Mills Mulls Microsoft

The head of IBM's $13 billion enterprise software business unit weighs in on his foremost partner and competitor.

IBM generated $13 billion in enterprise software revenues last year. So, when Steve Mills, senior VP and group executive with IBM Software Group, talks, even Microsoft tends to listen.

Microsoft Watch Editor Mary Jo Foley chatted with Mills a couple of weeks after he appeared on stage with Microsoft CEO Bill Gates to demonstrate Web services interoperability. Mills had plenty to say about the Redmond software vendor.


Read about the Gates-Mills dog-and-pony show here

Heres our transcript, edited for length:

Microsoft Watch: To start, a Sun question for you. Sun recently announced its plan to provide an integrated suite of server software, called the Java Enterprise System. Do you think Sun is simply copying what IBMs already done around WebSphere?

Mills: I think Sun doesnt really understand what a software company does. A successful software company has to have a software sales force, support in the field for software. Software is sold at an entirely different rate and pace. It has very different sales characteristics than hardware. So this idea of sort of "packaging it together and buy it with the hardware" idea is not how the market buys. Certainly not in the enterprise space.

There are two buying habits out there that remain valid. One buying habit is the shrink-wrapped phenomenon. The other is enterprise institutional buying, which is really more about the enterprise trying to achieve some business goal through deploying some fairly complicated pieces of software; making them work together with some other fairly complicated pieces of software; and six months after the purchase, being able to demonstrate a result that means something to the business.

So, if you dont have a field organization that understands the customer issues and relates the technology to their business needs; you dont have the resources to help the customer deploy it, tune it and get it to work right, you dont have a successful software model. And I dont see a lot of evidence that they are building the go-to-market structure around software. Theyre sort of presuming that terms and conditions alone will carry the day. And maybe there are enough people out there that hate Microsoft — which is not much of a motivation to buy anything. Sun may hate Microsoft, but the rest of the world doesnt quite think of them that way.

Microsoft Watch: So contrast that Sun approach with what Microsofts talking about around "integrated innovation." Microsoft is talking software stack, too. Do you see Microsofts approach as differing from Suns...and IBMs?


Read more about integrated innovation here

Mills: I see (Microsofts approach) as a continuation of BackOffice model. You cant equate these companies together. Microsoft has been able to do things because of reasons of history. A set of unique events occurred and they were the ones who lucked out.

But the PC model is a very different model than the enterprise server model. Microsoft clearly leverages the PC model extremely well. Theyd like to translate some of that to the server business…. For lower-end buyers still doing a lot of client/server computing, these integrated packages can work. Were doing some of it ourselves. Its a valid model, but were not naive about how far it stretches.

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Read the rest of this interview on Microsoft Watch.