The much-anticipated Zune, Microsoft's portable music player entry, has received mixed reviews, and demand has been tepid. Sure, Vista made its debut, finally, last week--but only for business customers. The Windows XP successor, more than five years in the making, didn't make it into consumers' hands for the all-important holiday sales season. Ditto for Office 2007, the flagship of the company's second most-profitable product line.
CEO Steve Ballmer says he isn't worried. Like Chairman Bill Gates, he says Zune will, over time, gain ground on Apple Computer's iPod. On Thursday, Microsoft rolled out Vista and Office 2007 to business customers, signaling the start of serious testing within big companies. Consumers will be able to get their hands on Vista and Office 2007 on January 30, the company said.
Less heralded, but almost as important to Microsoft's bottom line, are the more than 30 other new enterprise software products that debuted on Thursday--everything from a new version of Exchange Server to security software and data-mining tools. These and other products will boost Windows ability to work with technologies like voice over IP, business instant messaging and video.
Ballmer sat down with CNET News.com here to discuss life after Vista, battling the iPod, and the rising importance of mobile devices.
Q: Are you relieved that Vista has shipped?
Now that Vista work is more or less wrapped up--or will be soon--have resources been freed up within Microsoft (to work on things like Longhorn Server)?
Ballmer: Well, we're going to do a next version of Windows, and so one of the questions is whether we're going to have the same number of people, fewer people, (or) whether we need more people. We're going to have a very large team continuing to work on Windows innovation. Some people will undoubtedly do new things. Some senior people, some head count, will flow to some other areas.
There's a lot of things we want to do, need to do, can do in Windows. The prevailing kind of press point of view is, "Is there more?" I can just start with what we need to do for hardware enablement, and I think it's not hard to agree that there's plenty of additional important innovation to do.
We do tend to focus on the big features, like WinFS (file system) and other things that were talked about in 2004. Are those still in development?
Ballmer: Sure. We talked about things like the (Windows) Presentation Foundation shift, as an example. I think at our financial analyst meeting I talked about four big pillars: (There's) one that's about desktop and personal productivity, one is about the enterprise, one that's about entertainment devices, and one that's about online.
If you look over the last three years and see what's going on, the personal productivity one has been approximately flat in size, in terms of engineers. If you look at the number of people we have working on enterprise stuff, it's gone up. If you look at the number of people we've had involved in online, it's gone up. And if you look at the number of people we've had in entertainment devices, it's gone up some--probably less than most people would guess, because when Xbox was done it freed up resources that went to work on Zune, for example. So, this one has been more flattish in size, and the others have been increasing more.
Looking at the business market, one thing that seems very different today is that consumers shape a lot of the technology we use at work--consumers use a technology at home, and then they want it at work. To me, that seems to be truer now than it was when Windows XP was launched five years ago.
Ballmer: When Windows and the PC and office productivity software got established, it was end user-in, not IT-out. There's no doubt about that. And so our basic mind frame--my basic mind frame--is that most adoption happens first with the end user.
I mean end user-facing innovation. Virtualization is not going to be adopted first in the end-user market. New firewall technologies might be first in the enterprise. But things that are really about the user, happen first with the user.
Because of Y2K, because people were moving to try to do more centralized management, a little bit of that has ebbed slightly. But in general, if we want somebody to use our technology, the best thing to do is to get the CEO and the business leaders themselves personally excited about it. That's a very powerful phenomenon.