kempin was Redmond's employee No. 400, but he retired from the company in 2002. The ex-executive has grown frustrated with Microsoft's missed opportunities, and he's telling the world about it. One night last year, he told his wife: "I need to write my book and just tell the world what I think, and if no one buys it, so be it."

ReadWrite's Dan Lyons recently sat Kempin down to dig a little deeper into the book's often sinister stories. This man has an axe to grind, but his narrative rings too true to be dismissed.

Here's how Joachim Kempin explains Microsoft losing its way under Ballmer: Microsoft could have been both Apple (NASDAQ: AAPL  ) and Facebook (NASDAQ: FB  ) by now, if only the company had taken advantage of its early opportunities.

"Back in the late 1990s we had our own tablet under development. It never saw the light of day," Kempin said. It's hard to say whether that early slab would have been an iPad-like smash hit with a 15-year head start or a Surface disaster, but that potential first-mover advantage certainly never materialized. And now Apple owns the tablet space, at least in money-making business terms.

What about Facebook? Kempin said:

When I left in 2002 people were talking about social media. Microsoft should take advantage of [Facebook's clunky design] and do a next generation of Facebook and do it right. People would use it if they could transfer their posts with one mouse click. A Metro-like Facebook clone, and Microsoft would look way cooler than it does today. Instead the company produces its own hardware and tries to compete with Apple while [enraging] its loyal hardware manufacturers. Oh my God.

Kempin sees Ballmer's micromanaging style as a liability and recommends looking for a younger replacement with a finger on the modern market's pulse:

Look at Yahoo! (NASDAQ: YHOO  ) . They got this new CEO, Marissa Mayer, who has turned the corner with the company. There is talent out there, people who are closer to the current market trends.

The Y hasn't been a template for success in a long time, but I agree that Mayer just might have a shot at turning that boat around. And it's never too late to cure what's ailing Microsoft. Just don't expect the company or the stock to improve much under current management.

It's been a frustrating path for Microsoft investors, who have watched the company fail to capitalize on the incredible growth in mobile over the past decade. However, the company is looking to make a splash in this booming market. In this brand-new premium report on Microsoft, our analyst explains that while the opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so be sure to claim a copy of this report now by clicking here.

Read/Post Comments (5) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 12, 2013, at 2:07 PM, profitalert wrote:

    The day has come for a new MSFT CEO

  • Report this Comment On February 12, 2013, at 2:08 PM, profitalert wrote:

    Should have said well overdue

  • Report this Comment On February 12, 2013, at 2:09 PM, techy46 wrote:

    Kempin left in 2002 and what he's saying is not relevant. He also said XBox as a crummy product. Microsoft failed to innovate the touch based UI soon enough. It has fixed that and will be a viable force in mobile devices beginning in 2013. MS won the PC and enterprise but lost the 1st roound of mobile consumer gadgets. 2 out of 3 is better than Apple's 1 out of 3 or Google's 1 of 1.

  • Report this Comment On February 12, 2013, at 2:11 PM, AmcnFndrs wrote:

    It's not just balmer - it's many of the 20-30 year veterans that micromange and squash innovators that come from the outside. Even worse is the walmart and GE Manufacturing set that are working to turn the place into the Walmart of Software. Innovators come in with lots of promise and bright ideas that can be quantified and because of internal - very ugly - competition, especially from the old guard, it becomes a story of how fast can we kill or steal the great idea and discredit the source it came from so that they do not get a better score on there review. Internally, it's ugly romper room antics that will destroy the firm until you throw out steve and the cascade of adult children of Microsoft that do not know how or refuse to manage and lead any other way.

  • Report this Comment On February 13, 2013, at 1:16 PM, jvgfool wrote:

    What about Microsoft System Center, Exchange, and the other backend server products. No one ever talks about that because they don't see it. They only see the interface that's staring them in the face and have no idea that they are actually using a Microsoft product somewhere down the network path.

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