Ballmer Touches All Bases

By Paula Musich  |  Posted 2003-10-21

Ballmer Touches All Bases

LAKE BUENA VISTA, Fla.—Microsoft Corp. has a variety of "opportunities" to take cost out of the development, deployment and day-to-day operations of IT systems, according to CEO Steve Ballmer.

During his keynote address at the Gartner Symposium here this morning, the pugnacious CEO was peppered with questions about the cost of Microsoft software, the security vulnerabilities in its products and its ongoing battle with Linux.

He pointed to Microsofts Dynamic Systems Initiative as an example of the work that the software giant is undertaking to reduce the TCO (total cost of ownership).

At the same time, more automation is needed to lower the TCO of IT systems, he added.

When asked about the deal Microsoft struck to offer customers in Thailand its software at 10 percent of what it costs in the United States to reduce the amount of piracy there, Ballmer called the deal an experiment.

"We did an experiment with a very poor country to see if it would stimulate demand. That experiment has not been a great success," he said. He added that Microsoft has also offered lower prices to educational institutions—especially in poor school districts.

The latest release of Microsoft Office, called Office System 2003, will provide plenty of incentive to upgrade, Ballmer argued, because of advancements Microsoft has made in the area of collaboration.

"It really shines for teams of people. The way we build support for collaboration will revolutionize the way proposals [among other functions] are done," he said. At the same time, individuals will want to upgrade because of the advantages in the new version of Outlook.

Microsoft, however, has no plans to develop a version of its office software for Linux.

"Theres no reason because the uptake of Linux on the client isnt there. Its smaller than the Mac," Ballmer said. Besides, he said, "nobody pays for software on Linux. At the end of the day it isnt about religion. Its about business and what people are willing to pay for."

Ballmer also defended Microsofts shunning of Linux and the open-source community by pointing out his companys participation on standards efforts around XML. But Microsoft intends to "make Windows the best platform to port Unix applications to than any other platform on the planet. We want a good migration story for Windows," he said.

Next page: Pricing pressure from Linux?

Pricing Pressure


He brushed aside questions about pricing pressure from the Linux world saying, "We made the choice to extend Windows to include an application server. Its our view that customers prefer to see it packaged with Windows. We look for an opportunity to innovate in Windows products. If it adds value, well put it into the base Windows product."

Such integration and packaging of functions into the software reduce the integration effort and compatibility issues customers must deal with, by putting the onus on Microsoft to "think through the relationship between pieces of software," he said.

"We have to take [the integration] effort out," Ballmer said. "It was controversial when we put the TCP/IP stack into [Windows]. Now its not."

Despite the ongoing security breaches that occur in Windows, Ballmer characterized Linux as a less secure platform and defended his companys efforts to beef up the security of Microsoft products.

"Theres nobody to hold accountable for security issues with Linux. We stand behind the product, we provide a [product] roadmap," he said. "Some say there is a scenario where Linux has better penetration. That pushes us to work harder. Why should code developed randomly by some hacker in China be better than software developed by a professional? Theres nothing that says there should be integrity that comes out of [the open source] process. I think it is absolutely not good reasoning that you will get better security out of Linux."

Although Ballmer acknowledged Microsoft has a way to go to eliminate the security issues around Windows, he pointed to the progress the company has made to date.

"In the first 150 days [after the release of] Windows 2000, we had 17 critical vulnerabilities. In the first 150 days of Windows 2003, we had four critical vulnerabilities. Since we embarked on the Trustworthy Computing initiative, weve made dramatic strides," Ballmer said. "But we need more consistent patch policies. People want better technology to help shield our systems; they want rules to help inspect systems coming into an environment. This is an area where were cranking up. We have new releases of [Windows] XP and [Windows] 2003 that will address that. We need to keep [hackers] all out. Were also trying to work with law enforcement. There needs to be more criminal deterrent."

Next page: Microsoft puts "best brains" on security.

Best Brains on Security

Ballmer asserted that there will be fewer security complaints a year from now, and that it is a top priority for Microsoft.

"We have our best brains on it. We understand this is a customer satisfaction issue—a competitive issue. It could differentiate us from the competition. Were trying to train 500,000 people on the best way to protect systems."

Ballmer deflected questions about Microsofts response to the trend toward on-demand or utility computing, calling efforts by IBM, Hewlett-Packard Co. and others "good advertising."

But Microsoft is focusing on how to provide access to information in a "more intelligent fashion" and on how to manage applications at a lower cost.

"The real question is, How do we get there? We start from our heritage of the client and information worker" who is using Microsoft Office, he said.

The other part of Microsofts heritage is working with software developers. "More people use our platforms and tools to write applications than anything else out there."

Although he acknowledged that management software has not been a "strength" for Microsoft, it is "an area weve really made an effort in," he said, pointing to Microsofts Dynamic Systems Initiative. "This is where we have an opportunity to distinguish ourselves."

Rather than engaging more with customers by beefing up its consulting services, Microsoft is "trying to engineer products so they are simpler to deploy so customers dont have to mobilize 1,000 people. The right approach is to re-engineer the software so there is less total cost and man hours necessary [to deploy systems and applications]," he said.

For Web services, Ballmer said Microsoft is not treating management as an afterthought. Its first focus for that technology was with .Net development, but Microsoft is now working to provide its customers with the tools to build in the manageability for Web services in Visual Studio. He also held out the possible acquisition of a software company that provides the capability to build in management of XML services.

"Stand by for news there," he said.

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