Ballmer: Google, Google, the economy, Google
Microsoft CEO Steve Ballmer delivers the CES keynote speech Wednesday.
(Credit: Corinne Schulze/CNET Networks)LAS VEGAS--Microsoft CEO Steve Ballmer arrived at the Consumer Electronics Show with his usual optimism, but he also brings a clear sense of reality: The tech industry is in for some rough times.
"The fact of the matter is, this is not a downturn, this is a bit of a reset. Those are quite different and we're trying to really suss through what we think that means for us," Ballmer said in an interview here with CNET News Thursday, a day after delivering the keynote address at the conference.
Ballmer talked about what the "reset" will mean for Microsoft, as well as lessons learned from Vista and Microsoft's move to put Office on the Web. When it comes to what worries him most, most days it's still Google, although he concedes he has had to spend more time recently on economic issues and making sure Microsoft makes the adjustments it needs to. He wouldn't go into detail on what (and who) Microsoft plans to cut, but it is clear that some changes are coming.
The following is an edited version of that interview:
CNET News: Obviously, Microsoft didn't necessarily get everything it might have hoped for in terms of the critical response for Vista. What are you guys planning to do differently with Windows 7?
Ballmer: Well, I think we made some choices in Vista to improve security at the kind of expense, if you will, of compatibility. With Windows 7, we're able to build compatibly off of Vista and really sort of just tune, if you will, the user interface, the performance, and at the end of the day, it'll be what the users think of the product that we're building, and we'll start getting beta feedback this week.
Q: How hard are you pushing the team to get Windows 7 out this year?
Ballmer: I'm not pushing the team hard, the team is pushing itself. They set some goals and objectives and of course we'll ship the product when it's--as I said last night--both right and ready and when we know when that is, we'll share that.
Q: One of the biggest parts of the PC business that's really taken off amid an, obviously, challenging time overall is the Netbook segment. What has that meant for Microsoft both in terms of the technology, but also from a business standpoint? How does that impact you?
Ballmer: Well, we've done very well on Netbooks. When they first came out, I'm not sure if people knew whether they were PCs or something else, and I think everybody kind of understands now that a Netbook is a small-form-factor, low-cost personal computer. And we're doing very well with Windows XP, which fits. Vista does not fit, and we're working hard to make sure Windows 7 fits very well on the Netbooks.
You know, from a business perspective, low-cost machine means a little less revenue per unit to Microsoft, but I think it gives us an opportunity to see expansion of the overall PC market.
Q: Obviously, everything that you're talking about here at CES comes against the backdrop of a very challenging economy. What does that economy mean to Microsoft and its plans?
Ballmer: Well, I think there's two ways to take a look at it: First, what's going to happen to let's call it revenue in our industry? Revenue will be lower in aggregate in our industry than it would have been, and that will (affect) Microsoft, Cisco--you name the company--Intel. We'll all be affected by that.
With that said, the pace of innovation in our business will not change. The opportunity there won't change. And so the key is: how do we right-size a little bit as an industry, and that means different things to different companies to adjust to the fact that revenues will be lower. And yet at the same time, keep a strong push on the R&D that's going to power the future. And each company will discuss its plans. We're kind of in a quiet period, so I don't have much to say about that.
Q: Turning to search, that's obviously a key area for Microsoft. You announced a couple of partnership deals that will get you some more distribution, but clearly there aren't enough distribution deals out there to make the kind of headway you need to make against Google. What else does Microsoft need to really be a serious competitor to Google?
Ballmer: Just keep working. I mean, look, this is not something that changes overnight. Everybody wants us to snap our fingers. We have a good competitor, and yet at the same time, we see real opportunities to improve the search experience, to differentiate, but it's not going to happen overnight. We're going to have to keep working and working; innovating product-wise, marketing, branding, distribution, and we're going to have to be patient about it.
I like our new release. We're making two releases a year. We continue to attract great talent, which lets us do interesting things. Our cash-back program has some early promise in terms of what I call business model differentiation versus Google, but we'll continue to work.
