It's been a busy year for Bob Muglia.
Microsoft's server and tools boss shipped an update to Windows Server, got promoted to division president, and prepared Microsoft's operating system in the clouds--Windows Azure--for its commercial launch.
Bob Muglia
(Credit: Microsoft)In what has become a bit of a year-end ritual, Muglia sat down with CNET for a year-end interview. We hit on a range of topics, from the future of Windows Server, to why his bank won't be moving to Windows Azure any time soon, to the changing life of an IT manager, to Microsoft's consumer future. (Spoiler alert: Muglia thinks it is bright.)
Here's an edited transcript of our interview:
A few years out, how much does Windows Server, the server operating system, start to resemble Windows Azure?
Muglia: Well, making them as similar as possible is clearly the goal, and the goal is to take all the things that we do in Windows Server and make those capable to be done in Windows Azure, and then take the learning we have in Windows Azure and bring it back to Windows Server.
We just took the step of bringing the Windows Azure team, Amitabh (Srivastava) and his group, and putting that in my organization.
Now, what we also did as a part of that, is we merged the Windows Azure and Windows Server teams together. I just talked to Amitabh and he's really excited about the synergies that he can build across the organization and making these things as similar as possible.
In our own services, obviously we choose the hardware, and so there's a more limited set of things that work together. In some senses that gives us a bit of agility on the services side, because we can make something work in one very particular way, but what we've got a long term history of doing is understanding how to do that, and then abstracting that out to work in a much more general purpose way, to work with the hardware that our customers have.
One of the things we're looking at is how do we take the ideas that we're bringing to market in the form of Windows Azure service, and then build those into Windows Server and make them available to our on-premises customers and our hosters.
Do you expect there to be sort of an interim option? I wouldn't be surprised to see you guys do something in the intermediate term where you have the traditional Windows Server that runs on any hardware, you have Azure very customized for your data center, but then make a version of Windows Azure that they can write Azure apps for, but run in their own data centers.
Muglia: We're looking at those sorts of options. I think the trick to the thing is to understand what are the workloads that are most appropriate for doing that, and how would we structure that, and honestly we're still looking at that.
There are some interesting thoughts in that sense, and you can see how, for example, in a high-performance computing environment, where people could use hundreds or thousands of computers in one cluster, you know, Azure is really very, very helpful for something like that. But we're still looking at understanding exactly how we might bring some of those things to market.
I know you're the enterprise guy, but I thought I would give you the opportunity to come to the rescue of your consumer colleagues. One of the analysts pretty prominently said in The New York Times that it's kind of "game over" for Microsoft on the consumer side, particularly phones. I'm curious your thoughts on this.
Muglia: Well, I read your blog. You did, generally speaking, come to our defense. I mean, it's probably a fair thing to say that we understand the nerd. I think we understand more than the nerd, but it's certainly true that we do a good job with that audience, and that's actually my customer in a lot of senses, because I've got the developers and the IT pros.
You know, I feel like as a company we have a lot of focus on the consumer, and are doing a lot of great things that are quite revolutionary to consumers, and we're going to continue to do it. I mean, obviously if you look at what's happened even with Windows 7 and the success of Windows 7, most of the short term success has been in the consumer marketplace. The business marketplace is going to happen, but business moves slower than the consumer does.
Obviously we've had products like Xbox that have been very successful with consumer, and I think the new Zune work has been really fantastic, and obviously Bing has been really great.
I also think that people are going to be very pleasantly surprised to see the work we're doing in phones, and that will become visible next year. So, I think even in areas where there's been some concern, there is some really substantive, very, very innovative work coming down the line.
It seems a little weird to be saying this, but we're almost at 2010. Are there things in technology that you thought would have happened by now that haven't yet happened?
Muglia: Well, I certainly thought that the 787 would have flown by now. I hear it's supposed to fly Tuesday or Wednesday, though, so that's a good thing. I'm glad to hear that.
