Back when Microsoft was the biggest name in technology,CEO Bill Gates leveled an attack on the
auto industry: If carmakers wereas innovative as computer companies, he said, a car would cost
just$27.That was 16 years ago.Today, PC sales are falling asconsumers show a preference for mobile
devices, and Microsoft isstruggling. Meanwhile, U.S. car companies are resurgent. General Motors,the
world’s No. 2 carmaker, is gaining ground on No. 1 Toyota.AndFord, after 16 quarters in the black,
expects to see $8 billion-plus inprofit this year.It’s a testament to the changing times thatMicrosoft
is reportedly considering Ford Motor Co. chief Alan Mulally asCEO Steve Ballmer’s replacement when he
steps down in less than a year.Mulallysays he’s made no changes to his plan to stay at Ford through the
endof 2014. But he hasn’t denied rumors that Microsoft Corp. is courtinghim. Ford’s board of directors
will gather in Dearborn, Mich., startingWednesday. One of the items on the agenda will be a discussion
ofMulally’s future at the company.Here are the pros and cons ofMulally taking the wheel at Microsoft, a
company whose stock price hasbeen stuck in neutral for more than a decade:___THE PROS:HEHAS FRESH EYES:
As an outsider, Mulally could correct problems that aninsider might not even see, like Microsoft’s
culture of interdivisionalcompetitiveness or the fragmentation of its businesses. While itslucrative
enterprise-computing services rival its bread-and-butterWindows business in revenue, Microsoft is losing
billions chasing Googlewith its own Bing search engine. The company has also booked hundredsof millions
in losses on its Surface tablet computer.In contrast,Mulally helped Ford become the only Detroit
automaker to survive therecession without a government bailout. He forced engineers to startbuilding
global cars like the Focus instead of wasting billions makingindividual cars for each region. He sold or
shuttered brands such asVolvo, Jaguar and Mercury, and plowed cash into cars with edgier designs— such
as the Fusion sedan — even in the midst of the downturn.Hetold feuding executives to embrace the new
plan —or leave. Most stayedand learned to appreciate Mulally’s weekly meetings and focus oncooperation
and transparency.James Schrager, a professor at theUniversity of Chicago’s Booth School of Business,
says Mulally was a"genius" at "working person-to-person on the management side." The
CEOhelped Ford figure out "who we really are as a company, where we’regoing to spend all our time
and money and what we really have to achieveto be special to our customers."HE’S BEEN HERE BEFORE:
When Fordhired Mulally in 2006, the company was drifting. Its flagshipmoney-makers —trucks and SUVs —
were suffering as consumers sought morefuel-efficient cars to combat rising gas prices. Similarly,
Microsoft’sstill-dominant Windows operating system faces serious headwinds asconsumers switch to
tablets, a trend that threatens to scuttle its corebusiness providing operating system software for
PCs."Oncesomething works, it’s hard to change your behavior," says analyst RogerKay, president
of Endpoint Technologies Associates Inc. "Microsoft is inthe same position. It’s running like a
billing machine. At some point,they’re going to have to add value if they want to generate some
moremoney."Mulally is already being compared to Lou Gerstner, theformer RJR Nabisco CEO who took
over as IBM’s chief executive in 1993and — despite his lack of industry experience— helped transform IBM
froma money-losing personal computer maker to a profitable technologyservices company.HE KNOWS MICROSOFT
AND BALLMER: For a carexecutive, Mulally has unusually close ties to Microsoft. Microsoft’sWindows
Embedded software powers the Ford Sync dashboard entertainmentsystem launched during Mulally’s
tenure.Technology analyst RobEnderle says Mulally acted on trends that Microsoft was slow to
notice."Of the car companies, they got mobile (communications) first."Mulally spent most of
his career at Boeing in Seattle, not far from Microsoft’s headquarters in Redmond, Wash.Ballmer,57, has
said his father worked for Ford for more than 30 years. AndMulally and Ballmer are friends. Ballmer even
spoke with Mulally overcoffee about a wide-ranging reorganization that Microsoft announced inJuly.As a
Top 5 holder of Microsoft’s shares, Ballmer’s support is essential, and Mulally would clearly have
it.Ina 2009 contribution to Time magazine’s Time 100 issue, Ballmer praisedMulally effusively, saying
his support for the auto chief was "bothemotional and rational.""He understands the
fundamentals of business success as well as any business leader I know," Ballmer wrote.___THE
CONS:HE’SA SOFTWARE SOPHOMORE: As a trained aeronautical engineer with an MITmanagement degree, Mulally
lacks the programming chops of the troops hewould be leading.Patrick Moorhead, president of Moor
Insights andStrategy, says that’s a knock against him: "In today’s tech world, Ithink we’ve seen
the best leaders, whether in software or hardware orconsumer devices, have very deep background in
technology."Theanalyst favors Tony Bates, a self-taught programmer and the former SkypeCEO who is
now Microsoft’s executive vice president of businessdevelopment, strategy and evangelism. Microsoft
acquired Skype in 2011for $8.5 billion.HE’S OLD SCHOOL: At 68, Mulally would strike agrandfatherly
presence among Microsoft employees. The average age ofMicrosoft workers is 34, according to compensation
research firmPayScale Inc. While that’s higher than companies such as Google (29) andFacebook (28), a
younger leader may help Microsoft attract and inspirenew recruits.Yahoo Inc., for example, regained some
of its cooland saw its stock price double after hiring as CEO Marissa Mayer, who’s38. After arriving
more than a year ago, she quickly moved to boostmorale and improve Yahoo’s recruiting and retention of
talented workers,the lifeblood of any tech company."If (workers) see a younger CEO, there’s more
reason to believe they can get ahead," Moorhead says.HEALREADY HAS A LEGACY: Mulally has cemented
his reputation and couldretire from Ford into a lucrative world of speaking engagements andboard
positions.While Mulally is fit and enthusiastic, aturnaround of Microsoft could take five years or more.
He would have todecide if he wants to be a CEO into his mid-70s."Unless Fordcompletely collapses,
Alan’s tenure at Ford is going to be regarded asone of the greatest CEO stints in corporate
history," says Morningstaranalyst David Whiston. "If he goes to Microsoft in a totally
newindustry and it doesn’t work out, that could tarnish his legacy a littlebit."Copyright 2013 The
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