Family Learning Center

Posts Tagged ‘Ceo Steve Ballmer’

Steve Ballmer hints at more Xbox form factors

Speaking at the University of Washington this Thursday, Microsoft CEO Steve Ballmer dropped a tidbit that may point towards more Xbox form factors in the future.

As Gearlog reports, Ballmer made  the following response when asked about the company’s approach to collaboration with hardware partners (hardware diversity versus variety):

In the case of the TV we’ve got both strategies. We actually have a TV implementation in some senses built into Windows. It works really well for small screen TVs that you might call a PC, but for that big screen device here’s a piece of hardware that we build, there’s no diversity. You get exactly the Xboxes that we build for you. We may have more form factors in the future that are designed for various price points and options, but we think it’s going to [be] important.

That last sentence is key — it hints that the company may be eying different implementations of the Xbox hardware.

This news isn’t exactly new. Last year, Microsoft signed a deal with British Sky Broadcasting to stream premium television content on the Xbox across Europe — making it almost like a cable box. The company has also long hinted at how the Xbox 360 could replace cable boxes in the U.S. The console isn’t quite there yet, but recent news show how the Xbox could be used to stream AT&T Uverse content, in conjunction with a traditional IPTV cable box.

Microsoft reps reported that the console’s heat and hardware reliability issues prevented it from fully replacing the cable box, and that’s something the company will definitely have to solve before it moves forward with other form factors. Sony was able to release a slimmed down version of the Playstation 3 last September, but today’s Xbox still has the same form factor as when the console launched in late 2005. There have been internal hardware changes related to the Red Ring of Death issue plaguing the console, but beyond that not much has changed.

Once it figures out the hardware issues, perhaps we will eventually see a slimmer console, along with Xbox 360 technology included within other set-top boxes.

Tags: xbox 360

Companies: microsoft

Read the whole story…

Shareholders ask Ballmer about Apple

Filed under: Analysis / Opinion

While Bill Gates looked on, Microsoft shareholders asked CEO Steve Ballmer about Apple at their annual meeting this morning. Steve’s CEO-speak responses illustrate the larger problem.

Portfolio reports that one investor asked about the company’s reputation with young customers:

“I’m just wondering why your marketing group can’t do something to try to rein in this next generation, because you’ve got a real bad image out there.”

He also said that Apple’s ads make Microsoft look like “a buffoon.” That’s when the CEO-speak began.

“There’s certainly always opportunities for improvement,” Ballmer said. “[There is] … a group of people with whom our market share is less.”

When you hear “opportunity for improvement,” you’re screwed. Euphemistic language clouds meaning and hides the truth. Think “economic downturn” and “previously enjoyed” instead of “depression” and “used.” Or “opportunity for improvement” instead of “problem.”

Remember the Windows Mojave ads, in which producers tricked customers into thinking Vista was an unreleased version of Windows, only to then throw open the curtain and essentially say, “See? It’s really Vista! You DO like it! There’s nothing wrong here!”

Instead of telling people what they like, sanitizing language, insisting that the only reason the iPhone has 75,000 apps available is to make it usable on the Internet and denying your kids iPods, just say, “Our reputation with young people is poor and here’s what we’ll do about it.” That’s when you’ll get something done.

[Via MacDailyNews]

TUAWShareholders ask Ballmer about Apple originally appeared on The Unofficial Apple Weblog (TUAW) on Thu, 19 Nov 2009 21:00:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments
Read the whole story…

The Engadget Show, live with Steve Ballmer!

Keep your eyes tuned to this post — because at around 2:30PM ET (give or take), we’ll be starting The Engadget Show live, with Microsoft CEO Steve Ballmer as our guest! You don’t want to miss it! Update: We’re live!

Continue reading The Engadget Show, live with Steve Ballmer!

Filed under: Announcements

The Engadget Show, live with Steve Ballmer! originally appeared on Engadget on Thu, 22 Oct 2009 15:21:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments
Read the whole story…

Windows 7 is here

Windows 7 is now for sale around the world. Microsoft CEO Steve Ballmer is officially kicking off the Windows 7 launch at an event in New York City. Microsoft’s partners will be unveiling new hardware and OEMs are now no longer recommending Vista to consumers and are switching their default choice to Windows 7. Today is easily the most important day for Microsoft this year (the operating system’s RTM date of July 22, 2009 comes in at a close second place). Here’s everything you need to know about what’s happening today.