I think, if you had asked me in 2000, "Would we be further along on reading on devices than we are now?" I would have said we would be. And we're really starting to see that now with some very special purpose readers, but I would have thought it would have hit across more general purpose devices by now. So, that's probably been one thing.
You know, I think that that's related to how fast tablets or slates or whatever you might want to call them might have taken off. I might have thought that would have gone a little faster than it has. Those two are somewhat related with each other.
But those things always kind of come at different speeds, and I'm pretty confident both of them will become very important as we move forward.
If you could show the world as it is now to your 2000 self, what do you think would be most surprising?
Muglia: We've shifted to a world where all kinds of media are delivered digitally.
You think about what's happened with newspapers and magazines and things, I guess I wouldn't have predicted that shift would happen as dramatically. Not that it's delivered digitally, I think we would have expected that, but the kind of reporting and the real-time nature associated with it.
And I guess, similarly, some of the way social networks have developed, and the impact that they have had on the way people communicate. I find it so fascinating as an example to see the impact that Facebook has on what's happening in other countries like Iran, and getting information out, those sorts of things. You know, I'm not surprised by them, but I certainly wouldn't have predicted them back then.
So, probably your 2000 self might be surprised that in 2009 you're in touch with more people from your high school than you were in 2000?
Muglia: Right, exactly, things like that, exactly. That's a perfect way to say it.
Obviously, your focus is the IT world, and I'm curious, how different is the life of an IT manager? How much has changed in the last decade for what they do on a day-to-day basis?
Muglia: I actually think it's quite different for an IT manager. I think IT managers used to be expected to build the systems and do everything, and now I think they're much more focused on providing the infrastructure for the business teams and the people within business to do things.
One other thing that's missing at least from Microsoft at the end of this decade, as compared to the beginning is Bill Gates at least in a full-time sense. As one of the people kind of at the top of the technical ranks, I'm curious how have you noticed his absence in the last 18 months since he's left full-time work?
Muglia: I watched while Bill was here how his role shifted over a period of time. There was a period of time when the company was at a size and scope where Bill really was able to do the direction, the technical direction of very large parts of the company.
During the 1990s, we grew to a point where that was just not possible for a human being to do, although Bill's capacity is far beyond most. And so over time, Bill shifted into much more of an advisor role, and he provided advice and guidance.
While Bill's advice was always incredibly useful, he did a great job of also building a lot of people within the company that could also think in a similar sort of way to him. I mean, I'd like to think that I learned a lot from Bill and I'm able to do some of the things that Bill would have done.
I view part of my job is to take up and do many of the things that Bill did, and to do it in my area. My area of scope is broad but it's to a level that I think I can still do that effectively.
But I think what's happened is we now have a hierarchy of people. You've got Ray doing some significant cross-group things, and then you've got people like myself or Steven Sinofsky or folks in Stephen Elop's world, J Allard, all playing subset roles of what Bill used to do.
For a long time, Microsoft and you talked about this notion of autonomic computing. One of the things that conveyed was the sense that the IT would just sort of manage itself. Now you guys talk more about Dynamic IT. It seems like some of the idea that it's just going to magically happen has been moved from the notion.
Muglia: Let's just sort of kind of go back and talk about the time from where all those things sort of emerged in the 2002, 2003 sort of time. People sometimes called things autonomic computing, they sometimes called it utility computing. You know, our name for it was always Dynamic IT. It actually started out as the Dynamic Systems Initiative, and we sort of broadened it a bit with Dynamic IT a few years ago.
And the idea being that operational resources should be largely self-managing, and the process, the lifecycle of developing an application should be connected from the point of requirements, definition, through development, all the way to operations. That vision has not changed. We said it was a 10-year vision in 2003, and it will probably take us 10 years to really fully fulfill it. I think every year, as we release new products, we take substantive steps forward.
Now, the thing I didn't understand back then is that all of this would lead so naturally to the cloud application model, and that's what we've kind of put in place over the last year or two. I would very clearly say that is the next thing.
