News

Ballmer Rallies the Partner Troops

• By Paul Desmond
• July 12, 2005

He also used his keynote to address questions from three partner panelists, who brought up issues ranging from the long wait for Longhorn to licensing revenue.

"I look out the next 10 years, and I see nothing but opportunity," Ballmer said. "The world will change more in the next 10 years, I predict, than even the last 10 years." Ten years ago, Microsoft was just introducing Windows 95 and Internet Explorer Version 1.0, most people didn't have a PC and didn't know what the Internet was, he said. And yet, the industry has "barely begun" to exploit the power of the Internet and other technological advances.

"We still have user interfaces that work like computers, they don't work like us. I still can't talk to my computer, have it recognize my voice, my meaning, my intent. All of that will happen in the next 10 years," Ballmer said.

Microsoft is spending $6 billion on research and development this year, which he said was an "unponderably big number" for even him to understand. "We really have the deck stacked" in terms of products that partners can deliver to customers, he said, rattling off a few examples:

• The Longhorn beta due out this year
• Office 12, which was demonstrated to the public for the first time at the conference
• Live Communications Server, which recently debuted
• Windows Mobile 5.0 software
• New versions of SQL Server, Visual Studio and BizTalk coming in November
• New versions of Axapta and Microsoft CRM
• A new small business accounting package

"I think we're set up for many more good years -- not just the next 12 months or 24 months," Ballmer continued.
But as the technology landscape changes, Microsoft and its partners will likewise have to face some change in the way services are delivered. Likewise, the product spaces in which Microsoft offers solutions will continue to evolve, he said, noting security and business intelligence as two examples.

"We are 100 percent absolutely, totally positively committed to our partnerships. But neither you nor we should be 100 percent committed to doing things exactly the way we do them today for the next 10 years," he said.

Ballmer may have been referring to a couple of recurring themes at the conference, such as the trend toward more vertical applications and services, and a movement toward more standardized, packaged services around areas such as desktop OS delivery that some partners fear may cost them service revenue.

Microsoft is working with Energizer Holdings Inc. and will work with "two or three other customers" to build a managed service that "looks like a product, that's configurable like a product as opposed to having infinite configuration like the managed services do today." Once Microsoft learns from those experiences, it will decide how to productize the offering, at which point partners may be involved, Ballmer said.

Rick Devenuti, senior vice president for Microsoft Services and IT, said in a separate breakout session at the conference that his group is working on service-oriented products along the lines of what Ballmer described. The idea, he says, is to create a service where you know the results will be the same every time you use it. The first such offering is Partner Strategy Consultant, which will help partners marry best practices expertise with an understanding of the customer's business to create a solutions roadmap that helps drive the customer's business.

Ballmer also addressed the age-old concern of Microsoft incorporating tools into its products that were once value-added features offered by ISVs. "New opportunities have presented themselves as we've extended our horizontal footprint," he said.
One of the partner panelists, Tom White, CEO of infrastructure partner VLSystems , Inc. in Irvine, Calif., told Ballmer that his company has seen a drop-off in business involving migrations from NetWare and NT 4.0. He asked Ballmer what kind of opportunities could bridge the gap in business until Longhorn debuts in 2007.

"There's still plenty of NetWare and NT 4.0 out there. I'm not going to say it's not diminishing, but let's get every last customer over," Ballmer said, prompting some audience laughter.

He noted that Office 2003 is installed on only about 10 percent to 15 percent of installed PCs and said there's plenty of untapped opportunity in SharePoint, Exchange and Windows Mobile. Partners also have Lotus Notes opportunities "coming out the ying-yang," Ballmer said. "I've never seen a customer base that's more ripe to be plucked and moved than that Notes customer base."

Ballmer later took several more jabs at IBM, saying the company's mantra that it can sell customers hardware, software and services is starting to break down, since it sold off its PC business to Lenovo. In terms of software, Ballmer encouraged partners to ask themselves, "Does IBM have the best software? They don't even have, my personal opinion, the second-best software."

As for services, Ballmer called the notion that IBM has the biggest services army in the world "nonsense." "Our partner base is the biggest services force in the world, by far, without question," he said, to much applause.

VLSystems' White likewise drew applause with his suggestion that Microsoft offer software advisor fees to partners on the classic side of its business, just as it does on the Microsoft Business Solutions side. Ballmer responded that White's comment, "got a lot of applause, so I'd better write it down and not forget it."