Read the whole story…

Dell’s $2,000 Adamo XPS launching October 22 with heat-sensing open latch

Dell has been teasing its ultrathin Adamo XPS for weeks now, but all that goofing off will come to a solemn end next Thursday. On the same day that we sit down with Microsoft’s CEO Steve Ballmer (and a little OS by the name of Windows 7 hits store shelves), Dell will also fully reveal the planet’s slimmest laptop. The 0.39-inch Adamo XPS will cost $2,000, and while the nitty-gritty details are still under wraps, a new Business Week article notes that it’ll boast a “heat-sensing strip on the lip that, when swiped with a finger, glows white and automatically opens the aluminum lid.” The glamorous machine is part of a larger effort within the Round Rock powerhouse to revitalize itself and get people talking once again, and while this particular slab will obviously not be a high volume product, it could very well get a few more eyes pointed in its direction. Call us crazy, but we’re guessing next week is going to be a wee bit zany.

[Via Pasta Tech]

Filed under: Laptops

Dell’s $2,000 Adamo XPS launching October 22 with heat-sensing open latch originally appeared on Engadget on Sat, 17 Oct 2009 23:57:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments
Read the whole story…

Dell’s $2,000 Adamo XPS launching October 22 with heat-sensing opener

Dell has been teasing its ultrathin Adamo XPS for months now, but all that goofing off will come to a solemn end next Thursday. On the same day that we sit down with Microsoft’s CEO Steve Ballmer (and a little OS by the name of Windows 7 hits store shelves), Dell will also fully reveal the planet’s slimmest laptop. The 0.39-inch Adamo XPS will cost $2,000, and while the nitty-gritty details are still under wraps, a new Business Week article notes that it’ll boast a “heat-sensing strip on the lip that, when swiped with a finger, glows white and automatically opens the aluminum lid.” The glamorous machine is part of a larger effort within the Round Rock powerhouse to revitalize itself and get people talking once again, and while this particular slab will obviously not be a high volume product, it could very well get a few more eyes pointed in its direction. Call us crazy, but we’re guessing next week is going to be a wee bit zany.

[Via Pasta Tech]

Filed under: Laptops

Dell’s $2,000 Adamo XPS launching October 22 with heat-sensing opener originally appeared on Engadget on Sat, 17 Oct 2009 23:57:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments
Read the whole story…

Microsoft CEO Steve Ballmer: Chrome And Safari Are Rounding Errors

This is the third installment of our exclusive interview last week with Microsoft CEO Steve Ballmer. In the first article we showed an overview and video footage of the main subject areas we covered: Big Opportunities, Operating Systems/Browsers, Mobile, Search and Developers.

In the second post we did a deeper dive on his thoughts on big business opportunities for Microsoft in the next 5 – 10 years.

Here we focus on his thoughts on the competitive landscape around operating systems and browsers. And Ballmer has lots to say on the subject. Particularly because Microsoft has fresh browser and OS products in the pipe: IE8 launched earlier this year and Windows 7 launches on October 22.

We jumped right into the conversation by bringing up the 2001 consent decree with the Department of Justice and various other governmental bodies that, among other things, prohibited Microsoft from bundling Windows and IE for competitive purposes.

But the landscape has changed a lot in the last eight years. And Microsoft’s competitors are doing exactly what Microsoft is prohibited from doing – bundling an operating system and a browser. Heck, Google didn’t even change the brands. Chrome is both a browser and a desktop operating system.

Ballmer says the notion of an operating system being distinguished from the browser is no longer sensible:

I’ll say that it is certainly clear that in the year 2009, the notion of operating systems being independent of internet access and internet ability to render important things in the internet is kind of not a sensible concept. And in every legal dispute we’ve been in, eventually, people agree with that. You know, we had to agree with some rules around that with the DOJ as part of the consent decree. We’re trying to agree on a new set of rules around that with the European commission, but I think we’re well past the point where people really question that it needs to happen. The question is for somebody who’s got our market share, on what terms does it happen?