When you think about some of the biggest trends in the coming few years, I imagine cloud computing is a big one?
Muglia: Yeah. The thing that to me is so exciting about that is the impact I think it's going to have on business, most importantly allowing people to write applications more rapidly that really meet the needs of tier one enterprise apps, and do so at a fraction of the cost, both from a hardware perspective and from an operational perspective.
So, the kinds of things that would have required a mainframe in the past.
Muglia: Absolutely. Obviously we built software for very high-end systems. I mean, being straight and honest, that's not the main thing that our software is used for. We have a fairly small number of our systems running on these big $100,000 plus machines. But it's an important segment of the market, and clearly UNIX has a significant segment there, and the mainframe is a significant segment there.
When I talk to the Windows Azure guys, and I talk the software architecture that they've put in place in terms of having isolation units and understanding how to contain failures, and then I look at the way we are building the next generation data center systems, built inside these containers, I recognize that a container is essentially the mainframe of the future. The difference is that it's thousands of times more powerful than a mainframe at a fraction of the cost.
Do you have a sense of how many people are actually doing real cloud computing today, what percentage of businesses, and what that might look like in the next two or three years?
Muglia: I think Forrester has done some work that it's a really small number of people, like 4 percent of folks that are actually deploying things right now. So, it's still very nascent. But we expect a really large number of folks to start to (use cloud computing) over the next 12 to 18 months.
We're right at that inflection point where people are going to begin to start building real applications and begin deploying those applications into their environment, both for internal use and for their external customers. Certainly if you go out three to five years, we expect it to become very mainstream.
One of the constant debates is when people ask how much work will be done in a company's own data centers as compared to some sort of public cloud like Microsoft is running with Azure. Do you have a sense of where that mix might be a couple years from now or five years from now?
Muglia: I think certainly over the next five years we'll still see more work done in-house than in a public cloud. I mean, you'd have to move an awful lot of work out in order to shift that.
The question will be what is the cost and the effect, and at one level how much can this be done for people in a public cloud environment at a lower cost, and what level of security and trust can be established so that people feel comfortable moving their workloads to the cloud. I don't expect my bank will be moving their core financial systems to a public cloud environment in a five-year horizon, and that's probably a fine decision on their part.
I want to make, enable, and build the technology infrastructure to allow people to move their most sensitive data into the cloud so that some day it will become possible for a bank to do that, but I think it will take a little while for it to actually happen.
Last week, Microsoft bought a company called Opalis that specializes in software to manage data centers. Is this a big company? What made you interested in them?
Muglia: It's a moderate sized company. I'm really excited about this acquisition. I mean, what they do is something that's called "run book automation," and what they've done is they've built a very strong base of understanding of how to automate tasks that are happening within the data center.
And by the way, that's quite heterogeneous in its nature. Although they run fully on Windows, they're not limited and restricted to data center tasks that happen simply in Windows, but they can reach out and work with Linux and UNIX systems, et cetera.
Being able to automate a set of tasks is one of the key things that's going to be necessary to simplify the operations of any of these data center environments, and Opalis is a fantastic acquisition for us because they bring a ton of expertise and real world customer experience in that space. We think our customers will see value from this literally from day one.
One of the limiting factors for Windows Azure--Microsoft's operating system for the cloud--is that it only runs in Microsoft's data centers.
Some have wondered why Microsoft doesn't just package it up and offer it as something that businesses or hosters can run in their own data centers.
Server and Tools head Bob Muglia on Tuesday announced pricing and other details for Windows Azure, Microsoft's cloud-based operating system.
(Credit: CNET News)Server and Tools boss Bob Muglia said in an interview Tuesday that Windows Server will start to take on attributes of Azure, but said there are good reasons why Azure doesn't make sense as a standalone product.
The main reason, Muglia said, is that it isn't built to offer choice. Because Microsoft knows exactly the hardware that will run on Azure, it hasn't built it to support different kinds of hardware or software.
