Microsoft Sets Sights on Search

Microsoft also used the recent partner conference to talk about its decision to focus on more vertical "solution sets" in the enterprise and midmarket spaces, a move that has caused consternation among some partners. Ballmer looked to quell those concerns saying, "Most of what we do is horizontal, at least by industry. We remain a very horizontally focused go-to-market partner."

Microsoft is trying to get its horizontal infrastructure to address the vertical needs of larger enterprises while, for smaller enterprises and in corporate accounts, ensuring its Microsoft Business Solutions product line meets vertical requirements, Ballmer said.

"In large enterprises, to the degree we understand peoples businesses, we have a better chance of working with them to help them build out the IP [intellectual property] or get the partners or ISVs that will let them have solutions that target specific areas," he said.

However, some software partners say Microsoft does not yet provide enough support to allow the company to offer comprehensive vertical solutions.

"In fields like accounting, firms have tried to provide technology partnering, but Microsoft has not provided sufficient go-to-market resources. Microsoft needs to provide comprehensive planning so it can link a technology partner with international accounting consulting firms. This type of comprehensive support would truly move Microsoft and their partner forward in deep verticals," one partner said.

Enterprise customers such as John Persinger, a network administrator at Source4 Inc., based in Roanoke, Va., see the vertical-solution-set move as a low-risk opportunity for Microsoft to drive into areas where it currently does not have a presence.

"The more things they get under the Microsoft umbrella, the more opportunities they create for themselves," Persinger said, pointing to the fact that Microsoft already has the pieces in place to make a strong stand in markets such as health care.

"They already bring a lot to the table in terms of policy-enforceable secure communications between servers and desktops in the enterprise. This meets the standards of modern best practices and the IT requirements of organizations that have to conform to legally mandated security standards, like HIPAA [Health Insurance Portability and Accountability Act]," said Persinger.

While IBM remains an important Microsoft competitor, especially in the enterprise, Ballmer said, "they are not involved in a lot of the new technologies. That doesnt mean they are not doing some things our customers value, but they are not pioneering the new technologies."

"I think IBM is playing it smart," said Robert. "They compete on the software front where they can, but they do not want to rock the boat and so just go about doing whatever they can to make money.

"Microsoft has, over time, crushed every competitor that got in its way. Look at where Netscape [Communications Corp.], Novell [Inc.] and, to a lesser degree, Sun [Microsystems Inc.] are now. All of them have gotten steamrolled," he said.

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