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Ballmer sets Microsoft apart from the rest

Mike Ricciuti CNET News.com

Published: 09 Nov 2005 12:05 GMT

Beyond the usual hard sell for Microsoft, Steve Ballmer had another message for the 3,000 developers who showed up in San Francisco on Monday for the unveiling of updates to the company's flagship database programs and developer tools.

In a speech ostensibly devoted to SQL Server 2005, Visual Studio 2005 and BizTalk Server, Ballmer staked out what he saw as the key business differences separating his company from other software makers — including the growing cohort that makes up the open source community.

Microsoft's chief executive officer later sat down with ZDNet UK's sister site, CNET News.com, to explain that while Oracle and SAP might enjoy a more cordial relationship with the Fortune 500, Microsoft's ambition was to become the "grand consolidator of everything else".

Q: The Express line of products takes you lower down the food chain to compete with open source and so on. What about the other end of the spectrum? I've heard a statistic that Microsoft accounts for less than 1.5 percent of total IT expenditures in large enterprises. Obviously you want to grow that percentage?
A: Well, the question is, how do we get higher price points? We'll have some people in those "mission critical" applications choosing our enterprise editions. As people move into more mission-critical applications they will naturally choose some of our higher-priced items. We are the high-volume, low-priced guys in every space in which we play — with some small exceptions around open source, if you will.

Part of our pitch to enterprises is that we will help them save money. In terms of the trustworthiness of the platform, we have plenty of references and we have plenty of scale that should put to bed a lot of the legacy issues related to this stuff being enterprise-ready. We've had those issues for years. At some point, clearly those are legacy issues.

We have Express (stripped-down) versions of SQL Server and Visual Studio. Will we someday have Express versions of Windows and Office and other products?
We essentially have an Express version of Windows with Starter Edition. That's a product we don't have a lot of traction with in the markets in which we offer it.

But it's not offered in the US?
It's not offered in the US — Windows is so low-cost, you have to ask yourself if there's really room for an Express-type version below that. It's so fundamental to the definition of the machine and the basic experience people have, I wouldn't expect anything of that ilk.

In the case of Office, we have attacked that market with our Student and Teacher Edition. We will continue with Office 12; there will be news, over time, about where we are going with Student and Teacher Edition. Essentially, that edition targets the same market segment that we have been targeting with the Express Editions, but the people who buy most of those machines are parents, who might have more of a budget than a student does.

So on the Office side, there might be more news coming about a lower-cost edition with Office 12?
Yeah, I'm not trying to actually imply that there is. Today's not the day to talk about it. The Office team is always working to enhance their value proposition to all segments.

You mentioned Oracle this morning and at least one of its co-presidents sees the company as a great industry consolidator in the coming years. Microsoft could also clearly play that role. Why haven't you? Any plans to pick up the pace of acquisitions?
Well, look, there are two segments here: the biggest enterprises and everything else. We are going to be the grand consolidator of everything else. That's what we're doing with Dynamics (Microsoft's business applications line), that's what we're doing with the small business accounting product that we've launched. We will be the grand consolidator of everything else.

In large enterprises, there were sort of two basic choices: partner with SAP or compete with SAP by acquiring PeopleSoft and J.D. Edwards... We decided we had so much to do and so many ideas and our plate was pretty full with consolidating everything else, that it made a lot of sense to partner. SAP and Oracle will battle it out.

Last month, you said Microsoft needs, for every line of business, to have things that "pop every six to nine months, things that pop every couple of years, things that pop longer than that". What can you do with things like Windows and SQL Server, that take so long to develop, to get that six to nine month pop?
They don't. Aspects take long to develop. We made the decision that the next version of SQL would be the version to get the .Net runtime. It took a long time to pop. Because we made that decision, it also...

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