In the November 9 issue of Newsweek, Daniel Lyons writes about the decline of Microsoft under Ballmer’s leadership.  While replacing Bill Gates is certainly a no-win situation for anyone, Ballmer has done a fantastic job of actualizing just how no-win it is.

According to Lyons, Microsoft has lost hundreds of billions in market capitalization and the stock is nearly half of what it was when he took over almost 10 years ago.  During that time, Apple has boomed (shares up 700%) while Google redefines the Internet at will.

Even so, Microsoft certainly remains the 800-lb gorilla in the room but the gorilla has become old, less nimble, and not nearly as frightening.  Apple continues to use it as a branding punching bag while Google has become a technology tsunami.  Lyons argues that Ballmer’s biggest misstep is his non-technical background and inability to quickly deploy attention to competitive threats wherever they arise.  That’s a very fair assessment.

Another is basing their purpose strictly on their products (the Ballmer brand management approach) – rather than fulfilling a vision (the Gates approach).  Microsoft once represented the future.  It activated the Internet by providing access to it on a massive scale.  It created the largest browser (and eliminated its largest competitor – Netscape – in the process).  It did so many things and created millionaires and billionaires in the process.  Given the growth opportunity in this ever-expanding category, Microsoft was poised to forever expand and forever be meaningful.

Unfortunately, their brand is now exemplified by a product (Windows 7) and not a vision.  While this new OS is getting rave reviews, its previous product – Vista – stunk.  In either case, there is no category vision upon which to build relevance.  To matter, you must be seen more than a provider of a product.  For Microsoft, their story is now only about patches and product enhancements.

The larger you define the opportunity and become the default personification of it, the more you become the poster child for its success.  When you embody and define category upside, the more you matter.  And the more growth opportunities are created for your company.