MS Seeding the Cloud for Rain -Steve Balmers speaks about the new place where Microsoft wants to go with operating systems: The Cloud
http://www.microsoft-watch.com/content/corporate/steve_ballmer_sure...
MS Seeding the Cloud for Rain -Steve Balmers speaks about the new place where Microsoft wants to go with operating systems: The Cloud
Microsoft's cloud operating system will be one cornerstone for fulfilling the company's new mission statement. Interesting, though, when Steve Ballmer thinks cloud computing, advertising isn't the only model he sees.
Steve Ballmer Sure Has Lots to Say
September 29, 2008 12:00 AM
News Analysis. Microsoft's CEO is a man with a plan: Back-to-basics software development for operating systems installed in more places.
Today, Steve Ballmer begins a five-country tour in Europe: Denmark, France, Norway, Portugal and the United Kingdom. I expect him to reiterate some of the messages delivered last week to venture capitalists, at the Churchill Club and at the Stanford Graduate School of Business. His European agenda includes Microsoft's software-plus-services and virtualization strategies.
Steve is suddenly everywhere, and I think it's no coincidence that Microsoft's "Windows. Life Without Walls" marketing campaign is the background. Perhaps the CEO's marketing pitch will be as important as, or more than, the new "I'm a PC" commercials.
Convergent Uncertainties
He has lots to say. Microsoft has simultaneously reached several key transitions over which somebody has got to take responsibility and for which a future vision must be articulated. Among them:
Chairman Bill Gates' semi-retirement
Launch of Microsoft's services platform
Adoption of a new corporate mission statement
Economic uncertainties in America and elsewhere
Departure of the Platform and Services division president
Upcoming developer and hardware engineering conferences
Release of Hyper-V virtualization software and SQL Server 2008
Google's search gains, release of the Chrome browser and launch of the T-Mobile G1
Launch of new Microsoft hosted services, such as Exchange and SharePoint Portal Server
New Mission Statement
The transitions are more than a convergence of events. As I explained about two weeks ago, Microsoft's CEO is moving the company down paths simply unthinkable even five years ago. Yet as Microsoft's business strategies go their divergent ways, the core Microsoft stays the same.
"People say: 'Are you a desktop company?' 'Are you an enterprise company?' No, we're a software company. We think we're good at doing software, and we'll follow that broadly." Steve spoke to participants at the Venture Capitalists summit, from which I will excerpt some of his statements in this blog post.
"I don't care if the software gets delivered from a cloud, software gets embedded in a device, the software gets sold in let's call it more traditional senses or royalty. We have to have muscle and business model to pursue all of those," he continued.
But the business model is changing. Dynamically. Steve explained:
"For many years we had kind of what I would call the all-encompassing mission, vision and scorecard statement: a computer on every desk and in every home. ... Well, our footprint and portfolio is broader than that. ... So, as a vision statement we talk about creating seamless experiences that combine the magic of software, the power of the Internet across a world of devices."
Power of the PC
It's a pretty good new mission statement. Microsoft is no longer just about the PC. But that doesn't mean the company will up and abandon the PC:
"It turns out our biggest growth opportunity is the sale of more PCs. This is a dollar statement, not a percent statement. The more PCs that sell with a legitimate copy of Windows, it turns out if you take a big number and you multiply by a modest percent, you still get a big number. And we've got a lot of absolute growth opportunity because the PC market continues to grow in a stunning way ... the market continues to explode."
A turning point is coming. Microsoft's CEO predicted that China will become the largest "consumption market for PCs within the next two years." The United States will move down to second largest consumer. What he didn't say: Software piracy is rampant in China. Microsoft has to get legally purchased software on those PCs.
Seeding the Cloud for Rain
Steve also spoke about the new place where Microsoft wants to go with operating systems:
"You need a real platform in the cloud. When we wanted to go after the PC, we built an operating system. When we wanted to go after the phone, we built an operating system. When we wanted to go after the enterprise, we built an operating system. We'll announce a new operating system, one that runs in the cloud and has a wide variety of capabilities. That is part of what we'll talk about at our Professional Developers Conference [in late October]."
I expect Microsoft's cloud operating system will be one cornerstone for fulfilling the company's new mission statement. Interesting, though, when Steve Ballmer thinks cloud computing, advertising isn't the only model he sees:
"Some people say, 'Oh, the world is all going to advertising.' That's hogwash—hogwash. I could tell you at this stage I know a lot about advertising, a lot about advertising. I get to speak on both sides. One, we're the No. 3 seller of online advertising in the world, but we're only the No. 3 seller of online advertising in the world. But the thing you learn is you've got to know a lot about somebody or what they're interested in or something in order for advertising to be an effective business model.