Q:: Fair to say four years in, though, you would have hoped you'd made more progress in market share?
Ballmer: Maybe. Maybe. I'm not sure that would have been anything other than na?ve because the market leader is a strong company. And we're going to have to keep at it.
Q: You have said that while you're not interested in buying all of Yahoo, you would be open to some sort of a search deal. How likely do you think that is?
Ballmer: No way to handicap it. I think at this stage, it's probably fair to say I'm not even sure Yahoo would handicap it. They're out doing a search for a new CEO and we'll just have to wait and see how all that shakes out.
Q: You said a little while ago that there weren't any active discussions, is that still the case?
Ballmer: Yeah. I think probably fair for us not to comment too much.
Q: We've talked about Google, we've talked about the economy. Which actually occupies more of your time in terms of which do you spend your time worrying about?
Ballmer: Well in general, the answer is: Google, Google, Google, Google, Google. Now, the truth of the matter is, for a period of time of a couple of months, we do have to go through and say, OK, what do we really think this economic thing is, is it a year thing or is it a reset, and then we build from a new base, and how do we parse and act on the consequences?
So there's a little bubble period in here where I'd say I'm spending a little bit more time. But in general, I can't control the economy. We can drive and control and affect our competitive position, so the lion's share of my energy would be there.
Q: Microsoft, in the past, has been able to get through even some, you know, typical economic downturns by kind of trimming at the edges. Is it fair to say that whatever you have to do this time, it'll be more significant than anything you've had to do before?
Ballmer: It's premature to comment. I mean, the fact of the matter is, this is not a downturn, this is a bit of a reset. Those are quite different and we're trying to really suss through what we think that means for us.
Q: One of the biggest changes coming in the Office side of things is the fact that individuals and companies will soon be able to access Office over the Web. What doors does that open?
Ballmer: There's two aspects: One aspect is sort of the notion of can I get access to the software when I'm not at my own computer, and you'll get access to some stuff when you're not at your own computer. That's nice. People want the full capabilities, generally. The second thing is: do we provide better and better facilities for people to collaborate from within the productivity environment? And I think that's a bigger deal, and you'll see us do both of those--push both of those themes in the new Office release.
It's important to do, it enables some new scenarios, but I don't just say, "Oh, isn't it great, I can run Excel in a browser, or a subset of Excel in a browser." I'm not quite sure that that in and of itself is a breakthrough. Google and people want to run around, "Ooo. Ahh. Woo," you know--I don't quite understand that.
Q: It's been few months since Bill (Gates) switched from full-time work to working with the foundation. Any surprises in terms of what that's meant or what has it meant in terms of changes for Microsoft?
Ballmer: I don't think anything all that surprising. You know, I think we're trying to get settled now in a rhythm. Bill and I see each other, you know, we have a regularly scheduled lunch, there's board meetings, he has a regularly scheduled meeting with a couple of the internal groups. I think he's figuring out how he spends his time. But I don't think any real surprises.
Q: Is it a little weird to be giving the CES keynote? Obviously, you give a lot of big speeches.
Ballmer: Yeah, I mean, yeah, for some reason, it had that oeuvre, and yet like I say, last night I went back to my room and said, "That was actually a much easier speech to give than many others." I wonder why I was thinking that that would be a hard one to do.
Q: In terms of the economy and what that means, what are the kinds of things that are least impacted inside Microsoft and what are the kinds of things that do pretty well?
Ballmer: You mean what'll sell and what won't sell? I think PCs are going to sell a little less well, which means Windows will sell a little less well. I think servers--because capital spending will get hit, servers will sell a little less well, which has got to affect servers. Now, we still are taking share in the server business overall, so I don't know what that'll mean for our overall results. Phones, Web, those things ought to all be growth opportunities for us.
Q: Do you think this reset, as you called it, will force Microsoft to get out of some things that you've been doing?
Ballmer: I'd say at the macro level, the same things that we've been doing. At the micro level, I'm sure there will be some things where we have this many people and, you know, we might right size, or maybe we're expecting to go to this many people (moves his hands in to show a smaller level of growth)... I think that's more likely; to stay more flat on some of the projects. You know, there will be things that may not make as much sense. I don't know. We'll have to see how that all comes together.
