Microsofts Ballmer Promises Midmarket Win-Win

By Peter Galli  |  Posted 2005-09-07

Microsofts Ballmer Promises Midmarket Win-Win

REDMOND, Wash.—With his usual boundless energy and optimism, Microsoft CEO Steve Ballmer took to the stage at the Business Summit here Wednesday to sell the companys vision for the midmarket segment.

He fielded a question about how midmarket customers should think about Linux, one of Microsoft Corp.s biggest competitive threats.

"If you ask me, you dont have to think about it," he quipped, before adding that it is good for any company, including Microsoft, to have competition, saying it makes Microsoft "think more creatively and innovate more."

What does Microsoft CEO Steve Ballmer see as a competitive threat? Click here to read more.

Ballmer said Linux is also directly responsible for helping keep Microsofts prices down: "It makes sure we watch our prices and make sure were offering value. Competition is a good thing and we do compete with Linux," he said.

"But IT pros should ask one thing and one thing only: Am I getting the best products and services that allow me to run my business at maximum efficacy. The answer for the lions share of the time will be in favor of Microsoft products and solutions, and we feel you shouldnt have to think about Linux if you do not want to," Ballmer said.

He also said Linux was ahead in the area of high-performance computing, but said Microsofts staff comes to work every day looking at how to offer customers an even better solution.

"It is important to remember that Linux is not free and that, on a TCO basis, Microsoft comes out tops most of the time. I hope that when you look at Linux, you look at it as a competitor to the vendor with whom you do all of your business," Ballmer said to laughter and applause.

He also did not steer clear of other sensitive areas during his presentation, addressing the thorny issue of licensing head on, telling some 700 attendees that "enough is never enough" on the licensing front and that this area needs continual innovation.

"Hopefully we are moving forward in that regard, but we have also taken a few steps backwards," he admitted, referring to the brouhaha that arose when Microsoft introduced its Licensing 6.0 and Software Assurance plan.

To read more about how some users baulked at renewing their Software Assurance contracts, click here.

Ballmer said the midmarket customer was the least well served across the spectrum of people served by IT, adding that midmarket customers were not only challenged by the enterprise but also faced specific IT challenges.

"If we want to serve the midmarket customer well, we have to allow them to do amazing things with IT while taking out a whole level of complexity in the process. This will require patience and tenacity, a hallmark at Microsoft, as our customers have come to expect us to get it right, if not at first, then later," he said.

Microsofts strategy has been an evolving one, he said, from looking at ways to expand its Windows and Office product lines to expanding its offerings through Great Plains and then through the Navision acquisition.

"Our vision is to take all of these parts and to make them work harder for the IT professional in the midmarket," Ballmer said.

Click here to read about Microsofts plans for premium versions of Office 12 and Windows Vista.

Microsoft has also learned some hard lessons about integrating these large acquisitions and how to deal with all the issues that arose from that, Ballmer said, admitting that this had been more complex and had taken longer than Microsoft had expected or would have liked.

But that process is now complete and those companies and their solutions are fully integrated into the company and its line of products, he said.

Next Page: Microsoft tries to bring midmarket customers what they want.

Microsoft Tries to Bring

Midmarket Customers What They Want">

"Our workflow and Business Intelligence capabilities have been really worked on in Office 12, and they will work out of the box as well as with some other ERP and CRM applications," Ballmer said.

He pointed to Centro, a product in the Windows Longhorn Sever family under development, as an example of one that brought all of Microsofts experience with its Small Business Server product and in the small and midsize market space to bear.

"Centro does not look anything like the way I first conceptualized it when we started talking about the product," he said, noting that the final version was a result of in-depth research and customer feedback.

Ballmer said Microsoft would continue to invest in the partnerships and tools that would allow it to have a personalized connection with the more than 1 million customers in the midmarket space.

The midmarket space will also be a great source of revenue growth for Microsoft, he said, but that doesnt mean higher prices for products geared towards these customers—rather, it means more products specifically designed to meet their needs and address their issues and challenges, Ballmer said.

"I have spent more time trying to understand the midmarket customer segment than on any other customer group during my time at Microsoft," Ballmer said.

When assessing this market, he said, "I started with the view that we have too many products that we are trying to sell to too few people in the midmarket. We have now come up with a solution that is a win for both of us and allows you to deliver more value to and through your businesses."

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