Gates: Microsoft Poised for Growth

By Darryl K. Taft  |  Posted 2002-07-26

Gates: Microsoft Poised for Growth

REDMOND, Wash.—The long-term outlook for the high-tech industry is good, and Microsoft Corp. will be at the forefront of it, according to Chief Software Architect and Chairman Bill Gates.

Speaking at the companys annual financial analyst meeting here Thursday, Gates said Microsofts position in the enterprise was strengthening, due to its server capabilities and leading tools and operating system focus.

SQL Server 2000 has been leading the way, as has Windows XP, which has now sold 46 million licenses, Gates told about 300 financial analysts, investors and journalists.

Microsoft saw some "remarkable successes in 2002" despite tough economic times, he said, adding that "Web services are gaining broad appeal … and WS-I [the Web services interoperability organization] now has more than 100 members and Microsofts Visual Studio .Net is now deploying all kinds of Web services applications."

In fiscal 2003, Microsoft will release Windows .Net Server, for which the company released Windows .Net Server Release Candidate 1 Wednesday, Windows Media 9 series, Windows XP Media Center edition, MSN 8, Windows XP Tablet PC Edition, Windows CE for Smart Displays and an update of Visual Studio .Net, Xbox Live, and new Xbox games.

Gates said the Yukon wave will center on the next major release of Microsoft SQL Server, and further out the Longhorn wave will focus on the next major release of Windows.

Meanwhile, Paul Flessner, Microsofts senior vice president of the Enterprise Server Group, said at a time when database sales are either flat or decreasing, Microsoft SQL Server achieved more than 20 percent growth year over year.

Indeed, Microsoft plans to make considerable investments to ensure its products continue to do well in the market, he said. In the coming year, Microsoft will invest 22 percent more in server salespeople, 15 percent in the amount spent on account managers, and 47 percent more in developer salespeople.

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Beefing Up Its Channels

In terms of marketing, Flessner said Microsoft will invest $200 million in a worldwide advertising campaign, including TV ads. The company also will pour $500 million into its channel to beef up channel partnerships.

"Fifty percent of our revenues in servers went through the channel last year," Flessner said.

Microsoft is investing $2 billion in the server space this year alone, he said.

Flessner said Microsoft is poised to compete with IBM and Linux. Microsofts products measure up well against that combination, he said. "What enterprise customers want to talk about is how these things thread together," he said.

Eric Rudder, senior vice president of the developer platform and evangelism at Microsoft, plotted out the next steps for the developer division, though he stopped short of discussing the Whidbey version of the .Net Framework.

Rudder said the Everett version of Visual Studio .Net will ship next when Windows .Net Server ships by the end of this year. The Yukon version of Microsoft .Net will feature improved IDE and community support and will feature a new visual design tool for XML and integration with SQL Server and embrace all the languages in the Common Language Runtime.

"It will also do cool things with Office and Web services," Rudder said.

The Longhorn version of Visual Studio .Net, even further down the road, will feature new user interface tools and a new storage system.

In 2003, Rudder said Microsoft will continue to engage the community with .Net and make sure Web services become the preferred architecture for developers. "Here our great competitor is IBM," he said.

Rudder also said Microsoft must build a vibrant and healthy developer community. "This is one of the lessons Linux has taught us," he said

Last year, Rudder said, 85 percent of Microsofts tools were sold as part of a suite. And MSDN, the Microsoft Developer Network, grew by 36 percent in terms of membership, he said.

"Were winning customers through the .Net advantage," Rudder said. "We create the strongest foundation for business agility. Our solution is comprehensive open services, servers and tools."

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