During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina. 
I do think Mr. Ballmer's looking rather sickly in that photo you have of him. Why aren't you trumpeting the imminent demise of Microsoft because of his unhealthy looks as is the custom with Mr. Jobs and Apple?
lol.
Sweaty Ballmer comes out on stage bursting at the sweater seams like a sausage in a casing and nobody even blinks.
That this man is a billionaire is one of fate's greatest pranks upon mankind. Ever.
To be precise -- MS isn't short of leadership, and especially not of leadership that has public exposure. Steve Jobs is just about the only guy at Apple that ever announces any new stuff. There's a difference.
Besides - Ballmer was looking like his usual self - he always looks sweaty and he's always been a bit 'robust'.
While MSFT isn't short of leadership, it is short on vision, drive, and the guts required to make Windows more than the mediocre product that it is.
It's ironic that Apple suffers from having a perceived lack of leadership outside of Jobs, whereas Microsoft has the leadership but not the drive for new products from start to finish.
If only we could combine the two, we'd have... well, nothing would actually work then since it would be like putting two cats in a bag tied shut, but it's a silly thought.
Point is that MS can't keep Google off their platform the same way they did with Netscape (and yes they were found guilty of this). Technology is becoming the level playing field and those who cooperate will flourish. Those who think it's about competition are doomed to fail.... Discuss!
Microsoft keeps Google at the top of the list as a competitor because of the income they generate, and that comes from just one place- search, no where else. The reason Microsoft is pushing hard to catch up with search is because when they really begin to compete in that area, Googles one trick pony income begins to wane. Microsoft has a long way to go to get there. But they will, they have a long history and corporate DNA of coming way behind to take the top position.
That being said Google will be around forever. They have created something that generates that kind of money, and hired the kind of talent that gaurantees it. Microsft will be here forever and so will Google. Is one of them going to knock off the other- it will never happen. Will they compete- fiercely. It's all well and good. Take the tired Google will rule the world and put it where it belongs- in the wishful thinking pile of rubbish on the street curb waiting for pick up to the landfill.
It's not that nobody else is allowed to have a good idea. It's just that if (as everyone has been predicting for years now) web-apps start replacing desktop apps, then MS will be out of business. So it's better for them to compete in the space now, and have viable market share if and when the switch happens.
btw: MS didn't do anything to IBM. MS is still much smaller (by a factor of 3 in terms of revenue and by about the same factor in terms of head count).
Further -- MS cannot, and did not keep anybody "off their platform". If a user installed Netscape and ran it there wasn't a damn thing Netscape could do. Firefox has pretty much proved that Netscape's flaw was simply that it was not a good enough browser. If you want to beat the apps that ship with Windows you have to create a better app. Simple. It's absolute bollocks to say that MS can't bundle a web browser with their OS -- it's a fundamental requirement that users have, and MS recognized it a long time ago -- hence the bundling of IE4. The DOJ case against MS *said this was ok*. They were found guilty of not allowing OEMs to pre-install other OSes as part of their contractual agreements when purchasing OEM windows licenses. That practice was banned by the DOJ.
This threw two artificial barriers in front of Netscape: The download issue, and folks not even knowing Netscape existed in the first place.
Can you site a source for this? I followed the case pretty closely and I don't ever recall this being an issue.
"Microsoft doesn't even make 50 products! "
You need to get off the couch and enter the IT world. Microsoft sells 100s of products that run everything from small handheld devices to cars to nuclear submarines. You probably touch Microsoft code 15 times a day and don't even realize it.
You're revising history a bit when it comes to Netscape:
1. Netscape, by virtue of being the first commercial browser, was the dominant browser with virtually 100% market share before MS started its push with IE. That's a serious position of strength to start from.
2. MS did not do deals with OEMs prohibiting them from installing Netscape -- their deals (which were halted by the DOJ) excluded OEMs from installing other OSes if they wanted to continue to install Windows. Not a defense for Microsoft, but not a disadvantage for Netscape either.
