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Feisty Ballmer Talks Cloud, Office 365, And Big Data

In this Q&A, Microsoft's CEO pushes back, but also provides new insights into the company's cloud computing business, its hardware strategy, and his customers' next big bet.
Given that philosophy, is there any chance Microsoft could look at hardware makers or chip companies as possible acquisitions?

Ballmer: I didn't say that. I didn't say it, and it doesn't suggest that. It says we've got to think through the hardware and software design end-to-end. It doesn't suggest anything, in fact, quite the contrary, because we have three different models. The chassis spec model for Windows Phone that works, that is starting to work. We've got an Xbox model where we do hardware and software ourselves and sell it. And we've got a licensing model [that’s] pretty open in terms of hardware design for Windows. Each of them has worked pretty well in some ways.

We observed that IBM and Oracle are both in the server hardware business, based on the argument that there are advantages in owning all the pieces. Does Ballmer disagree?

Ballmer: I don't. You don't have to [own all the pieces], but you have to think through all the pieces. Whether you have to bend the sheet metal and do all that is another question. And Oracle doesn't have the pieces.

It's sort of ironic. Neither of those two companies have the key pieces. Neither are really in the networking gear business, yet if you look at the back end of computing, compute, storage, and network are all pretty important. I think that's an opportunity for everybody.

The conversation turned back to Office 365. Microsoft announced Office 365 last October, and on June 28 it will formally launch the SaaS version of its flagship applications suite at an event in New York. (It’s unclear if Office 365 will actually become generally available at that time.) We wanted to know, what’s the business case for Office 365?

Ballmer: The pitch has to talk about speed of innovation, agility, cost, availability, reliability, and security. We've done a lot of work on certifying our stuff. It helps from a security and availability. We have a track record. It's sometimes imperfect, but we've got a better track record than anybody else on the latter front.

The biggest problem in making the cost argument is a lot of customers don't have refined cost accounting that lets them understand how much it costs them to run a service. If you’re the biggest enterprise, you might know that. If you're not, you probably don't have very good cost accounting on what it's costing you to run your information worker infrastructure. So we have to work with the customer individually so that they get a clean comparison. This is what it costs me today; this is what this will cost me; this is what I can save on people and capital.

In terms of agility and the benefits of thinking from the cloud, I'd say that tends to be pretty well accepted by the bigger customers, and increasingly by smaller enterprises.

Finally, we asked Ballmer about the big bets that the CIOs who are Microsoft’s customers are making. On this subject last year, he pointed to cloud computing and collaboration. Now, a year later, are there other big bets he’s seeing?

Ballmer: The cloud remains valid, and collaboration. And collaboration I want to underscore, because the range of things we can do just keeps going up. The number of devices from which you can collaborate, the people you can reach with the Skype acquisition, the ability to connect people inside and outside an enterprise, since a lot of what you want to do is talk to your customers and trading partners, that gets more powerful. I may double down on virtual meetings, and Kinect is potentially an interesting peripheral in the enterprise. There's a lot of things there to further double down.

The other thing I'll underscore is data. And I'll use the word "data" instead of "BI" because data somehow says I want to use all the world's information, and BI somehow says I want to use the information that we figured out how to capture inside our corporate system.

The opportunity to use large amounts of data, generated internally and externally, continues to grow. I'm excited about the fact that we have a search engine. Without a search engine, I don't know how you play in the data that lives outside your company all that well. The search engine gives us a platform to get after that. Excel gives us a platform for analysis. SharePoint gives us a platform for presentation. And SQL Server for storing and capturing data that we want to formally manage.

There's a lot of work we're doing with Windows Server and our high-performance computing work to try to push that in the direction that enables more processing of large amounts of real-time data.

With a large gaming concern, with the chief marketing lines and what they want to do, it turns out, getting people to come back to Vegas, or Macao, the problem isn't to get people to come back, the problem is to get them to spend everything they can spend while they're there. It’s almost like you want to form a profile. This person just checked in there; we saw their player card. They want to go to a restaurant. We want to know what they're doing. We want to process all that data in real time, whether it comes in our systems or not, and make sure we have an opportunity to sell them something else, get them to spend more money in our casino, in our hotel, in our theater. This explosion of the use of data in not always traditional ‘BI-ish’ ways is a big thing for us.

Microsoft a heavy hitter in big data? The company didn’t used to be considered a key player in that market. We asked Ballmer if that perception has passed.

Ballmer: You've got to ask our customers. I think so, but we're in bigger data than anybody else out there. Nobody plays in big data really except us and Google. Now, you could say, what about that Oracle company? What about IBM? Well, they do data in the enterprise, but they don't do big data. Big data is indexing all the world's websites. Big data is tracking all the world's business. That's a real big data experience. The largest data sets in the world that are being mined are those kinds of data sets.

If you asked the average enterprise customer, they'd say, our data warehouse is still on Oracle, or IBM, but I think that whole dialogue is changing quite a bit. People are evaluating our stuff. People are looking at what to do. People are doing a lot of things that are a little different than they thought about as being data before.

Security concerns give many companies pause as they consider migrating portions of their IT operations to cloud-based services. But you can stay safe in the cloud, as this Tech Center report explains. Download it now. (Free registration required.)