While not sugarcoating the dismal economic conditions sapping revenues and profits across the industry, Microsoft President and CEO Steve Ballmer struck an upbeat tone Tuesday at the Worldwide Partner Conference in New Orleans, urging partners to seize this moment to focus on things they can control, such as gaining market share and making customer satisfaction the No. 1 priority in the year ahead.
In what was one of the more spirited, at times manic, keynote addresses the boisterous Microsoft leader has given, Ballmer stressed the strategic, fundamental role that the channel has and will continue to play in Microsoft’s success while at the same time encouraging the partner community to be ready and adaptable as the industry shifts toward new paradigms such as online services. He touted the bevy of upcoming product releases, from flagships Windows 7 and Office 2010 to newer frontiers such as the Azure cloud computing platform and current search phenomenon Bing.
“Despite this interesting economic time, our industry more than any other needs to step up and drive the next level of innovation,” Ballmer said, who characterized the state of the economy as a “reset” in which the level of economic activity will necessarily settle at a lower, more realistic mark in the future. “And I am more optimistic about the opportunities and innovations to drive from our company than any other point in time in history.”
Ballmer said Microsoft will maintain its current annual investment in R&D for next year at $9.5 billion (roughly 16 percent of the company’s gross revenue) and will focus ongoing investments across a range of product segments, including client-based Windows and Internet Explorer; Windows Mobile software and phones; productivity solutions including Office, SharePoint and unified communications; servers and data center management software; SQL Server database; enterprise applications; and search and Web-based advertising.
On a day when Microsoft announced the pricing structure for its Azure cloud computing platform, Ballmer spent a fair amount of time on his vision of how the world of traditional licensed software intersects with Web applications and virtualized software centrally available over the Internet. The model will be a hybrid of on-premises software installations that can seamlessly be ported over via tools like Microsoft’s Silverlight to reside on Azure in the cloud.
In discussing Microsoft’s initiatives around software plus services, Ballmer sought to allay partner concerns that Microsoft will own the data center and hosting cloud, leaving the channel out of the opportunity. “Look, we need to do services, but we will not be the only people that run data centers for the world, and that itself creates mutual opportunity for all of you.”
On that inclusive note, Microsoft unveiled SPLA Essentials, a program meant to simplify the licensing process that stumps many potential Microsoft hosting partners. The goal, executives said, is to broaden the number of smaller hosting partners that can take advantage of the Microsoft online services.
Ballmer also took a couple of swipes at rival Google. When asked about the impact of Google’s Chrome operating system announcement last week that has kept analysts and the media abuzz with prognostication, Ballmer struck a sarcastic, then dismissive tone.
“Who knows what this thing is?” he asked rhetorically. “I mean, the Chrome OS is highly interesting. It won’t happen for a year and a half, and didn’t they already announce an operating system? You don’t need two client OSes. We tried that with Windows 95 and NT. What we really do need is a model of the future that brings together the best of the rich client and the best of the Web.”
Ballmer urged partners to continue investing in Microsoft technologies and solutions, including those emerging spaces where the company is still far from market leader. He said Microsoft’s tenacity is the reason to get behind these new solutions. He didn’t actually say Microsoft was tenacious, but rather growled and shouted it in one of the more entertaining moments of the keynote.
“We don’t go home, we just keep coming and coming and coming,” he shouted. “Tenacious? How about virtualization? You’re seeing some tenacity there. Unified communications, voice/video? Boom! Management [software]? We keep coming. Our track record of having our tenacity turn into success is quite high, that’s why you keep coming back.”
The best example of Microsoft’s tenacity in a long-shot market paying off? Bing, the search engine formerly known as Live and, before that, MSN Search. Ballmer couldn’t stop talking about Bing. Tenacity.