Segmenting Products

But all products after Longhorn will deliver on integrated innovation by building on its next-generation capabilities, Ballmer said, adding that great innovations are not quick and easy. "Windows 1, 3 and 2000 all took time, and all were worth it. Longhorn has even more innovation and will be worth it, too. Bet on it," he said. But he cautioned staff that the company needs to deliver products and services that do more to enable the complete customer experience. Products also must be better segmented for users with different needs. "And we must evolve marketing to focus more squarely on the value proposition throughout the product life cycle, not just at launch. So many customers have yet to deploy our most recent advances, so we must not only help them understand why to deploy, but also demonstrate the benefits of deploying before we reach the Longhorn generation," he said. Addressing the fact that many customers are shunning new products and continuing to use their legacy systems, Ballmer said Microsoft needs to work to change a number of customer perceptions, "including the views that older versions of Office and Windows are good enough and that Microsoft is not sufficiently focused on security. "We must emphasize key positive perceptions of the strong manageability, and developer and information-worker preference, for our platform. We are effectively using independent studies by Forrester Research, the Yankee Group, IDC, Giga, Bearing Point and many others to change perceptions of the advantages of Windows over Linux when it comes to total cost of ownership, functionality and productivity advantages, support and security. We need to do work like this in every business to get customers to recognize our work and appreciate it fully," he said. Staff members also need to make it business-as-usual to listen to the voices of customers and partners. "We need to be especially effective in hearing and satisfying the people who use our products every day—consumers, information workers, IT pros and developers," he said. When Microsoft talks about "excellence," it means consistent, high-quality (and low-cost) execution in all it does, from creating products to serving customers and operating the business. "Were taking our work in security to the next level by implementing the Security Development Lifecycle [SDL] for all future products. "This involves mandatory annual security training for all engineers working in product-development groups, and a series of security-related milestones integrated into the software development process of each engineering team," he said. Next Page: Balancing employee benefits and the companys stock price.