He elaborates, arguing that there isn’t really any distinction between the browser and the operating system – both are operating systems. Except for the hardware drivers, of course. And oh boy do we agree. Says Ballmer:

You know, Google is talking about building an operating system with the name of its browser. Nobody should be confused. The browser they think of is the operating system and the question is you know sort of like Marc Andreesen in the late ’90s is back at work at Google. If you remember, he said something like, Windows will just be a poorly debugged set of device drivers running Netscape…Now, that’s kind of basically the attitude expressed in Chrome Browser, Chrome OS. Windows is just, you know, sort of a bag of bits that manages the hardware under the Chrome operating system and oops, we can even do our own device drivers for the Chrome operating system. Of course, the Chrome operating system isn’t available, hasn’t shipped.

When it comes to browsers, Ballmer calls Chrome and Safari rounding errors. And he certainly noticed Google’s attempts to turn IE into Chrome via a plugin:

The most successful by far is Firefox. Chrome is a rounding error to date. Safari is a rounding error to date. But Firefox is not. The fact that there’s a lot of competitors probably is to our advantage. Yeah, we’re right now about 74 percent overall with the browser market, roughly speaking. But we’re having to compete like heck with IE 8, with great new features. The other guys are getting more and more unanticipated competitive attack factors, the thing that Google announced yesterday where they replaced IE but they don’t tell you. I mean that’s how I would say it. For all intents and purposes of what they’re doing IE is not there. It’s their operating system. Instead of now masked as browser, it’s masked as a plug in basically to IE. So, you know, we’re going to have to compete like heck and you know, see where things go. The one thing that’s unclear is what’s the economic play for anybody else competing with us at the browser level. Is this all about kind of controlling the search box or is it about something else?

Clearly fired up, Ballmer also wonders at Google’s attempts to build two operating systems (Android and Chrome). It’s confusing, he says, and doesn’t help with interoperability. Microsoft has Windows for the desktop and Windows Mobile, and he says that he thinks about ways for Windows and Windows Mobile to “share more” every day. Google must have gotten Android wrong, he says, to have started to focus on Chrome. “In the OS business, it’s generally advisable to get it right and stay right.” He elaborates:

It’s incompatible with the one operating system they have shipped. To me, still, I don’t understand why they needed another one. They must have gotten the first one wrong. They must – they’ve got the first one. I mean, I really don’t know. They must think they got the Android wrong somehow. Otherwise, in the OS business, it’s generally advisable to get it right and stay right as opposed to have many of them. We have one and a half operating systems, Windows and Windows Mobile. Windows Mobile is kind of a half because it’s not entirely the same as Windows. And everyday, I say I’d love to get those two things to share more.

So I don’t know why Google before they have one successful one, decided they needed a second one. You know, I was expecting this Fall, or if not this Fall, next Winter, to really see a rash of essentially things that look like PCs running Android.

I think that’s a little tougher for them now because they basically tell the hardware community Android is dead, Chrome is the thing or maybe Chrome isn’t the thing. Maybe it is Android. The cacophony there is probably helpful to us in the grand scheme of things and I don’t know why they would have chosen to do it, at least the way you read the press. It probably has a lot to do with internal squabbles, but I just don’t know.

And he’s not done yet. In a fascinating answer to my question on how Microsoft will compete with Android, Chrome, Safari, Linux and other operating systems, he begins a long discussion of competitive attack vectors on Windows/IE and how competitors are hitting Microsoft from all sides via true operating systems and browsers. He even drew a chart for me, although he wouldn’t let me take it with me. Here’s what he had to say:

Mr. BALLMER: Here’s Windows and Windows is a very successful product. How do you attack Windows? Well, you attack with the high end, and hardware. That’s an attack. That’s – I won’t call it the Snow Leopard attack. I’ll call it the Mac attack of which Snow Leopard is a piece. You could attack from the side. That’s the Chrome – Firefox attack. You can attack from cheap, from below. You’re not from the side. You’re one on one, but that’s kind of a Linux, Android, presumably Chrome OS, who knows, attack vector. You can attack through phones that grow up. You know, mama don’t let your phones grow up to be PCs or something. I don’t know. But that’s another attack vector. So, you could say how do I feel about all these attack vectors? Strong, I feel very strong here.