"Windows Azure obviously runs in our own data center," Muglia said. "It is very much restricted. It only needs to run the hardware that we are trying to run on. It's not really appropriate for us to deliver it to customers in that form."
Businesses and hosters will want to offer their own clouds he said, and Microsoft will have tools for them, but Azure isn't their answer. Instead, he said, Windows Server, System Center, and Virtual Machine Manager will get a lot better at operating in a cloud-based environment, while still offering customers lots more choice.
"We will be taking our Virtual Machine Manager product and evolve it over time to much more straightforwardly allow customers to build their own private cloud," Muglia said.
Just because they will remain separate products, though, doesn't mean there won't be overlap between the Azure and Windows Server teams, he said. He noted that Windows Server 2008 R2, the version of Windows 7 for the server, has the ability to boot from a virtual hard drive--a feature developed by the Windows Azure team. Conversely, Azure supports applications written in PHP, a feature that it was able to offer because of work the Windows Server team had done in its last release.
Both Windows Server 2008 R2 and Windows Azure are set for release in the coming months. Microsoft announced Azure pricing on Tuesday and said it will launch commercially at Microsoft's Professional Developer Conference in November. Meanwhile, Windows Server 2008 R2 is set to be available to volume license customers September 1, the same time as Windows 7.
As for Azure, rival Salesforce.com had some hard words on Tuesday.
"When Microsoft, the company that has the most to lose from cloud computing, enters the market, you know that 'The End of Software' has arrived," Salesforce.com VP of strategy Bruce Francis said in an e-mail. "However, instead of solving the problems of the cost and complexity of client server, Microsoft is just moving those problems to the cloud. We believe that Azure will do for cloud computing what the Zune has done for media players."
But Muglia said that Azure is actually leading the way by allowing companies a way to move to the cloud that doesn't make them create whole new ways of writing software.
"There are many millions of customers today that are running very business critical applications today in the server environment," Muglia said. "We are focused on providing those customers with a smooth easy on-ramp into the cloud where they can leverage their skills and get the scale-out benefits the cloud will provide."
A long time ago, Bob Muglia worked on a Microsoft project designed to offer a variety of services in the cloud. That effort, known as Hailstorm, didn't exactly go gangbusters, and Muglia's career took a detour.
Bob Muglia
But both Muglia and Hailstorm are back. On Monday, Microsoft elevated Muglia to divisional president, a recognition of the success he has enjoyed as head of Microsoft's server software business.
As for Hailstorm, the name is gone, but many of the concepts are back, as part of the Windows Azure platform that Microsoft announced in October. Last month, I had a chance to talk with Muglia about Windows Azure, the cloud in general, as well as the economy. Here are some edited excepts from my conversation:
Is this supposed to be a slow-motion rollout with Azure?
Muglia: The way I sort of describe it is, it'll be phased--there's a whole broad set of services. You'll see some of those services go to production next year; exactly what and when, we're still working through. People are able to begin to develop right now, of course, on it, but it will happen over a period of time.
And the other thing right now is, people are still very much kicking the tires. We have quite a bit of tire kicking going on, a lot of people provisioned on the services right now, and so far, things have been going well.
What are the kinds of things that you think people will want to run in Azure?
Muglia: In terms of the classes of applications, I think you'll see two initial ones, though it's fair to say that people may have an interest in running in this environment any application they would want to run on-premises. But the initial ones I think would be your Web-style applications, which tend be Internet-connected and need geodistribution.
The other class that I think is really interesting is anything that involves working in partnership with others: supply chain sorts of applications, business-to-business, Electronic Data Interchange, those sorts of classes of applications in which you need to connect multiple organizations, and you need to deal with authentication, and you need to deal with network connectivity.
Today it's very complex with virtual private networks and password management, and a whole nasty set of problems to deal with, and Azure has some built-in services to simplify those things, including a service bus to go through firewalls and connect things over the Internet--again, any system to allow people to authenticate. Those are basics that are fundamental, that everyone will really need in this kind of environment.
