A New Role for Microsofts Ballmer

By Peter Galli  |  Posted 2006-07-27

A New Role for Microsofts Ballmer

REDMOND, Wash.—The decision by Chairman Bill Gates to transition away from working full time at Microsoft to assuming a part-time position has ushered in a new era and a new job for CEO Steve Ballmer.

"When Bill announced his role change, I felt like I was entering a new era and had a new job, given the uniqueness of my relationship with Bill over many years," Ballmer said at Microsofts annual financial analyst meeting at its campus here July 27. "I have never had to be the primary champion of innovation within the company. Bill has always played that role. But, over the next two years, I will have to become the primary champion of innovation at Microsoft."

Click here to read more about whether Microsoft is ready for Gates transition.

With regard to Microsofts longstanding goal of making software a service, Ballmer said this is happening and the Redmond software giant is embracing advertising and subscription-based models and Internet-based delivery across all of its products as an important part of what it does going forward.

He also said the company is like a multicore processor and is looking to add new cores such as entertainment and Internet services to its existing cores of desktop and server software.

The past year has been one of many firsts, he said: This is the first time Gates has not attended Microsofts financial analyst meeting; instead, he is "in Africa somewhere enjoying a long-planned vacation," Ballmer said.

This is also the first time Ballmer addressed the financial analyst community since Gates announced he will change roles, and it marks a time of change and innovation and a new era at Microsoft that will be more exciting and will generate even more shareholder value, Ballmer said.

Windows Vista and Office 2007, expected to ship in early 2007—which Ballmer called "blockbuster releases"—are the engines that will propel Microsoft in the market and attract interest in add-on offerings.

Next up at the financial analyst meeting was Kevin Johnson, co-president with Jim Allchin of Microsofts platforms and services division. Johnson made it clear that Microsoft will ship Windows Vista only when it is ready.

"The team is driving toward the next milestone, Release Candidate 1, which is likely this quarter. There are also no indications at this time that Vista will not ship as planned next January," he said.

Microsoft is striving for an on-time delivery of Windows Vista. Click here to read more.

"There is something for everyone in Windows Vista, and we will be driving that message home. But, at the same time, we have to make clear the additional value the premium SKUs bring," he said.

The platforms and services division is focused on putting the customer first, creating a compelling environment for end users and third parties to innovate on, while driving clear business value to its targeted audiences.

Leadership priorities include innovation agility, online services, execution and growth, as well as empowering people more and attracting the talent that drives the company, he said.

While Microsoft expects total PC shipment growth to slow to 8 or 9 percent, with 225 million PCs likely to ship next year, emerging market PC shipment growth is rising at double that rate, Johnson said.

Steve Sinofsky, who was recently appointed to head the Windows and Windows Live groups, has retooled the planning and development process for Windows, Johnson said.

Software Assurance renewals are tracking at the highest level in years, and Microsoft is signing up a lot of new users ahead of the release of Windows Vista, he said.

Next Page: Healthy business climate.

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In his address, Bob Muglia, senior vice president of Microsofts server and tools business, said this is a very healthy business climate, with IT spending going strong and growing, with billions of dollars being spent on architectures that benefit both Windows and Linux.

The trend toward industry-standard architectures will benefit Windows; Microsoft feels good about this and is putting mechanisms in place to engage with its customers and partners over the long term, he said.

Microsoft will take share from Linux in the High Performance Computing space over the next few years, Muglia said.

Microsoft is also living up to its promise to reach out and build bridges with the Linux and open-source community, and on July 18 announced a strategic relationship with XenSource for the development of technology to provide interoperability between Xen-enabled Linux and Windows Server virtualization.

As Microsoft starts providing software solutions in new areas, like the High Performance Computing and security spaces, it is once again turning to partners to help it gain traction and market share in those markets.

Click here to read more about how Microsoft is pulling out all the stops to woo new partners.

Muglia acknowledged the company had been weak on the Web hosting side as Apache had provided a better solution than Windows, but that has changed since December as Windows has gained eight points of market share, which translates into server sales for Microsoft from the Web hosting market.

"I see turnaround this year in HPC, the beginning of a turnaround on the Web, with security 18 to 24 months out. If we improve on these three we will outgrow Linux on a percentage and unit basis," Muglia said.

The security business is one of great opportunity for Microsoft, and there are huge upside opportunities, even though this is a nascent market for the company.

To read more about how Microsoft plans to take on Linux in the HPC space, click here.

Microsoft is also driving the industry forward in the management product space, where it is the sixth largest player, Muglia said.

"Watch what happens in the virtualization space over the next few years. Microsoft is going to own that space," he said.

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