"I was joking actually with Tim Lyons, who's here from Morgan Stanley, 'Sure, we'll give you everything for free as long as we get to watch what every investment banker does all day on their PC, where they go, what their mail says, and we'll give them real relevant ads.' I think we can probably get 100 bucks a year out of them instead of inflicting that experience. So, I don't think advertising is for everything."
Steve didn't mean to diminish the value of advertising, just the idea that the only business model is the one mainly adopted by Google: Give it away for free and recover revenue through contextual advertising. He said about online and display advertising and search: "Big, big opportunity for us. Obviously we were willing to put $40-odd billion out on the table to acquire Yahoo. We're bullish. We're bullish but realistic. Things aren't going to change overnight. The market is not going to flip in some way, particularly in search."
On the Phone to Nowhere
I've been highly critical of Microsoft's mobile strategy. Steve articulated one, but either he is justifying Microsoft's weak strategy or believes it's adequate. He observed that out of the 1.2 billion mobile phones sold each year, about 150 million are smart phones. He continued:
"What is the market structure? Will there be five guys who build hardware, proprietary software, proprietary applications and take them to market? I'll call that the Apple or [Research in Motion] model. And you could have five guys who each had 20 percent share. It's conceivable. I don't think it's likely, but it's conceivable.
"Another market structure would say you'd have two players like that who had each 10 or 15 percent share, and then you'd have 80 percent of the market that essentially was probably divided up between a couple of software stacks that ran across many pieces of hardware. That's what we're trying to do with Windows Mobile. That's certainly what the LiMo crowd is trying to do with Linux Mobile, etc."
What Microsoft isn't ready to do is make its own phone. "We remain focused on doing software and working with the hardware community," Steve said. "The hardware community is what I would call—in a way the smart phone market is about where the PC market was in '84 or '85 in terms of real organization on how you get hardware innovation and software innovation to be more separate as opposed to tied together."
I don't agree. The PC clone market had just started to take off in 1984. There was only one viable end-to-end software and hardware manufacturer: Apple. In the mobile market there are Apple, Nokia and RIM. Nokia also licenses its mobile operating system, as do Google and Microsoft. But wireless carriers change the market dynamics for mobiles today compared with PCs nearly a quarter century ago. Apple has the right model for end-to-end hardware and software providers, while Google may yet provide the better blueprint for operating systems licensed to carriers and hardware manufacturers. Google clearly was hands-on with HTC and T-Mobile in a way Microsoft typically isn't with Windows Mobile licensing.
Circling back to where I started, Steve Ballmer is putting on his best pitchman's suit to sell Microsoft in a way only a CEO should do.
MS Seeding the Cloud for Rain -Steve Balmers speaks about the new place where Microsoft wants to go with operating systems: The Cloud
Microsoft's cloud operating system will be one cornerstone for fulfilling the company's new mission statement. Interesting, though, when Steve Ballmer thinks cloud computing, advertising isn't the only model he sees.
Steve Ballmer Sure Has Lots to Say
September 29, 2008 12:00 AM
News Analysis. Microsoft's CEO is a man with a plan: Back-to-basics software development for operating systems installed in more places.
Today, Steve Ballmer begins a five-country tour in Europe: Denmark, France, Norway, Portugal and the United Kingdom. I expect him to reiterate some of the messages delivered last week to venture capitalists, at the Churchill Club and at the Stanford Graduate School of Business. His European agenda includes Microsoft's software-plus-services and virtualization strategies.
Steve is suddenly everywhere, and I think it's no coincidence that Microsoft's "Windows. Life Without Walls" marketing campaign is the background. Perhaps the CEO's marketing pitch will be as important as, or more than, the new "I'm a PC" commercials.
Convergent Uncertainties
He has lots to say. Microsoft has simultaneously reached several key transitions over which somebody has got to take responsibility and for which a future vision must be articulated. Among them:
Chairman Bill Gates' semi-retirement
Launch of Microsoft's services platform
Adoption of a new corporate mission statement
Economic uncertainties in America and elsewhere
Departure of the Platform and Services division president
Upcoming developer and hardware engineering conferences
Release of Hyper-V virtualization software and SQL Server 2008
Google's search gains, release of the Chrome browser and launch of the T-Mobile G1
Launch of new Microsoft hosted services, such as Exchange and SharePoint Portal Server
New Mission Statement
The transitions are more than a convergence of events. As I explained about two weeks ago, Microsoft's CEO is moving the company down paths simply unthinkable even five years ago. Yet as Microsoft's business strategies go their divergent ways, the core Microsoft stays the same.
"People say: 'Are you a desktop company?' 'Are you an enterprise company?' No, we're a software company. We think we're good at doing software, and we'll follow that broadly." Steve spoke to participants at the Venture Capitalists summit, from which I will excerpt some of his statements in this blog post.
