Ballmer's economic 'reset' vision: Who'd benefit?

Microsoft CEO Steve Ballmer, speaking to the technology heads of U.S. federal agencies on Wednesday, suggested that the global economy is in for significant change, as TechFlash reports.

While this suggestion is not surprising, I found his comments about a "resetting" of the economy, a theme he has been discussing a lot lately, interesting in that it would likely favor open source:

Essentially, the economy is going to reset to a different level, and then again be propelled by what really should be, and typically are, the fundamental drivers of economic growth--which are really productivity and innovation.

(The) things which are really productive and really valuable and really make a difference, they'll either get funded at companies like ours and our competitors (or) get funded by the venture capital community. We may not get the eighth, ninth, and tenth start-up in every area, but we'll get the first four, five, or six that make sense, and we'll get plenty of good competition.

(When) I tell you the (Microsoft R&D) budget was over $9 billion and is going to remain over $9 billion, it speaks to this fundamental faith and belief and excitement that we have about the things technology will do, and we've got to be at that table.

Actually, all it tells us is that Microsoft may be spending far too much to develop its products, R&D spending which, to date, has yet to demonstrate much market value for Microsoft. It also suggests that Microsoft must put a higher price tag on its products to ensure that it recoups its R&D costs. Guess what that means? It means that Microsoft may not be able to accommodate the "resetting" of price tags that buyers are already demanding.

In that environment, open source wins. Microsoft and every other proprietary vendor are going to struggle to compete with open source, which has an initial cost of nothing. As Ken Starks notes on his blog, this isn't making those dependent on the proprietary ecosystem very happy, but eventually, the ecosystem will reset toward open source, too.

CIOs are also looking to open source to drive innovation: one CIO told me that for any projects that have the potential to competitively differentiate his company, open source is the innovation platform it'll use every time.

It's no wonder, then, that Gartner finds 85 percent of enterprises adopting open source to drive efficiency through code reuse, lower costs, and more. The economy is in the process of resetting, as Ballmer speculates, but it's not necessarily going to reset in his company's favor, though I suspect that Microsoft, with its comparatively low price points and integration, will do well.

My own company has seen a dramatic increase in our pipeline, and in conversations I've had with the CEOs of Pentaho, RiverMuse, and other open-source companies, it's largely the same.

The economy is resetting for open source. It's open source's game to lose.

Follow me on Twitter at mjasay.

[rapier1]

It always shocks me how little you actually understand R&D. Then I remember that you are a business development guy and don't really need to understand what R&D (in all of its different flavors) actually is.

[odubtaig]

Yet providing an explanation as to the correct view is somehow beneath your wisdom. Even explaining that if only 0.01% of research projects make it to a sold product then it's worth it if they recoup the investment made in all R&D over the year (or comparing the inverse attitude to the Soviet film 'industry') seems to be too much to ask.

But then sniping at people with lesser knowledge in a field you understand is easy; trying to help them understand as well as you do requires effort.

[playaman1313]

This would be great to see happen. Good article.

[nonicks]

what kind of article is that?

your whole article is based on couple of lines from Balmer's speech and still you don't do any justice to the theme, topic or your own article.

I feel baffled, when I have to read such stupid article which make just no sense what so ever.. I wish there was another site, which will bring more news just like CNet but none of the non-sense.

Amen.

[Inconnux]

Ballmer makes me actually want Bill Gates to return. How did this guy ever become the CEO of the largest software company???

[SlimGem]

What scares me is the fact that anyone in the Federal government is listening to the wisdom of Steve Ballmer. Don't we have enough problems?

[timothydh65]

So wait a minute, you mean the economy is not working and Microsoft's answer is reboot? Does anybody else see the irony here.

[daftkey]

Kazzzzing! Love it!

[aeshraghi]

I don't think it helps to support Open Source blindly and religiously . It will be more helpful to be open minded and explain pros and cons. I am not pro Microsoft but I should admit that Microsoft business and products "work" and I don't take it lightly because I know - by experience - that building a great business or product doesn't happen accidentally and although I like the ideas behind open source, it hasn't been proven yet to be more than a lead generation tactic. There is no shortage of free and cost-effective products in the market and most of them are not open source.

[shootthecops]

if microsoft expects a handout they should also expect to have their monopoly broken up.

[daftkey]

I'm curious:

1) When did Microsoft ask for a handout?

2) How do you propose to break up their monopoly in such a way that it will positively effect the businesses and consumers that use their products (and not just their competitors)?

[pentest]

Breaking it up into an OS and application division would help everyone immensely, even MS.

[pentest]

For Ballmer, those are actually fairly decent comments.

Yes, MS R&D has shown little in monetary benefit, but I think MS treats that division more like an academic unit.

And that is a valuable thing indeed.