Ballmer Sees Many Billion-Dollar Opportunities

ORLANDO — Microsoft CEO Steve Ballmer stood before a packed crowd at the Gartner IT conference here and gave a bullish and often pointed outlook of
Microsoft’s prospects.

“In business computing, the other guys aren’t even as good as ‘me too,'” said Ballmer during the Q&A session with analysts. He did concede that Google is No. 1 in search and online advertising with Microsoft trailing in third place, but has strong aspirations to move up.

“We’re playing the stakes. It’s expensive to do an ad platform and indexing.
We’re differentiating in certain verticals like shopping, and we’re also
trying to rewrite the game of how that world works. When we have something
ready, you’ll see it.” (Microsoft bought online ad company aQuantive for $6 billion earlier this year).

Ballmer said Microsoft has several product lines that could grow quickly
to billion dollar businesses — a billion being a “mere” 2 percent of the $50
billion the company generates.

“We’re already close with SharePoint, with hundreds of millions of
dollars,” he said. “There’s also management software, office communications
and mobility could explode.”

But amid that rosy outlook, Gartner research vice president Yvonne
Genovese related her unhappy experience with Microsoft Vista, noting it was
difficult to implement and that after two days she switched back to XP.
Vista has “not had a lot of the value
we perceived it would have,” Genovese said.

Ballmer said there have been problems with device drivers, but he said
the company is working with vendors to get those resolved.

“There’s always a
tension between end users and what we can deliver to IT,” said Ballmer,
noting Vista’s security features. “There are actually fewer vulnerabilities
in the first six months than any of our other releases.”

In an interview after the session, an information services executive at a
large insurance company who asked not to be identified told she’s been
disappointed with the complexity of Microsoft’s service agreements and the
value of Microsoft’s Software Assurance maintenance agreement.

The company “saved a ton of money,” she said, by dropping the client support and sticking with XP. “We found we didn’t need it and we don’t see a lot of business value in upgrading to Office 2007,” she said.

Ballmer of course disagrees. “I think it’s phenomenal what we delivered. I
don’t think everyone realizes that when we launched Office 2007, it was
essentially with 33 other products, like a new version of SharePoint and the
Office Communication Server we’re launching
next week.

He said the value Microsoft has offered with its software
has not decreased in the past five to 10 years and added that it’s working on a
number of improvements. “It’s super critical that people want software to be
easier to take care of. Software should self-update, and we need
click-to-run on PC applications.”

He also said Microsoft was offering enterprise customers more flexibility
with technology such as that from Softricity, the virtualization company it acquired last year, which lets applications run on one version of Windows while being hosted on another.

On the question of Software as a Service and Web-based applications, Ballmer said he
expects Web apps will be richer, but he didn’t back away from the company’s
view that rich-client applications will continue to dominate.

“With Windows Live we see the OS having more real-time extensibility
via the cloud so you can do richer things on thin clients.”

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