Newsmaker: Ballmer: IBM in the crosshairs

At Microsoft, it's no longer just about bits and bytes.

The company has for years marketed its products to the tech elite within big companies. Now Microsoft is making concerted effort to speak the language of top executives.

Why? Because business managers, marketing executives and other nontechies are increasingly involved in technology purchasing decisions, Microsoft argues. Another reason for the shift is IBM. Microsoft's chief rival in the business software area has been pitching to CEOs for years, relying on its business-savvy consultants to help win deals. In essence, Microsoft needs to speak Big Blue's language.

At a press conference on Thursday in New York, Microsoft's CEO Steve Ballmer spoke to about 500 corporate executives about his company's overarching plan for business computing.

Ballmer--known for his "developers, developers, developers" chant to rally the Microsoft troops--changed his tune for the business crowd. This time it was "people, people, people"--how end-users can be more productive and creative with the right tools.

He drew a contrast between that approach and IBM's, saying the company is increasingly focused on services and consulting. Big Blue, naturally, disagrees with Ballmer's assessment.

After his keynote speech, Ballmer spoke to CNET News.com about the Microsoft-versus-IBM rivalry, the role of hosted services, and prospects for growth.

Q: Today there seemed like a very deliberate sell to the CEO, to the business executive. Why is that? Has there been a change in the way your software is bought?
Ballmer: The truth is that the way information technology decisions are made in a company is really complicated. You really have four points of view, and we have to work with all of them--end-users, central IT, line-of-business executives, and then the business leaders, who could be the head of sales, finance or operations.

Most of our enterprise IT customers and partners say: "Look, you got to create the air cover for us. If we're going to create these kinds of solutions to let our business be 'people ready,' it can't be just us talking. Microsoft, you have to talk too." I actually get a lot of feedback from IT customers, who say: "Look, whatever the business message is, you have to help us with the air cover. We'll talk specifically about the technology."

You drew this contrast with IBM, saying that they're a consulting company and Microsoft is a software company. IBM is clearly interested in consulting, but if you want to do some of the Office-based applications that you showed today, you need consultants.
Ballmer: Let me be more clear: We're not anticonsulting. I just came off the board of Accenture recently. I've been on the board four or five years. This is not about being against consulting. This is about being for empowering people, so they can they can empower their company.

This is not about being against consulting. This is about being for empowering people.

And I think IBM's point of view is it's all about the consulting project or the outsourcing. What we would tell you is...we believe in giving people the tools that let themselves collaborate, get insight, deal with exceptions. One of the big differences between good companies and great companies is that great companies deal with the problems and the exceptions a lot better than the good companies.

IBM will tell you we are their No. 1 competitor, so in that sense it sets up the comparison. And we both just started advertising campaigns, so it begs the question: What's different?

Judging from the number of headlines, you'd think that Google or Sony are your most-feared competitors. What's the nature of the competition with IBM?
Ballmer: Clearly in business there's IBM. There are not that many times people are picking between our products and theirs, like Notes, Domino or Workplace, or whatever they're doing. And I do think our point of view is quite different from IBM's. And I think if you asked IBM about their biggest competitor, I don't even think they'd say one of the services companies. I suspect that they'd say us.

So how well is Microsoft doing against IBM?
Ballmer: I think we've never done better. And we're just gaining traction every day. Seriously, look back to a few years ago. Outside of its mainframe presence, DB2 (IBM's database software) is a very weak No. 3. Very weak No. 3.

The mainframe--I'm not going to say it's unimportant, it purrs along. They're really losing a lot of traction with Notes. We have more big customers than ever looking to do Notes-to-Exchange migrations with the chaos of Notes, Domino, Workplace, etc. We really weren't in the management business three or four years ago. With System Center, we're starting to build some real traction. Tivoli, if anything, I'd say is floundering--my sense. If you look at the app development platform, our Windows server business is going great guns. WebSphere is kind of limping along.