I mean, we’re gaining share. Apple is expensive. And in tough economic environment, people get it. Their model is, by definition, expensive. And we’ve actually held or maybe even gained just a tiny bit of share relative to the Mac in the last 12 months. And it’s not really Snow Leopard. It’s really Windows PCs versus Mac.

That’s the trade-off. We’ve done extremely well versus Linux-powered machines with the Androids or Linux and we’ve done that primarily by having a better solution and being willing to do the right thing from our pricing perspective. And Windows 7 will only make this, I think, more competitive here.

Mr. ARRINGTON: And part of what we’re talking about here is Netbooks, of course.

Mr. BALLMER: Yes, well, Netbooks are just the first battleground.

There’s no question that there was a Linux PC battleground and then it became “the MID” and if you remember that mobile internet device. That’s what they call Netbooks before Netbooks, is in the new battleground. We’ve done a very good job and I think we’ll continue the job.

Phones, I think the jury is out. Nobody has yet tried to take the phone and turn it into a PC or take a PC and turn it into a phone. But this is where we have to be. We’re going to have it and we’ve got to have our phone act together. I like our 6.5 release. I like our plans for the future. But you know, we’re certainly in a period now where competition has got a lot more commotion.

Mr. ARRINGTON: As you said the market there is just getting started.

Mr. BALLMER: It’s still awfully nascent. People don’t think about it that way because phones aren’t nascent. Smart phones are more nascent. And then this attack is perhaps the most, I don’t mean this in a negative sense, but it’s the most insidious because some people don’t even know that it’s really an attack. Those are operating systems. They all run their own proprietary rich-client code and we’re competing against them. [Editor's note: If you view the full transcript below, it's clear he's talking about competitive browsers in these last few sentences, which he clearly views as operating systems with "proprietary rich-client code."]

There you have it. Ballmer sees a competitive landscape where Microsoft is surrounded by competing operating systems and browsers (which are also operating systems) and hobbled by a consent decree that limits their competitive response. But he doesn’t seem shaken by the threat. At the end of the day, one quote rings true from Ballmer: “In the OS business, it’s generally advisable to get it right and stay right.”

The full transcript of this portion of the interview is below.

Transcript:

Mr. ARRINGTON: You’ve got Windows 7 launching when? What’s the date?

Mr. BALLMER: 10/22.
 
Mr. ARRINGTON: 10/22. A decade ago the DOJ said that the browser and the operating system cannot be merged together. You probably know I’m talking about there. How do you feel about that with today’s world where Google is moving forward with Chrome OS and Chome Browser being merged?
 
Mr. BALLMER: I have no clue. I mean, how do I say this correctly? I don’t know what Google is doing. I’ll say that it is certainly clear that in the year 2009, the notion of operating systems being independent of internet access and internet ability to render important things in the internet is kind of not a sensible concept. And in every legal dispute we’ve been in, eventually, people agree with that. You know, we had to agree with some rules around that with the DOJ as part of the consent decree. We’re trying to agree on a new set of rules around that with the European commission, but I think we’re well past the point where people really question that it needs to happen. The question is for somebody who’s got our market share, on what terms does it happen?

You know, Google is talking about building an operating system with the name of its browser. Nobody should be confused. The browser they think of is the operating system and the question is you know sort of like Marc Andreesen in the late ’90s is back at work at Google. If you remember, he said something like, Windows will just be a poorly debugged set of device drivers running Netscape.
 
Mr. ARRINGTON: Yeah, he did say that. Yes.
 
Mr. BALLMER: Now, that’s kind of basically the attitude expressed in Chrome Browser, Chrome OS. Windows is just, you know, sort of a bag of bits that manages the hardware under the Chrome operating system and oops, we can even do our own device drivers for the Chrome operating system. Of course, the Chrome operating system isn’t available, hasn’t shipped.
 
