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Microsoft‘s Worldwide Partner Conference, running in New Orleans from July 13-16, saw the company demonstrating a wide swath of its upcoming products, including Office 2010, Windows 7, Silverlight 3, Windows Server 2008 and Windows Mobile 6.5, as the company seeks to regain and retain market share against its high-profile rivals.
The company also finds itself faced with convincing its partners and customers to upgrade and refresh their IT infrastructure during a period of economic turbulence. On Oct. 22, Microsoft plans on rolling out Windows 7, the newest version of its operating system, which it hopes will be a worldwide hit. Success for Windows 7 would counteract the negative feelings that many users and businesses have for Vista.
Publicly, Microsoft CEO Steve Ballmer suggested during a Q&A session following his July 14 keynote speech that an industry-wide tech refresh, vital as it is for Microsoft, is inevitable.
“Even if you take the assumption that [the economy] won’t turn around for a long period of time, every minute of every day we’re building a pent-up demand for IT,” Ballmer said.
Ballmer also added that Microsoft would keep its annual R&D spending flat at $9.5 billion next year, despite economic drag. “That is a testament to our belief and optimism about the future. We’re going to keep the same old Microsoft approach: tenacious, long-term.”
The conference also saw Microsoft taking a more aggressive stance toward its biggest rivals, including Google and Apple. Specifically, Microsoft’s newest ad campaign, which compares the relative inexpensiveness of PCs when compared to Macs, and which allegedly provoked an irate phone call by Apple’s lawyers to Microsoft’s chief operating officer Kevin Turner.
“Two weeks ago we got a call from the Apple legal department saying, ‘Hey’ – this is a true story – saying, ‘Hey, you need to stop running those ads, we lowered our prices,'” Turner said during a July 15 speech at the conference. “I did cartwheels down the hallway. At first I said, ‘Is this a joke? Who are you?'”
Turner also vowed that Microsoft would take more competitive stance throughout the balance of 2009, spearheaded in part by new Microsoft retail stores due to open in the fall. In another move seemingly calculated to drive up Steve Jobs’s blood pressure, a number of those stores will be located in close geographical proximity to Apple stores.
Apple’s share of the U.S. PC market was 7.4 percent in the first quarter of 2009, down from 9 percent in the third quarter of 2008. However, Apple continues to perform strongly thanks to its iPhone and iPod sales.
As it seeks to build momentum around its flagship product lines, Microsoft used the conference as a platform for a number of key announcements:
Microsoft Office 2010: In a sea change from its previous desktop-centric model, Microsoft plans to offer Office 2010 as a free online service to Microsoft Live subscribers. The move seems designed to directly challenge Google Apps and other free cloud-based applications and productivity suites.
The stripped-down versions of OneNote, Excel, Word and PowerPoint will not replicate all the features available in the full versions, which Microsoft plans on offering (for a price) as both a hosted subscription service and an on-premises application. Microsoft announced during the conference that Office 2010, along with SharePoint Server 2010, Visio 2010 and Project 2010, had reached the technical preview engineering milestone; the beta release will follow at an as-yet-unannounced point.
In another sign of Microsoft’s embracing the Web, Office 2010 will be specifically designed to be more accessible through smartphones, allowing users to access documents through their mobile browser and make certain lightweight edits.
Windows Mobile 6.5, Azure and Bing
Windows Mobile 6.5: Microsoft’s upcoming operating system for mobile devices will come loaded with several new features designed to specifically counteract features of the Apple iPhone and Palm Pre, including improved touch capabilities and customizable widgets.
The ability to use gestures such as tap-and-hold to navigate through the Mobile interface will appeal to users, but Microsoft seems to be betting that its Windows Marketplace for Mobile, due to roll out in the fall, will give it an opening in the increasingly competitive mobile-device space. According to a report by Juniper Research, there will be nearly 20 billion mobile-application downloads per year by 2014.
Windows Marketplace for Mobile, which will open itself to developer submissions later in July, will be specifically tailored to the enterprise, with a dedicated section for business applications. In order to expand Microsoft’s potential customer base, Marketplace will also support applications built for Windows Mobile 6.0 and Windows Mobile 6.1 devices.
Microsoft Azure: Microsoft announced that Azure, its public cloud platform, would be free until the Professional Developers Conference in November, at which point developers will be required to pay for the service.
At the conference, Doug Hauger, general manager of Microsoft Azure, acknowledged that cloud services were a potential “$150 billion business opportunity for the marketplace,” suggesting that Microsoft’s free-for-five-months offering is part of a strategy to achieve broad market penetration as Azure goes head-to-head against similar offerings from Amazon.com and Google.
Once the pricing structure goes into effect in November, Microsoft will offer three different options. The first, “consumption,” will be a pay-as-you-go model, costing 12 cents per hour for infrastructure usage and another 15 cents per gigabyte for storage. The second will be a subscription-based format, while the third will operate on volume licensing. All three types of Azure services will cost 10 cents per gigabyte for incoming data and 15 cents for outgoing data.
The business edition of the SQL Azure database, with 10 gigabytes of storage, will cost $99.99.
Despite reservations among many IT professionals about public clouds and the security of the operations and databases run from them, Microsoft does not plan on making Azure available to any private clouds set up by the enterprise. However, it does plan on porting some of Azure’s functionality, such as the ability to boot from a VHD (Virtual Hard Disk) into Windows Server 2008, which in turn could constitute part of the platform that a company uses to build its own cloud.
Microsoft Bing: Microsoft used the conference to re-emphasize its commitment to Bing, its search engine that combines traditional “page of hyperlinks” search with a set of tabs on the main page that allow for more granular search.
During his keynote speech on July 14, Ballmer suggested that support of the search engine would continue, describing Bing as having “a little bit of mojo.” Microsoft has dedicated a massive ad campaign, estimated at between $80 million and $100 million, to spreading the word about the search engine.
That campaign, and the attendant media attention, has so far translated into an 8.4 percent market share for Bing in the U.S. search engine arena, according to a July 16 report released by comScore. That places Microsoft’s baby in third behind Yahoo, which holds 19.6 percent of the market, and Google, which continues to dominate with 65 percent of the market.
However, it could be some time before Microsoft sees monetary gains for its search efforts. A July report by research company SearchIgnite showed that Microsoft’s percentage of the U.S. paid search advertising market remained level in the second quarter of 2009, at just under 6 percent; the report also noted that an uptick in paid search spend often lags behind a similar rise in actual users.