"I don't care if the software gets delivered from a cloud, software gets embedded in a device, the software gets sold in let's call it more traditional senses or royalty. We have to have muscle and business model to pursue all of those," he continued.
But the business model is changing. Dynamically. Steve explained:
"For many years we had kind of what I would call the all-encompassing mission, vision and scorecard statement: a computer on every desk and in every home. ... Well, our footprint and portfolio is broader than that. ... So, as a vision statement we talk about creating seamless experiences that combine the magic of software, the power of the Internet across a world of devices."
Power of the PC
It's a pretty good new mission statement. Microsoft is no longer just about the PC. But that doesn't mean the company will up and abandon the PC:
"It turns out our biggest growth opportunity is the sale of more PCs. This is a dollar statement, not a percent statement. The more PCs that sell with a legitimate copy of Windows, it turns out if you take a big number and you multiply by a modest percent, you still get a big number. And we've got a lot of absolute growth opportunity because the PC market continues to grow in a stunning way ... the market continues to explode."
A turning point is coming. Microsoft's CEO predicted that China will become the largest "consumption market for PCs within the next two years." The United States will move down to second largest consumer. What he didn't say: Software piracy is rampant in China. Microsoft has to get legally purchased software on those PCs.
Seeding the Cloud for Rain
Steve also spoke about the new place where Microsoft wants to go with operating systems:
"You need a real platform in the cloud. When we wanted to go after the PC, we built an operating system. When we wanted to go after the phone, we built an operating system. When we wanted to go after the enterprise, we built an operating system. We'll announce a new operating system, one that runs in the cloud and has a wide variety of capabilities. That is part of what we'll talk about at our Professional Developers Conference [in late October]."
I expect Microsoft's cloud operating system will be one cornerstone for fulfilling the company's new mission statement. Interesting, though, when Steve Ballmer thinks cloud computing, advertising isn't the only model he sees:
"Some people say, 'Oh, the world is all going to advertising.' That's hogwash—hogwash. I could tell you at this stage I know a lot about advertising, a lot about advertising. I get to speak on both sides. One, we're the No. 3 seller of online advertising in the world, but we're only the No. 3 seller of online advertising in the world. But the thing you learn is you've got to know a lot about somebody or what they're interested in or something in order for advertising to be an effective business model.
"I was joking actually with Tim Lyons, who's here from Morgan Stanley, 'Sure, we'll give you everything for free as long as we get to watch what every investment banker does all day on their PC, where they go, what their mail says, and we'll give them real relevant ads.' I think we can probably get 100 bucks a year out of them instead of inflicting that experience. So, I don't think advertising is for everything."
Steve didn't mean to diminish the value of advertising, just the idea that the only business model is the one mainly adopted by Google: Give it away for free and recover revenue through contextual advertising. He said about online and display advertising and search: "Big, big opportunity for us. Obviously we were willing to put $40-odd billion out on the table to acquire Yahoo. We're bullish. We're bullish but realistic. Things aren't going to change overnight. The market is not going to flip in some way, particularly in search."
On the Phone to Nowhere
I've been highly critical of Microsoft's mobile strategy. Steve articulated one, but either he is justifying Microsoft's weak strategy or believes it's adequate. He observed that out of the 1.2 billion mobile phones sold each year, about 150 million are smart phones. He continued:
"What is the market structure? Will there be five guys who build hardware, proprietary software, proprietary applications and take them to market? I'll call that the Apple or [Research in Motion] model. And you could have five guys who each had 20 percent share. It's conceivable. I don't think it's likely, but it's conceivable.
"Another market structure would say you'd have two players like that who had each 10 or 15 percent share, and then you'd have 80 percent of the market that essentially was probably divided up between a couple of software stacks that ran across many pieces of hardware. That's what we're trying to do with Windows Mobile. That's certainly what the LiMo crowd is trying to do with Linux Mobile, etc."
What Microsoft isn't ready to do is make its own phone. "We remain focused on doing software and working with the hardware community," Steve said. "The hardware community is what I would call—in a way the smart phone market is about where the PC market was in '84 or '85 in terms of real organization on how you get hardware innovation and software innovation to be more separate as opposed to tied together."
I don't agree. The PC clone market had just started to take off in 1984. There was only one viable end-to-end software and hardware manufacturer: Apple. In the mobile market there are Apple, Nokia and RIM. Nokia also licenses its mobile operating system, as do Google and Microsoft. But wireless carriers change the market dynamics for mobiles today compared with PCs nearly a quarter century ago. Apple has the right model for end-to-end hardware and software providers, while Google may yet provide the better blueprint for operating systems licensed to carriers and hardware manufacturers. Google clearly was hands-on with HTC and T-Mobile in a way Microsoft typically isn't with Windows Mobile licensing.
Circling back to where I started, Steve Ballmer is putting on his best pitchman's suit to sell Microsoft in a way only a CEO should do.
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