Mr. ARRINGTON: Right.
 
Mr. BALLMER: It’s incompatible with the one operating system they have shipped. To me, still, I don’t understand why they needed another one. They must have gotten the first one wrong. They must – they’ve got the first one. I mean, I really don’t know. They must think they got the Android wrong and somehow. Otherwise, in the OS business, it’s generally advisable to get it right and stay right as opposed to have many of them. We have one and a half operating systems, Windows and Windows Mobile. Windows Mobile is kind of a half because it’s not entirely the same as Windows. And everyday, I say I’d love to get those two things to share more.
 
So I don’t know why Google before they have one successful one, decided they needed a second one. You know, I was expecting this Fall, or if not this Fall, next Winter, to really see a rash of essentially things that look like PCs running Android.
 
Mr. ARRINGTON: Yeah.
 
Mr. BALLMER: I think that’s a little tougher for them now because they basically tell the hardware community Android is dead, Chrome is the thing or maybe Chrome isn’t the thing. Maybe it is Android. The cacophony there is probably helpful to us in the grand scheme of things and I don’t know why they would have chosen to do it, at least the way you read the press.  It probably has a lot to do with internal squabbles, but I just don’t know.
 
Mr. ARRINGTON: When you think of Windows 7 and explore competitive positioning versus Snow Leopard which just came out and has had some problems, and also, Chrome OS, how do you think about that?
 
Mr. BALLMER: I don’t know how you position against something that just doesn’t exist.
 
Mr. ARRINGTON: That’s fair.
 
Mr. BALLMER: Really, I don’t. So, when you do it, can I do Android or do Linux?
 
Mr. ARRINGTON: You can do either.
 
Mr. BALLMER: I think, well, because I sort of understand if you look at the competitive vectors – here’s Windows and Windows is a very successful product. How do you attack Windows? Well, you attack with the high end, and hardware. That’s an attack. That’s – I won’t call it the Snow Leopard attack. I’ll call it the Mac attack of which Snow Leopard is a piece. You could attack from the side. That’s the Chrome – Firefox attack. You can attack from cheap, from below. You’re not from the side. You’re one on one, but that’s kind of a Linux, Android, presumably Chrome OS, who knows, attack vector. You can attack through phones that grow up. You know, mama don’t let your phones grow up to be PCs or something. I don’t know. But that’s another attack vector. So, you could say how do I feel about all these attack vectors? Strong, I feel very strong here.
 
Mr. ARRINGTON: Yeah.
 
Mr. BALLMER: I mean, we’re gaining share. Apple is expensive. And in tough economic environment, people get it. Their model is, by definition, expensive. And we’ve actually held or maybe even gained just a tiny bit of share relative to the Mac in the last 12 months. And it’s not really Snow Leopard. It’s really Windows PCs versus Mac.
 
That’s the trade-off. We’ve done extremely well versus Linux-powered machines with the Androids or Linux and we’ve done that primarily by having a better solution and being willing to do the right thing from our pricing perspective. And Windows 7 will only make this, I think, more competitive here.
 
Mr. ARRINGTON: And part of what we’re talking about here is Netbooks, of course.
 
Mr. BALLMER: Yeah, well, Netbooks are just the first battleground.
 
There’s no question that there was a Linux PC battleground and then it became “the MID” and if you remember that mobile internet device. That’s what they call Netbooks before Netbooks, is in the new battleground. We’ve done a very good job and I think we’ll continue the job.

Phones, I think the jury is out. Nobody has yet tried to take the phone and turn it into a PC or take a PC and turn it into a phone. But this is where we have to be. We’re going to have it and we’ve got to have our phone act together. I like our 6.5 release. I like our plans for the future. But you know, we’re certainly in a period now where competition has got a lot more commotion.
 
Mr. ARRINGTON: As you said the market there is just getting started.
 
Mr. BALLMER: It’s still awfully nascent. People don’t think about it that way because phones aren’t nascent. Smart phones are more nascent. And then this attack is perhaps the most, I don’t mean this in a negative sense, but it’s the most insidious because some people don’t even know that it’s really an attack. Those are operating systems. They all run their own proprietary rich-client code and we’re competing against them.

