CEO Steve Ballmer uses the pulpit of a Microsoft event in San Francisco to discuss a so-called new efficiency that IT administrators must embrace in a difficult economy, and touted the cost-saving aspects of new Microsoft products such as Windows 7 and Windows Server 2008 R2. A massive enterprise tech refresh, coupled with rapid adoption of Windows 7, would help Microsoft improve its battered revenues.
Microsoft
CEO Steve Ballmer, speaking at a company
event in San Francisco Sept. 29,
suggested that IT administrators will need to be more efficient during an
"economic reset," as he called it.
"I think IT is going through a period of new efficiency," Ballmer
said at the event. "What do we mean by that? It relates to this notion
that the same pressures that have been on IT for years ... [are now] accompanied
by the pressure to run a cost-effective IT shop."
Of course, Ballmer then suggested that the surest route to that
extra-efficient, ultracheap IT shop would be the deployment of Windows 7 and
other upcoming Microsoft software platforms. The event was aimed squarely at
the enterprise, upon which Microsoft and many of its ecosystem partners are
depending for a sizable amount of technology sales over the coming quarters.
"In the new economy, it's, 'With less, do more,'" Ballmer said.
"Yet at the same time, there's a lot of pressure for new applications, new
innovation."
Ballmer attempted to appeal to IT administrators' consciousness of their purse-strings,
focusing much of his talk on the supposed cost-efficiency of upgrading to the
next generation of Windows products.
"Some of our customers will race to embrace Windows 7 and will want to
upgrade machines in place," Ballmer said. "More will probably want
them on more PCs as they refresh their PC base. Those with a particularly old
install base may do a more massive refresh." He added, "We do think
you'll see ongoing savings once you have these things deployed and provisioned that
should be interesting for you from a cost perspective."
In
a letter titled "The New Efficiency"
released to customers and partners on the same day as the San Francisco presentation,
Ballmer wrote, "The new efficiency will not only help companies respond to
today's economic reality, it will lay the foundation for systems and solutions
that connect people to information, applications and ... other people in new
ways."
Drawing attention to Windows 7, Windows Server 2008 R2 and Exchange Server
2010, Ballmer made it clear that he wants the enterprise to see Microsoft as a
vital part of propagating that new efficiency. In the letter, he cited Ford
Motor Company, Continental Airlines and Baker Tilly, a London
financial services firm, as all saving money through the deployment of
Microsoft systems.
The viciousness of the two-year recession has dampened companies' IT
spending and, by extension, Microsoft's bottom line. For the fourth quarter,
the company reported a 17 percent decline in year-over-year revenue, with earnings
of $13.10 billion that were roughly $1 billion below Wall Street estimates.
As a result, Microsoft has cut several underperforming or legacy programs
and retrenched
around core products such as Windows 7 and Office 2010. In addition, it has
launched a campaign of price cuts and associated promotions through retailers,
attempting to spark interest in the upcoming operating system among consumers.
That being said, a key part of Microsoft's strategy focuses on the
enterprise. So that its new operating system will be embraced by IT
professionals, some of whom may initially choose to stick with their well-worn
XP-based systems, Microsoft
has taken steps such as offering Windows 7 Enterprise in a free 90-day trial
edition.
The question remains, though, whether IT professionals will choose to
rapidly upgrade their systems, especially considering the general squeeze on
budgets alluded to by Ballmer during the presentation. A July report by
Deutsche Bank found that Windows
7 would indeed compel such a widespread tech refresh within the enterprise
and small and midsize businesses, even as another survey by ScriptLogic found that
many companies plan on adopting
the new operating system and other software in the Microsoft ecosystem much
more slowly.
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
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