3. Netscape was available *eveywhere*. It was impossible to pick up a magazie that didn't barf out a CD with a netscape on it.
Without regurgitating the entire timeline, suffice it to say that between Netscape's demise, and Phoenix's (Firefox's) arrival -- IE enjoyed a *long* reign in which there were simply no credible competitors. It's no wonder that IE's rendering quirks became defacto web standard. The rest of the industry is just as guilty as MS for this -- for something they thought was really really important, they sure took their own sweet time to come up with competing solutions.
Now here's the kicker -- what did Firefox do differently than Netscape to win marketshare back? They *stopped whining* about defacto standards. They *didn't waste time paying lobbyists* to get the DOJ to pressure MS over antitrust BS. They just said -- hey, our quirks mode has to mirror IE's quirks mode well enough, so that a bad html site that renders in IE should render in our browser as well.
Well played, Firefox dudes -- well played!
The thing I like most about FF -- they didn't ***** in court or to the EU (ala Opera) about say, IE not being standards compliant. They just made it a point to mention that they do a good job with standards compliance. Well played again.
Now the only area where I'll grant Netscape was disadvantaged -- they didn't have an easy way of monetizing their product once IE became a viable competitor. But again that goes to my main point. They started out with virtually 100% of the market. Their quirks mode was the defacto standard back then (prior to August 1995). It was absolutely imperative for them to just keep grinding away to have the fastest, lightest, bestest browser so that they remained the "must have" because of those random sites that won't render with IE that keep popping up because site developers would have to target Netscape first and worry about IE next. The squandered that position -- and the blame lies squarely on them.
And the worst part of it all! The lobbying money from Netscape, Sun Micro and others to get the DOJ to investigate MS. These are all companies that were resting on thier laurels thinking that past success entitles them to future profits. They turned MS into a political company. Bill Gates himself has said in an interview that MS was non-political and did not pander to lobbyists until the DOJ case, when they realized that they got screwed because of other companies that were spending lobbying dollars. Google is on the verge of learning the same lesson (think antitrust investigations into the DoubleClick acquisition). Both sides have to pay the damn lobbyists to neutralize political forces otherwise the non-paying party will get screwed. It's extortion, plain and simple.
If a page isn't standards compliant, the browser should throw up an error.
That would fix the issue of crappy web page design pretty damn quick.
1. The HTML rendering spec is a moving target. It's been revised countless times since 1995. If you design a page that was compliant in 1995, it might not be compliant right now. Businesses can't skip the rope every time the spec changes (however minimal the change might be) -- there's bound to be a gap in spec updates, and pages getting updated. For some computer novice trying to run a website for say business purposes -- he/she might never update it at all, might never even know how to make it standards compliant. Erroring out on such pages dis-empowers such novice users.
2. The HTML spec. is relatively mature now. Back in the time of the Netscape vs. IE battles it was not quite as mature. It was possible to write standards complaint pages, that still had room for different interpretations on how to render them.
3. Would you (as a browser maker) chose to error out the page as opposed to making a best-effort to display the data? Can you imagine the reviews -- "xyz browser can only display 30% of the pages you'll encounter on the net. You as a user will suffer, but you should still use it because it's standards compliant". No browser maker can afford to make that leap first.
4. Standards-compliance for HTML (HTML/CSS/JavaScript/everything) is *still* not completely nailed. The acid tests are only a fraction of what goes into validating compliance. MS themselves contributed some 2000 or 4000 tests to the public domain for validating compliance recently. It's a super-complex spec. It's gonna be a while before a complete test suite is developed, that you can use to get real confidence about how your browser complies with standards. People tend to take the ACID tests way too literally. Compliance is a *much* more complex matter than running ACID tests.
I just realized that I responded to your comment with far more civility than I should have. I'm specifically referring to this comment of yours: "Quirks mode is the worst idea ever. No wonder MS loves it. Nobody other then MS loves to tolerate incompetence."
