In an address entitled "Value across the lifecycle: doing more with less," an upbeat and energetic Ballmer said a pattern of good solid increases in IT spending was on the horizon, but the pressures to do new projects would exceed investment in IT technology, and to lose sight of this would be a mistake.
"So the focus has to be on productivity and the total cost of ownership. When we have issues like we have over the past few years with security … thats a setback and we need to beat this problem so we can help improve productivity and reduce TCO," he said.
"I think the next 10 years will bring more positive change and innovation in our industry than in the last 10 years. Ten years ago most people didnt have PCs, cell phones and werent using the Internet," Ballmer said, asking the audience if they believed the world of IT would be dramatically different in 10 years.
Most did, but for those who didnt, Ballmer quipped that "you can meet me backstage where well have a conversation about this."
Microsofts unique role in serving the IT market was to bring integration of products and innovation, he said, and while it was working on this with Longhorn, the next version of Windows, that has taken a backseat to the security updates coming in Windows XP SP2.
Microsoft had to be responsive to its customers and their insistence on responsiveness had increased even more over the last few years. Ballmer said one of the things he was proudest of in this area was Watson, the automatic error reporting system.
Asking the audience if they had ever got the Watson error message, to which every hand was raised, he quipped "I thought statistically some of you might have."
Security was an important pillar of the responsiveness theme from Microsoft, where "security is job one. The problems you are having keeping your systems up is unacceptable. But there is no immediate solution. We have an installed base of more then 600 million and we can also never rely on having a perfect release," he said.
Microsoft is working on the core quality of security and on building layers to help protect systems, and is engaging with partners to respond quickly when there is an attack, Ballmer said.
Turning his attention to spam, Ballmer said this was more annoying and problematic for many users and is another big area Microsoft is investing in. The number one question asked by the 130 global CEOs and their spouses who had visited Microsofts campus last week was, "When are you going to get rid of spam?"
Microsoft had dialed up its focus and was concentrating on three main areas in this regard: protection, filters, screens and the like; prevention, where it was working with ISVs to screen certain IP addresses and shut them down if they were found to be spammers; and technologies that made it more expensive to be in the spamming business—something that forces cost in the system by making the sender prove his identity. "The big problem with spam today is that its too cheap to send," Ballmer said.