The most successful by far is Firefox. Chrome is a rounding error to date. Safari is a rounding error to date. But Firefox is not. The fact that there’s a lot of competitors probably is to our advantage. Yeah, we’re right now about 74 percent overall with the browser market, roughly speaking. But we’re having to compete like heck with IE 8, with great new features. The other guys are getting more and more unanticipated competitive attack factors, the thing that Google announced yesterday where they replaced IE but they don’t tell you.
 
I mean that’s how I would say it. For all intents and purposes of what they’re doing IE is not there. It’s their operating system. Instead of now masked as browser, it’s masked as a plug in basically to IE. So, you know, we’re going to have to compete like heck and you know, see where things go. The one thing that’s unclear is what’s the economic play for anybody else competing with us at the browser level. Is this all about kind of controlling the search box or is it about something else?
 
Even Firefox – all the economics from Firefox come from that box.
 
Mr. ARRINGTON: The search box.
 
Mr. BALLMER: The Google search box, yes.
 
Mr. ARRINGTON: You have, I think Silverlight has  — 35 percent of computers have Silverlight on them.
 
Mr. BALLMER: Yeah. That’s right.
 
Mr. ARRINGTON: Is Silverlight essentially competing with Windows? I mean, the way you described some of this here, it’s like they’re competing with each other.
 
Mr. BALLMER: No, it depends on what the strategy is. IE only runs from Windows. Anybody who uses IE uses Windows. So does it compete with Windows? No it helps Windows.

On the other hand, when we tell people the right applications which are not unique to Windows that doesn’t particularly help Windows. And so we’ll continue to see and do things that are standard-based because that’s important. And you continue to see us encourage developers to do things that run uniquely on the Windows platform. You know, with the new Silverlight, you can build Silverlight applications that are flash-like in the sense that they run across platform. But you can also do things which are even nicer which really narrow down and run only on Windows.  And given that Windows is a billion units, you can afford to make optimizations as long as they bring value and do your applications that are Windows unique.

Crunch Network: CrunchGear drool over the sexiest new gadgets and hardware.

Read the whole story…

Microsoft CEO Steve Ballmer On “Moving The Needle”

Last week we showed the highlights and 10+ minutes of video footage of an exclusive hour-long TechCrunch interview with Microsoft CEO Steve Ballmer.

Now for the rest of that interview. The video was just a teaser. I spoke with Ballmer for another 50 minutes on the record, doing a deeper dive into five key areas of Microsoft’s product strategy: Big Opportunities, Operating Systems/Browsers, Mobile, Search and Developers.

This post is about big opportunities at Microsoft beyond their dual cash cows of Windows and Office. Microsoft generates around $20 billion a year in pre-tax profit, and spends nearly $10 billion on research and development. When Microsoft thinks about increasing (or sustaining) those profits, they have to think big. And they have to think long term.

Ballmer says he thinks about new business opportunities in three buckets: expanding current businesses (short run), building things from scratch (long run), and big aquisitions (short cuts).

First Bucket (short term): The bulk of new business opportunities in the short term are going to come from things that Microsoft is already working on. Says Ballmer: “Most of what we’re going to move the needle in the next five years relative to 20 billion is going to come from things that we’re already in.”

Second Bucket (long term): It just isn’t realistic, he says, to build new businesses from scratch to big profits (the kind that make a company the size of Microsoft blink) in five years or so. Ten years is a more appropriate horizon for new ideas: “You would be hard pressed to name a start-up company that generated an interesting amount of profit in five years relative to 20 billion. Even the most successful. Google in its first five years, Facebook in its five years.”

Third Bucket (aquisition short cuts): Despite the fact that in the initial interview Ballmer said that total acquisitions of around 15 companies per year would remain roughly steady, he says not to expect any big “needle changing” acquisitions in the near future: “And the only other wild card you can weigh on top that, which we just don’t do much, is large acquisition. So, we have nothing to announce, there’s nothing we’re thinking about, so I’ll put the third bucket aside.”