So, I think you'll see those sorts of things emerge initially, but then you could just imagine all sorts of things. You could imagine people using it for (high-performance computing) applications. That's an area we're looking at, and we certainly are having conversations with a number of academic and other organizations.
In terms of the movement toward the Microsoft-hosted versions of its server products, are there some interesting things that you have come across, as you've had to do the work to get ready for that?
Muglia: There's a ton. I mean, one is, you need to move so that everything works across the Internet, which is just the right thing to do, anyway. Another thing you see is the need to have what we call multitenancy. So, to get scale on these things, you can't be dedicating even a virtual machine to a company. You need to be able to support many users, many organizations within a single instance of an application, and so that's an attribute.
There's a whole set of really interesting regulatory things that you hit when you go across the world attached to this. Turns out, some of our products, like unified communications, have VoIP (voice over Internet Protocol) capabilities. Well, you go and take that to many countries of the world, and the call those telephone companies. They call you a telco, and all of a sudden, there's a conversation about being regulated like a telco, you know, in some countries around the world. That may or not be pleasant.
There are issues about data and where data can reside and not reside, and so that's why when you spread geographically around the world, there's a wide variety of new issues that open up that are quite, you know, quite interesting--billing issues, because obviously, there are different issues with the way the banking systems in different countries work.
Let's talk about the economy. What are you seeing when you talk with customers?
Muglia: People are afraid. I mean, I think we're all a bit afraid, at some fundamental level, because we don't know--no one knows where this is going to land in the long run.
No one really is clear as to how far the contraction is going to go and how long it's going to happen, and then there's a lack of clarity also as to how we get through this. Are we going to be tight six months of the year, then boom!? Well, maybe. That would be kind of a good viewpoint of things right now. Or is it going to be a longer period of time, with a medium period of time with sort of a slow growth.
I sort of always come back to a belief that the fundamentals will drive all of these things, and ultimately, it means that people have to produce things that others value that helps to drive the overall society forward and, you know, generate something that is of sustainable long-term value. Ultimately, one of the key things is, how can we make companies and individuals more productive and able to work together better?
So, I guess I have two questions somewhat related to that. One is, how about for you? As a business manager, obviously, you manage a fairly large business. What are the things that you might have done, had the economy continued, that you're not doing now? What are some of the things that remain priorities, and what are some of the things that you're going to let happen slower?
Muglia: Well, certainly, there's no question that Microsoft's not immune to the circumstances. There's no question about that. So we have slowed our growth. We are still growing as a company, and (the server and tools business) will grow overall this year, though I admit that we did most of our growth in Q1. We actually were incredibly successful in bringing a lot of folks on in Q1, so we would have had to slow (hiring) under any circumstances because we're outachieving our plan, but we've slowed considerably.
So if you take some of the areas in the database space, like some of these areas around business intelligence and data analysis, we're actually investing in some of those areas. But we're taking resources off some things that don't have the same kind of results and long-term potential for us to have returns, one of which was pretty public recently: OneCare, where we, you know, decided to refocus that effort into a much more narrowly focused free antimalware offering instead of providing a broader suite.
Are there other things about which you, as a business leader, are saying, this is going to have to wait a little or move slower?
Yeah. I mean, there certainly are. I think that we've looked inside, at what we're doing really in almost every one of our groups. If you look at almost every one of the things that we're doing and say, OK, there's a set of things we want to do in management, let's tighten the belt a little bit, as to where we're going. Yet we're continuing to invest in this whole virtualization and management space, coherence with Azure, all those sorts of things we're continuing to invest in.
So in each one of our business areas, we've looked at how we could reallocate and refocus, and then across the board, we've made some fairly fundamental shifts like we did with OneCare.
Microsoft started off its new-year executive shuffling by promoting longtime Server and Tools unit head Bob Muglia to president, a title he shares with entertainment boss Robbie Bach and business software chief Stephen Elop.