Linux is a competitor--I'm not going to say Linux is not a competitor. That's more of a dogfight. But IBM is not Linux. IBM is WebSphere, Tivoli, DB2, Notes and those things. And I'd say at least in the last three years, in those areas we compete, they have lost traction and we've gained traction. That may be a different view you'd get from them, but I've never felt more on a roll.

In the scope of all your businesses, where's the bigger opportunity for Microsoft--business, entertainment and games, or the end-user market?
Ballmer: People talking about the transformation that is happening--software as a service, advertising--big opportunities. We think about the move of video delivery and music and entertainment over IP networks, and gaming meets real world--huge opportunity.

(The corporate IT market) is the biggest business today by far. And we think the kind of innovations we show for people-ready business, the next two or three years, this is probably the biggest dollar growth for us.

(Consumer services) is probably an area of great profit growth in the middle term, but we need some more investment. (Games and entertainment) is an area where we're just turning the corner from investment mode. We're not in full profit, right, because there are still things to invest in.

We'll get profit from every place. But big dollar growth, (business computing) is probably the area of biggest dollar growth.

More Newsmakers

[Stan Johnson]

No creative life left in IBM

IBM does not believe there is a next big thing. Their creativity is all dried up. I think Microsoft can do very well against a company that thinks like IBM.

Never any creative life in Microsoft

They are all about seeing what others are doing and then copying, as is the case with this story ... somebody at microsoft probably said "oh, IBM is selling to top execs, well, we should also do this."

[jmmejzz]

Creative and MS?

I would have to ask what was the last truely creative product from MS?

[murato]

Maybe, but that should not depend on Donofrio's words..

Although it reminds me of the US patent bureau manager's words back in 1800's.

Donofrio is talking about innovation, rather than invention. The circuits are getting tinier, Moore's law still applicable, but that is again related with innovation...

[murato]

Maybe, but that should not depend on Donofrio's words..

Although it reminds me of the US patent bureau manager's words back in 1800's.

Donofrio is talking about innovation, rather than invention. The circuits are getting tinier, Moore's law still applicable, but that is again related with innovation...

[ServedUp]

Ballmer: IBM IN THE CROSSHAIRS

A headline with the word "hair" and Steve Ballmer in it.
Is nothing short of ridiculous!!

I think the words "Chair", "Google", "Ballmer" and "hypertension"
will definitely sell a story.

MS is going after IBM. Yeah right! Thats a great strategy! Kudos
to MS. They are so cutting edge.

I don't know about you but does anybody really learn anything
from Steve Ballmer these days.

[TechDeveloper]

He's Right.

I work at a company with 18k employees and we were informed months ago that Notes is out and exchange is in. Email will be first and the Notes development will follow.

The major reason was cost for upgrade and IBM arrogance when dealing with the company.

[Captain_Spock]

One Case In Point....

... that suggests that you, as well as Microsoft may very well be out of touch with world reality and things may just be the other way around. Think India, Think Guyana and the rest of Latin America and the Caribbean... and IBM and IBM's Business Partners are apparently doing very much what this article reads; "for the past ten years, through its relationship with IBM World Trade Cooperation, has been responsible for the introduction of the most advanced technologies to corporate and government customers in Guyana, a release from the organization said.

The company provides product, services and support for its customers who range from banking, insurance, telecommunications, food and beverage and petroleum industries to government organisations...";

"Top graduate in computer science at UG gets award
Monday, March 20th 2006":

http://www.stabroeknews.com/index.pl/article_general_news?id=48497434


;-) ;-) ;-)

last week Google, this week IBM...

Microsoft sure is good at criticizing other people's products. Also, Ballmer did a great job hyping up the media that they're going to be hyping up. Microsoft a media company? Get outta town....

[Johnny Mnemonic]

I disagree with premise...

I disagree with the basic premise of this story
regarding Microsoft's "marketing to the technical
elite". Microsoft has always marketed to the
upper echelons of a corporation as they cannot
compete at a technical level. As far as my
experience and many colleagues of mine, there is
usually a corporate dictate from high above that
requires the engineering staff to support or install
MS products. I don't believe Microsoft would get
very far if they marketed to those who know better.