Ballmer also specifically highlighted seven businesses that he hopes to dramatically build and/or expand over the next few years: PC innovation, Communication/Productivity Tools, Phones, TV, Search, Enterprise Infrastructure and Servers. He also says to expect an explosion of application development over the next five years:

It’s going to come on innovation and growth in the PC market having the number of PCs that are sold continue to grow. That’s important. We can drive that. It’s going to come from innovation in the tools and technologies both at home and at work to help people communicate, collaborate, to be productive. It’s going to come from phones. It’s going to come from the intelligence that powers TVs. That could happen. It probably doesn’t explode unless we can manage to make the device that does that, the PC, that’s the way to get short-term explosion. We’re focused in on that.

Search, we have real opportunity in search in the next five years.

Biggest opportunity that we never talked about is enterprise infrastructure. Most of that goes to the database and mainframe vendors today who are in the business. We’ve got four billion in revenue and yet we’re a small marketshare player.

Servers, there are going to be more new applications written in the next five years than any five-year period of time.

…

So, I take a look and, I’d like to say we’ve got seven big opportunities and everyone of those seven opportunities is going to have to do its fair share to move the needle over the next five years on the 20 billion. We have some other things that in aggregate may not themselves be a large percentage of the 20. But those have to perform, and we’ve got to be investing in some things that can explode in years 5 to 10. I hope I answered your question.

What about new technologies like Azure, Mesh, etc? Ballmer says they’re “dislocators to technology” that overlay all of these opportunities:

I don’t list the cloud because the cloud has kind of overlaid all of those opportunities. We have opportunities by offering cloud infrastructure to enhance the margins we make in our server business, in our communications and collaboration and productivity business, and that’s where things like exchange online, SharePoint online, Windows Azure, they’re not really new value propositions, but they are new potential margin streams and dislocators to technology shifters and some of the existing kind of customer propositions that we invest in.

Ballmer also broke down that huge $9.5 billion/year Microsoft R&D budget. Just $250 million to 300 million per year is invested in pure research, he says. The bulk of it goes into Microsoft’s five key business areas. They have 5,000 people just researching search, for example. Health IT, robotics and energy also have a share of the budget:

Well, if you look at the R&D budget itself, let me break it into four pieces: pure research, that was misreported I think in Business Week recently. But our pure research budget is about $250 to 300 million or something like that. We have what I call an incubations budget – incubations and explorations. These are things we’re not sure turn into products and don’t yet fit in any one of the existing business groups necessarily. Mostly managed by guys like Craig Mundie and Ray Ozzie. That’s another several hundreds of million dollars.

We have new businesses, put health for example, we have a fairly significant investment in health IT. There’s some stuff going into robotics, energy. That would be another few hundred million. And then the bulk of our key money is going into our five big business groups that are investing in the kinds of stuff that we talked about. Just take search, order of magnitude, we have 5,000 people working in R&D and search order of magnitude.

Five thousand people, you pay a person fully burdened let’s say 200,000 plus. That’s kind of what the tech industry looks like and you get a billion dollars to spend. But we got five of those things, and so – or bigger than a billion. Not many of them are too much smaller than a billion. You put them all together and then add to the first billion and a half I described and then say get the 9.5 billion bucks. So, the bulk, eight of the 9.5 is invested in the core businesses including the incubations that are going on inside the businesses.

Ballmer ends this portion of the interview by talking about Microsoft’s biggest single research focus – communications collaboration and productivity. He says “And you know, the biggest investment area for us is in communications collaboration and productivity. That would be the single biggest investment area for us.”

The full transcript of this portion of the interview is below.

Transcript:

Mr. ARRINGTON: Last year you generated about $20 billion in pre tax profits.

Mr. BALLMER: That’s right.

Mr. ARRINGTON: It takes a lot to move a needle with Microsoft where you find new businesses in areas you want to expand. What are the new business opportunities that excite you?

Mr. BALLMER: I want to start with my excitement about our existing opportunities.

Mr. ARRINGTON: OK.

