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Microsoft’s week climaxed at its annual Financial Analyst Meeting, where company executives reiterated their argument-made previously at July’s Worldwide Partner Conference-that competition in areas such as the cloud and tablet PCs is only just beginning. While Microsoft’s core businesses performed well last quarter, the company is trying to expand into areas where some of its competitors already hold something of home-field advantage-particularly Apple, whose bestselling iPad threatens to dominate the tablet market.
“Apple has done an interesting job of putting together a synthesis and putting a product out,” Ballmer told the assembled analysts July 29, according to a transcript provided by Microsoft. “They sold certainly more than I’d like them to sell, let me just be clear about that.”
According to Ballmer, Microsoft already possesses the components necessary to make a successful tablet franchise: “We have a lot of IP, we have a lot of good software in this area, we’ve done a lot of work on ink and touch and everything else-we have got to make things happen. Just like we had to make things happen on netbooks, we’ve got to make things happen with Windows 7 on Slates.”
A vital part of that, apparently, will be Intel’s Oak Trail processor due in 2011. “Oak Trail is designed to be lower power,” Ballmer said. “Lower power is good in a lot of ways. It leads to longer battery life, no fan, lower kind of noise levels, a lot less weight-a lot of things people like.”
Ballmer seemed to hint that the consumer tablet market is in its early stages, and the opportunity still exists for Microsoft to make a substantial play. In that sense, his comments echoed those made at the company’s Worldwide Partner Conference earlier in July, where executives suggested the smartphone market is nascent, and that the upcoming Windows Phone 7 can succeed against well-established players such as the iPhone and Google Android.
Unlike Windows Phone 7, which will be loaded onto a singular style of device-iPhone-like glass front, three physical buttons, no keyboard-Microsoft evidently envisions a broad family of tablets running Windows 7.
“We think about these devices and I don’t think there really is one size fits all,” Ballmer said. “Some people are going to want a device that is screen and keyboard that spins around for inking purposes. Some people are going to want things very light or very cheap or very expensive or very powerful. All of those things are going to be important, and we’ve got a push right now.”
Push, maybe-but Ballmer also seemed noncommittal about an actual release date.
“Some of you will say, ‘Well, when? When?’ And I say, ‘As soon as they’re ready.’ They’ll be shipping as soon as they are ready,” he said. “Nobody is sleeping at the switch. And so we are working with these partners, not just to deliver something, but to deliver products that people really want to go buy.”
In addition to showing off Windows Phone 7, Xbox Kinect and Office 2010, Microsoft used the Financial Analyst Meeting to talk about its “all in” cloud strategy, as well as the company’s designs on the enterprise.
“Our enterprise business is about 35.8 percent of the company. Our small and medium-sized business is about 20 [percent] as you look at it,” COO Kevin Turner told analysts. The company’s strategy to appeal to those businesses, he added, revolves “around rebooting, retransitioning, replatforming ourselves, if you will, around leading with the cloud with our customers.”
He also insisted that Microsoft’s cloud initiatives will boost its traditional software sales.
“We are going to lead with the cloud,” Turner said. “Leading with the cloud actually helps better position Microsoft to sell more on-premises products than we ever have before. … Very strategically it signals a very clear commitment to our customers and to our partners.”
While Microsoft has touted the cloud at several recent events-particularly Azure, its cloud-based development platform-the company still depends on traditional products such as Windows to supply the bulk of its monies.
“On the Azure side, it’s early,” Microsoft CFO Peter Klein told analysts and media during the company’s July 22 earnings call. “It’s not material to the financials this year.”
Microsoft’s other big announcement this week centered on security. In conjunction with the opening of the Black Hat USA security conference, Microsoft announced July 28 that Adobe Systems will begin informing vendors of software vulnerabilities via the Microsoft Active Protections Program.
Originally launched in October 2008, MAPP was built with the intention of delivering vulnerability information to security software vendors ahead of Redmond’s regular Patch Tuesday updates. As part of the program, Adobe will share information about its product vulnerabilities with 65 global MAPP members.
“Given the relative ubiquity and cross-platform reach of many of our products, as well as the continued shifts in the threat landscape, Adobe has attracted increasing attention from attackers,” said Brad Arkin, senior director of product security and privacy at Adobe. “MAPP is a great example of a tried and proven model giving an upper hand to a network of global defenders who are really behind a shared purpose-protecting our mutual customers.”
As part of Black Hat, Microsoft announced EMET (Enhanced Migration Experience Toolkit), which “brings newer security mitigations to older Microsoft platforms and applications,” in the company’s words, and blocking targeted attacks.
Not related to Black Hat, Microsoft also provided a behind-the-scenes glimpse at some of the features in the upcoming Office for Mac 2011, including Template Gallery, which lets users pick from Microsoft Office templates as a jumping-off point for creating new documents, and the Office Ribbon, “designed as an evolution of the Office 2008 Elements Gallery.” Apple may be a competitor with regard to tablets, but Mac users still offer Microsoft a notable source of revenue.