At a conference in Orlando, Fla., earlier this month, Microsoft CEO Steve Ballmer gave a speech to software developers and IT workers about a "new world of work" characterized by remote workforces, outsourcing of skilled labor, and heavier regulation of business, and what his audience would have to do to support it. InformationWeek senior writer Aaron Ricadela spoke with Ballmer afterward about how those workplace trends are affecting Microsoft's customers--and the company itself.
InformationWeek: Bill Gates recently gave a speech to CEOs in which he talked about the problem of people feeling tied to technology, always needing to be available, and said there could be ways to alleviate that. Is there a business there for Microsoft?
Ballmer: The real question is, how do you get the tools so that workers can use the technology well when they're not tethered to it? That is, how do I create and express a set of rules that say, "these things are important to me when I don't want to be bothered"? Or, "I don't want to be bothered at all costs"? So in a sense, you want people to feel like they always have access to technology, but not bombarded by the information it may produce. Do I think there's a real business opportunity? I don't know if it's a separate product, but there's a real opportunity to innovate providing tools. Workers will want it, and CIOs will want to give it to them if the workers want it.
InformationWeek: Thinking about overseas software development or other kinds of outsourced labor, is working with and managing people across time zones and national boundaries placing new demands on the features or functions of your Office products?
Ballmer: If you look at Microsoft Project, a very high percentage of its use--let's say 20% to 40%--is actually for managing projects in IT organizations. So it's a big subset of the Project user base. In the case of Outlook, you want to make sure it really works well across company borders. Today, it's still relatively difficult, frankly, to send a secure piece of E-mail across company boundaries. Some of the work we're trying to do with Active Directory and Active Directory Federation Services is designed to facilitate that new world of work.
InformationWeek: Given regulations about archiving corporate information, Gates recently said it could be easier for companies to decide which E-mails get archived to the server, which things on the PC are archived, without clogging up the whole system. Is that a sales opportunity for you?
Ballmer: Compliance in general is a very strong focal point for CEOs and CIOs. IT products that facilitate compliance will be quite popular. In our case, to some degree we'll have some new products that help with compliance. But in large measure, we're going to continue to build into our existing products features that support compliance, and try to get people to upgrade because they want those features. In some senses, part of the way we've been selling our rights management product so far has been to facilitate certain compliance scenarios. So we're already kind of hard at work on at least aspects of compliance, as are a number of our partners.
InformationWeek: Last month you released the Windows desktop search engine. In November, you announced a new MSN search site. So far, those are free. Do you see search technology mainly as something that's a free service, or a feature of Windows, versus something you would charge for?
Ballmer: We have three levels of search right now: Desktop search, which is basically Windows search. People may choose to use other guys' desktop search, but it's a feature we want to give all Windows users. I would view it as part of the value we deliver with Windows; that is its business model. There's intranet search, which basically we instantiate today through the SharePoint Portal Server. That's a product we charge for. Then there's the Internet search, which is funded by advertising. So you have one integrated development and thought approach, but three different business models.
InformationWeek: Is the SharePoint business comparable to what Google is doing delivering these search appliances to companies?
Ballmer: It's the same basic concept. We're clearly ahead in that market and they're moving to try to get involved in the game. ... Google has barely started, and we have millions of users. The fastest growing server offering we've ever made is the SharePoint Portal Server.
InformationWeek: Google's CEO, Eric Schmidt, recently told InformationWeek that Google plans to add more features to the its search appliance, and we wrote that those could include E-mail, instant messaging, and image searching. Is the corporate intranet search market an emerging area where you guys are going to go head to head?
Ballmer: You have to ask him. We're in all those areas pretty much on the corporate network today. We're in search, we're in E-mail, we're in IM, we're in presence. It wouldn't surprise me if Google wanted to get in the game, just like it wouldn't surprise them that we intend to take market share from them in Internet search. I do think the game is different. I don't think their monetization engine, their sales force, many of their sales and marketing assets work very well in the corporate environment. IT will want to have more participation in what goes on, more ability to customize what gets indexed. I like our product position and I like our sales and service capability.
InformationWeek: Ray Ozzie [Groove Networks' CEO and incoming Microsoft chief technical officer] says most IT systems, including Windows, are designed with the IT administrator in mind, and contrasts that to what he calls decentralized systems that can be easily deployed on the Internet and which have no global directory of users. Ozzie says that's a more natural reflection of the way people work, and he's got a security model to deal with it. Could those approaches be applied to Windows and Office products now that Microsoft has acquired Groove? And could they applied without scaring off CIOs who may already be vigilant about security?
Ballmer: Ray understands how to do this. Groove got sold to CIOs, not to end users, primarily. What Ray was trying to do with Groove was to make sure you got the best of decentralization and the best of federation--that was a basic part of the Groove model. With the work we're doing to federate Active Directory over time with Passport, you want the best of decentralized and centralized. You really don't want to push all one way. With a decentralized design, it's hard to get corporate to buy-in. And if you're all centralized, you can't get any kind of organic, bottom-up work. ... Office 12 will bring with it a set of things to support this style of work because Office 12 is not going to require a new release of Windows at all. It will also run on Windows XP and other versions of Windows. The Groove infrastructure eventually could be made available independently of an Office release, but the initial thought is just to get Office 12 and Groove well integrated.
InformationWeek: How does the "new world of work" you're talking about apply to Microsoft's own workforce? The company has talked about trying to make the jobs that younger workers come into more attractive, and taking out parts that aren't interesting to them. What are you doing?
Ballmer: In our workforce, yes, we're having a hard time finding talent. But who isn't in the IT industry? There is a talent shortage. But let me go back to something that's just so palpable and meaningful to me that I'll explain it to you. I joined Procter & Gamble 27 years ago. When I joined Procter & Gamble, we went through oftentimes 20, 21, 22 rewrites of a memo. That was commonplace because you wanted to get it just right before it went up the management chain. There were no word processors back then. We were literally cutting and pasting and then taking an X-acto blade and cutting on this special Mylar and then pasting it down on top of another piece of Mylar. Do you think it was a lot of fun working there? Getting the memo right was hard enough, but the process of getting the memo right was just outlandish. What is the equivalent in the year 2005?
Just take instant messaging. Instant messaging is a basic communication and collaboration form for most people 19, 20, 21, 22 entering the workforce. It is not a natural form of collaboration even for most people 35 or 40, nor is it necessarily a well supported interaction technique in most corporate IT environments. That is a good example of trying to make the job more natural--you could say more fun. Or you could merely say supporting the technologies that are important for the productivity of the newest part of the workforce.
InformationWeek: Microsoft is making a bigger push in consumer electronics with the Xbox and Windows Media Center businesses. Is that changing how you have to market your technology, vs. the marketing approach you've taken to the PC business?
Ballmer: Sure. We're learning how to be more consumer oriented in a lot of our marketing. Our Xbox guys lead the way. With Xbox [version] one, they were selling to gamers, and gamers are a particular profile. With Xbox 360, we're going to try to broaden that demographic. You also see our new Windows "start something" ad campaign, which talks more to the general potential of Windows PCs. We also see ourselves having to do a lot more with Windows mobile devices and Windows Media Center. We'll learn some new skills, or relearn them, because you could say that Windows and Office started out very much marketed to consumers 15, 20 years ago and they morphed to be much more marketed to IT people over the years.