Ballmer: Microsoft Taking a New Direction

Says company has learned, grown from legal dispute; some observers skeptical.

Projecting a warmer, gentler—if not quite contrite—corporate image, Microsoft Corp. CEO Steve Ballmer last week made his first public address since a federal court issued a decision in the antitrust suit that had dogged the company since 1998.

Ballmer emphasized that Microsoft has learned and grown from the protracted legal dispute, and he depicted the companys new mission as one about relationships, communication and sensitivity.

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"As a company, as people, I think weve changed and grown over the past few years," Ballmer said at a forum in Washington sponsored by the Brookings Institution and the American Enterprise Institute.

These days, Ballmer said, he spends most of his time and energy working on the companys foundation, including its values and the way in which it works with others.

Having become the face of Microsoft since co-founder Bill Gates took on the less public role of chairman and chief software architect, Ballmer underlined the companys intention to comply fully with the antitrust ruling issued by U.S. District Judge Colleen Kollar-Kotelly Nov. 1.

"Bill and I run a very different organization today than we did five or 10 years ago," Ballmer said. "We learned that we needed to take a different perspective on being a good industry leader. Even five years ago, I think we tended to think of ourselves as a small company that was just getting started."

The Redmond, Wash., company has "affirmed a set of basic values" that are incorporated into each employees personnel review, and managers now have a great deal of accountability to customers, Ballmer said. "Were trying to forge a new kind of relationship with our customers, our partners, the industry and the government," he said.

Despite the positive affirmations from Ballmer, many in the industry are not convinced that Microsoft will significantly alter its behavior absent stronger legal remedies.

"If anything has changed, it is that Microsoft has more money now to use for anti-competitive strategies," said Antony Tovar, network administrator at Moss Adams LLP, in San Diego. "I wish that [the judge] had adopted the states more proactive remedies because its not clear to me how this new agreement is significantly different [in its impact] than the previous consent decree."

Early this month, even as the court was conditionally approving the settlement that Microsoft clinched with the Department of Justice one year ago, Sun Microsystems Inc. filed a complaint about Microsofts adherence to licensing provisions in the settlement.

Microsoft requires licensees of its communications protocols to sign nondisclosure agreements, which an official at Sun called "very strict and very comprehensive."

Ballmer said last week he was not surprised that competitors have brought complaints to the government, but he expects discussions in progress with several companies "to bear fruit."

Because of the nature of the networking industry, there remains a large contingent of users who see structural separation as the only way to prevent Microsoft from leveraging its operating system market power to dominate emerging products and services.

"I dont see how Microsoft will stop any of their anti-competitive practices with this ruling," said Mark Wirtz, service representative for PC Power Systems Inc., in North Olmsted, Ohio. "The most important concern is Microsofts exclusive access to APIs and other system calls that they leverage to exclude competitors in the applications arena."