Bob Muglia
It's a title elevation for Muglia, whose responsibilities remain the same. It also reflects the growing importance of the server unit, which accounted for $13 billion in revenue in the most recent fiscal year, now making up fully a fifth of Microsoft's total sales.
"The core of our success at Microsoft has always been great people--people who combine talent, drive, vision, customer focus, and leadership," CEO Steve Ballmer said in an e-mail to employees. "Few people at Microsoft embody these qualities more fully than Bob Muglia, and few people have contributed more to the company's success."
The Wall Street Journal article on Muglia's promotion notes that it represents quite the comeback for Muglia, who found himself shuttled off to head management software in a post-Hailstorm reshuffling of the Internet unit. Of note, Muglia now heads the Azure Services Platform, components of which look a whole lot like Hailstorm.
I sat down with Muglia last month, just before my extended winter holiday break. In honor of his promotion, I'll post a fuller transcript of my interview on Tuesday, right before I head off to Las Vegas for the Consumer Electronics Show.
For more quarters than I can remember now, Microsoft's server and tools unit has been the company's shining star. While desktop Windows and Office still provide the bulk of revenue and profits, it's the server business that has been the fastest growing of Microsoft's big businesses.
That may continue to be the case, but in an interview on Tuesday, Microsoft's server and tools boss, Bob Muglia, said that the business is definitely feeling the heat from the global economic slowdown.
"Servers are probably growing flat, 1 (percent), 2 percent sorts of numbers," Muglia said, referring to recently lowered industry forecasts. "IT budgets are cramped. It's not like IT is going to dramatically contract, but it is certainly slowing pretty dramatically."
Muglia said the server and tools business will add employees overall during the current fiscal year, which runs through June. But, he noted, the company had been hiring ahead of its targets, so most of that growth comes from folks already hired during the July-to-September time frame.
"Certainly there is no question, Microsoft is not immune to circumstance," Muglia said. "We have slowed our growth."
He still has 150 open positions in his unit, but Muglia noted that is down from more than 900 at one point.
Muglia said the company as a whole and his unit have been looking at where their priorities lie. Among the things he said the company decided to scrap was its paid Windows Live OneCare antivirus software. Instead, he said, the company opted to offer a much more limited (and less costly to develop) free service, currently code-named Morro.
In addition to talking about the economy, Muglia talked a lot about Windows Azure, Windows 7, and virtualization. I'll have more on those topics in a later post.
In the meantime, check out the video interview we shot on Tuesday.
REDMOND, Wash.--Amid its analyst meeting, Microsoft on Thursday announced a small acquisition, scooping up Aliso Viejo, Calif.-based Datallegro, a data warehousing firm. Financial details were not disclosed.
Speaking at the meeting, server and tools unit head Bob Muglia said that the acquisition will help the company reach the highest-end enterprise data stores, even reaching higher than Oracle can get today.
"We've never been able to do that before," Muglia said.
In a blog about the acquisition, Forrester Research analyst James Kobielus said: "This deal sets the stage for what will surely be a period of rapid DW (data warehousing) vendor consolidation." He also wrote: "The deal to acquire Datallegro clearly demonstrates that Microsoft is serious about delivering an appliance-based SQL Server solution for DW and business intelligence."
Not a lot of other news from the afternoon sessions with presentations thus far from Muglia and business division head Stephen Elop.
I also wanted to highlight a good point from CNET Blog Network writer and Directions on Microsoft analyst Matt Rosoff, who noted that Zune was barely mentioned in Robbie Bach's talk this morning.
Updated 10:55 a.m. with clarification from Microsoft that Hyper-V standalone is not scheduled to ship until sometime in the second half of 2008, contrary to what Muglia stated.
Microsoft is getting ready for what it calls its biggest IT launch in history.
I'm not sure everyone will agree with that notion, but the launch of Windows Server 2008 and the next version of Visual Studio is clearly an important one for Microsoft, given that the server and tools unit has been one of Microsoft's fastest-growing businesses in terms of sales and profits. (Microsoft is also "launching" SQL Server 2008 at the event, but the product itself won't actually be ready until the second half of this year.)
