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CRN Interview: Microsoft CEO Steve Ballmer

In this Q&A, Ballmer talks about the Vista challenge, how Microsoft has fared against Linux, the emerging software-as-a-service arena, and how Microsoft can become what he calls the software industry's first "N-trick pony."
CRN: But broadly, who do you worry about most?

BALLMER: You're not asking that and I don't want to answer that. I want to answer this question. The question is, 'How do we do it all?' The answer is we have capable leaders that can actually run--I won't say independent businesses--but run them in a way that is sufficiently focused and protected from a resource and economy perspective to get something done.

Robbie Bach and J Allard are not coming to work every day worried about the same problems that Bob Muglia is. Steven Sinofsky and Kevin Johnson have different concerns, [as does] Jeff Raikes. And thank goodness. These are some strong leaders. [Editor's note: Bach is president of Microsoft's Entertainment and Devices Division. Allard is corporate vice president and chief XNA architect. Muglia is senior vice president of servers and tools. Sinofsky is senior vice president of Windows and Windows Live Engineering. Johnson is co-president of the platforms and services division. Raikes is president of Microsoft's Business Division.]

We do get a chance to get some technology synergy, brand synergy, sales force synergy, which is all good. When we go build something, I expect there to be a team of people, very capable, as capable as anybody in the world, at building great stuff and competing. If we can't do that, we have an issue.

What's key to me, the most important thing that keeps me up at night, is having the talent and technology approach and management approach and innovation approach that lets us be what I might best refer to as the only N-trick pony in the technology business.

You might say, 'What is an N-trick pony?' Most software companies do one thing. We've proven we can do at least two, maybe three. We do the desktop, we do the server. I think we've almost proven--we haven't proven we can make a lot of money [on it] yet--that we can really do gaming. Sony is helping us in that with some of their announcements. I want us to prove we can do multiple things really, really well. The innovation around that, how does it flow? How does talent flow? The leadership, that's kind of job one. If I think of where I apply most of my time and energy, it's probably there.

At the top of the business, what we think a lot about is new business models. How do we embrace them or compete with them? Open source is more of a business model than anything else. Over the last several years, we can't embrace it being a for-profit institution, but we've spent a lot of time thinking about how we can compete and focus on innovation, value and total cost of ownership. We've done a very good job competing.

If you look at other business model ships, in the consumer market, advertising revenue can be an important source of funding. The notion of a technology ad platform, we probably could have grokked earlier in our lives. We totally grok it now. How do we embrace it where appropriate, make sure we get critical mass, which we're doing, and succeed with an advertising platform, including the applications like search and others that would be built around it?

What keeps me up at night? It's embracing or competing with new business models, the talent and approach and innovation that lets us be a multi-trick pony.

CRN: Getting back to the partner proposition, the Adobe thing illustrates this. Software companies partner with Microsoft with a certain amount of trepidation. Does that hurt you in public opinion and in your ability to deliver products?

BALLMER: No. We're coming further up the stack in the Office 2007 time frame. I hope that's also clear. We have document management and workflow, which we've never had before. Enterprise search we're taking to the next level. Business intelligence we're pushing forward in a fairly significant way. Unified communications, including voice, will be very significant for us in the Office 2007 time frame, but we are pushing further up the stack. We are a platform company in the sense that all our stuff should be extensible in that third parties can add value. We're not a platform company in the sense that we don't think about how to complete the loop with some sort of end-to-end solution. We've always been an applications company. In the early days of Windows, we weren't a platform company. We were a platform company with key applications that work with our platform.

CRN: Even Microsoft Business Solutions is pushing its apps as a platform.

BALLMER: It is. It is a platform and applications. Most good pieces of software are both.

CRN: VMware is getting ready to launch its next-gen platform, and they're competing against Microsoft and Linux rivals. All are integrating Hypervisor with the operating system. VMware said there's no advantage because it's integrated with the metal itself, and there’s no technical benefit to the customer. What's you're take on that, and how do you see virtualization shaping up as a system service in the next five years?

BALLMER: Virtualization will be a very important system service, no doubt about that. In terms of the detailed technology, I don't particularly have a point of view on it.

CRN: What would you tell a small software company to convince them to work with Microsoft vs. a non-Microsoft stack?

BALLMER: It probably depends on what they're involved with. At the end of the day, we've consistently proven in most areas that we actually get more customers. If you're looking to add value, it is probably as important as anything else as to who creates the most opportunity for you.

Let me talk about a partner I talked to today that didn't exist nine years ago and focuses on just Microsoft technology and is now [taking in] over $2 billion nine years later. HTC, in Taiwan, builds Windows Mobile devices. Has it been good for them? You bet it has. Fantastic company. Doing some of the most exciting work going on in the mobile industry. Is it good to bet with us to get customers and make money? Most people can. The technology is good, and innovation is strong even though Vista is late. We don't like this gap. It won't happen again. Let's get on with it, man.

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Brian T. Horowitz, Contributing Reporter
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Jessica Davis, Senior Editor
Cynthia Harvey, Freelance Journalist, InformationWeek
Sara Peters, Editor-in-Chief, InformationWeek / Network Computing