Mr. BALLMER: I really do because, if you’re going to – if you want to move the needle for us, there’s two things we have to do. Most of what we’re going to move the needle in the next five years relative to 20 billion is going to come from things that we’re already in. Most of where we’re going to move the needle maybe five to 10 years from now is going to come from things that are new, that we have to go invest in from scratch.

And the only other wild card you can weigh on top that, which we just don’t do much, is large acquisition. So, we have nothing to announce, there’s nothing we’re thinking about, so I’ll put the third bucket aside. But you would be hard pressed to name a start-up company that generated an interesting amount of profit in five years relative to 20 billion. Even the most successful. Google in its first five years, Facebook in its five years. So, there are things we have to be investing for kind of the five to 10 timeframe. But if you look at where things are going to happen and they’re interesting relative to 20 billion you’d mentioned, it’s not at our existing businesses.

It’s going to come on innovation and growth in the PC market having the number of PCs that are sold continue to grow. That’s important. We can drive that. It’s going to come from innovation in the tools and technologies both at home and at work to help people communicate, collaborate, to be productive. It’s going to come from phones. It’s going to come from the intelligence that powers TVs. That could happen. It probably doesn’t explode unless we can manage to make the device that does that, the PC, that’s the way to get short-term explosion. We’re focused in on that.

Search, we have real opportunity in search in the next five years.

Biggest opportunity that we never talked about is enterprise infrastructure. Most of that goes to the database and mainframe vendors today who are in the business. We’ve got four billion revenues and yet we’re a small share player.

Servers, there are going to be more new applications written in the next five years than any five-year period of time.

I don’t list the cloud because the cloud has kind of overlaid all of those opportunities. We have opportunities by offering cloud infrastructure to enhance the margins we make in our server business, in our communications and collaboration and productivity business, and that’s where things like exchange online, SharePoint online, Windows Azure, they’re not really new value propositions, but they are new potential margin streams and dislocators to technology shifters and some of the existing kind of customer propositions that we invest in.

So, I take a look and, I’d like to say we’ve got seven big opportunities and everyone of those seven opportunities is going to have to do its fair share to move the needle over the next five years on the 20 billion. We have some other things that in aggregate may not themselves be a large percentage of the 20. But those have to perform, and we’ve got to be investing in some things that can explode in years 5 to 10. I hope I answered your question.

Mr. ARRINGTON: Oh, yeah, you did. Things sure have changed since your initial mission statement – the computer in every home, every desk running Microsoft software. You’ve moved way beyond that.

Mr. BALLMER: Yes.

Mr. ARRINGTON: Your R&D budget is $10 billion a year, roughly.

Mr. BALLMER: Nine and a half.

Mr. ARRINGTON: $9.5 billion…What do you spend that on?

Mr. BALLMER: Well, if you look at the R&D budget itself, let me break it into four pieces: pure research, that was misreported I think in Business Week recently. But our pure research budget is about $250 to 300 million or something like that. We have what I call an incubations budget – incubations and explorations. These are things we’re not sure turn into products and don’t yet fit in any one of the existing business groups necessarily. Mostly managed by guys like Craig Mundie and Ray Ozzie. That’s another several hundreds of million dollars. We have new businesses, put health for example, we have a fairly significant investment in health IT. There’s some stuff going into robotics, energy. That would be another few hundred million. And then the bulk of our key money is going into our five big business groups that are investing in the kinds of stuff that we talked about. Just take search, order of magnitude, we have 5,000 people working in R&D and search order of magnitude.

Five thousand people, you pay a person fully burdened let’s say 200,000 plus. That’s kind of what the tech industry looks like and you get a billion dollars to spend. But we got five of those things, and so – or bigger than a billion. Not many of them are too much smaller than a billion. You put them all together and then add to the first billion and a half I described and then say get the 9.5 billion bucks. So, the bulk, eight of the 9.5 is invested in the core businesses including the incubations that are going on inside the businesses.

Mr. ARRINGTON: Ok.

Mr. BALLMER: And you know, the biggest investment area for us is in communications collaboration and productivity. That would be the single biggest investment area for us.

Crunch Network: CrunchBoard because it’s time for you to find a new Job2.0

Read the whole story…