Nobody other than MS *loves* to tolerate incompetence???
Quirks mode has existed as long as browsers have existed, in one way or another. Deliberate non-recognition of standards has been taken to much greater levels by browsers other than IE. Think ECMAScript vs. JavaScript in Netscape. NCSA mosaic had it's share of rendering bugs that had to be taken into consideration for Netscape's quirks. Lynx probably had a similar effect on Mosaic.
You give MS far too much credit, and you're analyzing the matter with an attitude of assigning blame to a single party. A little historical perspective is necessary. When it comes to web standards, there's plenty of blame to go around. Part of the blame is simply attributable to the imperfect nature of software and standards evolution.
I agree about the Google comments. Maybe MS should be working together with Google as opposed to fighting them.
If 7 works people will go there. However they will remember that MS didn't stand by Vista and let it die and take peoples time, and money with it.
******? ?/t???k/ Show Spelled Pronunciation [chingk] Show IPA Pronunciation
?noun 1. a crack, cleft, or fissure: a ****** in a wall.
2. a narrow opening: a ****** between two buildings.
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MS is done. Emergency patches every few weeks. I am sick of insecure OSs. I am sick of losing 20% of my machines power cause of anti-virus software. Vista was the last straw. A 10 gig OS?? How big will 7 be? 20 gigs? 30? I am sick of BLOATware. I am sick of getting a fast machine then the next year I install the next version of Windows then it slows instantly to a crawl.
MS's day is past.
Rubbish.
There is nothing factual about your post at all.
Incorrect. For 4GB, Vista gives you an OS and a few basic apps - that's it. For 4GB in Linux, I get an OS (the average Linux kernel is only ~50MB in size), and literally thousands upon thousands of end-user apps. Ubuntu for instance can install off of a single CD-ROM if I desire, and take even less space if I choose to... and I'd still have more apps than Vista provides.
@MArk_Anderson: Depending on his A/V suite, it can eat 20% easily (esp. during scanning).
Then he needs to change his AV software which is clealry the problem. As for scanning, most good ones do it real time and if you do want to do an in depth one then schedule it for when you're away or asleep.
Yes, you can indeed install Ubuntu from a single disk- just as you can with pretty much any OS today.
I'm curious how you can have 2000+ applications fully installed in that 4Gb Linux setup. Could you please list them? I'd like to see some sort of evidence to back up your claim. Otherwise it is complete heresay and considered gibberish. I don't even need a list- just some sort of evidence. Now remember these would need to be installed apps- not ones in packages or compressed archives waiting to be installed. Don't bother including 'apps' like 'mail' or 'ftp' either. People are too smart to fall for that sort of deception. I want to see a real world list. A directory listing would suffice.
Doing that would greatly substantiate your claim and really help to promote Linux.
OpenSuse 11.0, which is one of the more bloated Linux distros can neatly fit the OS in under 2 GB, even all the eye candy crap. While running it uses less then 1 GB of RAM.
There is no excuse for the bloat of MS operating systems.
Mail programs and FTP aren't "real world"?
Idiot
In a slow economy it's conceivabe that purchaces decline, and clicks do as well. That would result in less revenue for Google (and MS's Live Search, Yahoo etc.). If advertising budgets tighten, Google might have to offer more competetive (lower) rates as well. At the same time, online advertising continues to be a growth space.
Bottom line -- it's premature to predict what will happen to Google's revenues during the economic downturn.
Yes, I suspect they do.
Based on the above publication, I think that there is nothing new in substance from Ballmer, as others have also remarked. And this is exactly why Ballmer's talk was easy to give; and this is, in fact, exactly what is wrong with Microsoft.
Ballmer constantly thinks about catching up with Google. Why doesn't he think about changing the game altogether? It's not about catching up with your competitor. It is, in fact, all about already starting with your nose over the finishing line of another race.
http://google.com/search?q=windows+media+drm+diagram
Meh.
After Micro$oft has demonstrated for years that they are a monopolist, and are willing to eat babies to maintain their market share, can anyone really imagine that the world is interested in them ever reaching that goal?
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