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March 4, 2009 8:09 PM
Ballmer explains how investors are reacting to cost cuts; says WinMobile 6.5 'not the full release we wanted this year'; talks Windows 7 marketing
Posted by Benjamin J. Romano
Microsoft CEO Steve Ballmer addressed a packed auditorium of public sector technology executives gathered at the company's Redmond headquarters for its seventh U.S. Public Sector CIO Summit this week. He touched on some of the economic themes that have come up in several of his speeches recently, giving his take on funding for innovative ideas in a down economy and investors' reactions to Microsoft's cost-cutting measures. Ballmer also expressed some disappointment in the progress of Windows Mobile and gave his thoughts on marketing Windows 7. Read on for highlights.
Ballmer talked about how the economic reset would take its toll, but told the audience to remain optimistic about the prospects for innovation in the IT industry.
"There will undoubtedly be some innovation that would have been funded when there was more money in the economy," he said, "and yet the things which are really productive and really valuable and really make a difference, they'll either get funded at companies like ours and our competitors, they'll get funded by the venture capital community."
He said he has been talking to investors in the last month about Microsoft's cost-cutting efforts, "and we're in the process of doing more on our cost structure," Ballmer said. But investors have looked at the company's plans to keep research and development spending flat at more than $9 billion and asked, "What's all this hard work you say you've done on your cost structure?"
He suggested that cuts have come to projects that are less visible.
"Not many of the projects we were working on that were in market come out of market, but there are some things that weren't bearing fruit that we've decided that we will at least put on the back burner, if not get rid of," Ballmer said, without naming names.
Later, he admitted to being as flummoxed as anyone on the recent performance of the stock market. Talking about a future in which all screens, such as the large projector screen in the auditorium on Microsoft's campus, will respond to touch or voice commands.
"Hey, bring me up, uh, the stats on the stock market today. I wouldn't do that to you," Ballmer said, dropping into a sort of stand-up comic mode as the audience chuckled along. "Actually today I should have, for those of you who care, it was up really big. I don't understand the whole darn thing. But anyway." More laughs. "A bunch of other people not have either." More laughs.
He hastened to add that he understands "our business."
As is usually the case, the most interesting comments came in response to audience questions. The chief information officer of NASA's Ames Research Center in Silicon Valley pressed Ballmer on Windows Mobile. He asked:
"One of the challenges we have as CIOs is supporting all these new platforms coming out everywhere. And Microsoft's been great about security, and it's one of the reasons we run on a lot of Microsoft infrastructure, but with platforms like the Google phone and iPhone coming out, it's really tough to continue to stand behind Windows Mobile, when ... our employees are bringing these consumer devices into our environments. And in your presentation you put Windows Mobile right in the center there, but it was a phone that that doesn't work in America and an operating system which you haven't released. I'm wondering what your commitment is to continuing to get newer versions of the operating system in our hands so that we don't have to fight this battle on the ground?"
"I'd say a couple things. No. 1, we have a significant release coming this year -- not the full release we wanted to have this year -- but we have a significant release coming this year with Windows Mobile 6.5. I think that would a lot like the phone that was in the slide that I showed -- very good catch ... . But I think with Windows Mobile 6.5, there will be phones in market this year, we still don't get some of the things that people want on the highest end phones. Those will come with Windows Mobile 7 next year.
"Certainly I'm not--- There's opportunities for us to accelerate our execution in this area and we've done a lot of work to really make sure we have the people who are going to be able to accelerate. With that said, we did sell more Windows Mobile devices last year than Apple did iPhones. That's an important factoid to have. BlackBerry was a little bit ahead, and Google was no where to be seen, except in Silicon Valley I'm sure. But we'll do our best to help with that challenge."
Windows 7 marketing
An IT exec from Texas Christian University asked Ballmer for his thoughts on the marketing strategy for Windows 7, "particularly as it relates to the role perception plays in the success or adoption of the product."
"Our top objective right now is to finish a quality product. And, so we're being far more, if I could say, low key, than we might have been during the Vista period, because I think low key may serve us well relative to perception at this stage. The truth of the matter is we sold a lot of Vista and the Vista product is a quality product, but we definitely have a set of static in the system as it relates to that topic, I don't want any of that as it relates to Windows 7."
"So far I would say the blogs have been pretty darn positive, maybe even better than I might've expected and I think that might continue to grow. I think perception is important and I've got my fingers crossed that we're on a good trajectory there. I don't think the key right now is not getting out there and talking, blowing our horn. [It's] to finish a quality product, let people evaluate the work. So far, I think the evlauations have been good, including in this room."
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