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 Australia 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."
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.
Ballmer: 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.
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?
Ballmer: 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 U.S.?
Ballmer: It's not offered in the U.S. Windows is so low-cost, you have to ask yourself if there's really room for an Express-type version below that. And 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. But 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?
Ballmer: 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?
Ballmer: 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.
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?
Ballmer: 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. And because we made that decision, it also took longer for .Net 2.0 to pop, because those things had to pop together. We needed to do that work.
The thing we would do differently in that position is to say, "Look, that may take three or four years, let's not hold the next release for that innovation." There are plenty of innovations that could have been put into the market earlier that would have been interesting and exciting. That's why I talk about the three cycle times. We're going to have things that take longer; we'll have regular releases; and we'll have service packs or service oriented value-adds that people will see every nine months or so.
Back with Windows 95's launch, the stars sort of aligned so that Win 95's debut more or less coincided with the Internet boom. Today, Web-based computing -- blogs, IM, Web e-mail, search -- that's the new phenomenon. Windows Live and MSN get you in the game. But how do those services pull through sales of Vista? What's the connection between Vista and Windows Live? Is there more that we haven't yet seen?
Ballmer: Windows Live is designed to work on all Windows systems. It may or may not pull through Vista. We will certainly do things in Windows Live that take advantage of Vista. But it's like the next version of Office -- it will run on versions of Windows other than Vista, too.
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