Bob Muglia, senior vice president of Microsoft's Server and Tools Business
(Credit: Microsoft )Ahead of Wednesday's launch, I had a chance to talk with Server and Tools boss Bob Muglia. Here are some of the highlights from our interview.
What are the Vista ties for Windows Server 2008?
Muglia: One of the most important Vista ties is we are building the products off the same code base and we simultaneously shipped (Windows) Vista SP1 with (Windows) Server 2008. The real benefit of this for customers is that it makes it simpler for us to maintain and drive the systems forward as we learn about security issues.
There is an enormous amount of work that went into improving the security across the board that applies to both the client and the server. And then there are some very specific things on the server we have done. All of the ports are closed by default and we only open them up as the roles are installed on a machine.
Are there also some ties in terms of the network access protection feature?
Muglia: We worked across the client and server teams to build network access protection so that when clients are out in the wild and they rejoin the corporate network, they have to run a health check to make sure they fully meet the company policies and they have the latest set of patches and antimalware signatures before they join the network.
Is there a "live" component to Windows Server?
Muglia: The biggest "live" component is the fact that Windows Live runs on Windows Server. Microsoft.com is running entirely on Windows Server 2008 right now. A good part of the Windows Live servers are running Windows Server 2008. We don't have any direct connection to Windows Live because Windows Live is really targeted to consumers.
It seems like every part of the business is getting a services component. I'm curious what that looks like for your part of the business.
Muglia: What we're doing is we are looking at the things that customers do with servers inside their infrastructure and are looking at how we can bring those to customers as a service. As an example, my team is driving (Microsoft) Online. That group today is offering hosted messaging and e-mail, so hosted Exchange and Sharepoint and Unified Communications. We are also working on desktop management.
Is that a starting point?
Muglia: It's really just the first set of roles. We'll continue to look at a wide variety of roles that make sense to be delivered as a set of services.
Corporate adoption of Vista was somewhat slower than Microsoft had expected. What do you think the adoption cycle will be for Windows Server 2008?
Muglia: It's important to realize how people adopt a new server. People have a lot of servers running inside their data center (already) and we really don't see a large number of those being upgraded to Windows Server 2008. One of the key things about Windows Server 2008 has been to run right next to 2003 and even 2000 and be a good neighbor. We do expect that as customers begin to deploy new servers, a very significant number of those will deploy with Windows Server 2008. With Windows Server 2003 we saw a pretty quick uptake.
Do you have a sense of how much 2008's release affects overall server growth rates. Is it neutral, is it an accelerant?
Muglia: We don't anticipate any massive change in the number of hardware servers shipped because of the introduction of Server 2008. Servers continue to grow pretty well and Windows Server is outgrowing the overall market fairly considerably right now.
As the economy faces challenges, there are some concerns for overall IT spending. I'm curious what your thoughts are and what a slower economy in the U.S. might mean for your business.
Muglia: We are a worldwide business, so the U.S. is only a part of our sales. We have very strong expectations of growth in the future. When we look at the businesses that, say, my organization is in, we are still a small percentage of total IT spend in those areas. There is a lot of upside opportunity for Microsoft to grow our business even if IT spend is reduced or not growing as fast?
One of the hot areas of discussion these days is virtualization. One of the things we are hearing about is the idea that the hypervisor is going to be built in to the hardware. I know VMware has something in that area, as does Xen. Is that something Microsoft is looking at?
Muglia: We've said we will be offering Hyper-V as a standalone solution, so that is an option for our (hardware) partners. We actually are certainly in conversations about that. Our plan is to release Hyper-V standalone as the same time as Hyper-V, which is within 180 days of Server 2008, which makes it early August. (Update: Microsoft said on Tuesday that Muglia misspoke and that the standalone version of Hyper-V will ship later, some time in the second half of 2008.)
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