Ballmer: While Apple And Google Get The Glitz, We Get The Customers

Microsoft's CEO expounds on two rivals that are in the spotlight, the company's efforts to attract younger employees, and how its products address new work styles.

The sense of excitement in the computer industry may be accruing more to Apple Computer and Google Inc. than Microsoft these days, but Microsoft CEO Steve Ballmer downplays the buzz those companies are generating. Microsoft still outsells Apple 50-to-1, and it's in a better position inside companies than its search-engine rival, Ballmer said during an interview at Microsoft's TechEd conference in Orlando, Fla., on Monday. The world's largest software company also is trying to redefine its jobs to appeal to a younger demographic. Ballmer's comments, after a conference-opening speech here, came hours before Apple CEO Steve Jobs was preparing to disclose at a technology conference in San Francisco Apple's decision to use chips from Intel in its computers, switching away from those of IBM. "We've been competing with Apple every day for the last 20 years and we have about 50 times as many users," says Ballmer. Every year, 50 times as many people buy a PC as a Mac, he added. "I don't think this changes anything in the basic competitive dynamic."

In the search-engine market, Google may have the franchise on the Web, but inside companies, Microsoft's SharePoint products are more popular, Ballmer says. "It's the same basic concept" as the servers Google sells programmed with its search algorithm, but "we're clearly ahead in the market," he said. "Google's barely started and we have millions of users." Last month, Google CEO Eric Schmidt told InformationWeek the company plans to expand the features it offers in its appliances. Those could include E-mail, instant messaging, and image searching. Said Ballmer, "It wouldn't surprise me if Google wanted to get in the game, just as it wouldn't surprise them that we want to take market share from them on the Internet."

Ballmer's topic during his speech to nearly 12,000 IT workers here was how corporate technology departments need to learn to support a "new world of work" characterized by employees who work from remote locations and organize themselves into teams that span company boundaries and coalesce and dissolve with the demands of projects. At the same time, Ballmer said, Microsoft's entry into consumer electronics markets with products such as its Xbox video-game console and Windows Media Center computers are helping the company refine its marketing and think more like a consumer-products company. "We're learning how to be more consumer oriented in a lot of our marketing," Ballmer says. "We'll learn some new skills, or relearn them. You could say that Windows and office started out very much marketed to consumers 15, 20 years ago, and they morphed to be much more marketed to IT people over the years."

Microsoft also is trying to inject some pizzazz into the jobs for which it hires young people out of college. Chairman Bill Gates last month said the company is trying to make its jobs more attractive to younger workers, and "taking out the parts of the job that aren't interesting." Ballmer admits Microsoft is having recruiting troubles -- "In our workforce, we're having a hard time finding talent, but who isn't in the IT industry?" he says. But the company also is trying to update the tools its workers use to do their jobs. Using more instant messaging on the job is one example. It's a "basic communications medium" for people in their early 20s entering the workforce, Ballmer says, but it's not commonly used by workers even as old as 35. "That's a good example of trying to make the job more natural -- you could say more fun." Ballmer loosely compared the situation to when he joined consumer-products company Procter & Gamble 27 years ago. "When I joined Procter & Gamble we went through oftentimes 20, 21, 22 rewrites of a memo. That was commonplace before it went up the management chain." Without word processors, Ballmer and his co-workers used X-Acto knives and Mylar boards to literally cut and paste text. "Do you think it was a lot of fun working there?" he says. "Getting the memo right was hard enough, but the process of getting the memo right was just outlandish." During his speech, Ballmer pointed to Microsoft technologies designed to support a "new world of work." The tech industry is entering another period of "sustained growth," he said. But 10 years after the release of Windows 95, a watershed event in high-tech marketing, Ballmer couldn't resist a jab at his own company's branding. Microsoft today released a "messaging and security feature pack" for its latest version of Windows for high-end cell phones, and an update to its E-mail server software called Exchange Server 2003 Service Pack 2. "Some people say Microsoft's a good marketing company," said Ballmer, reading the lengthy product names off his slides. "I have a hard time saying all that."

"We've been competing with Apple every day for the last 20 years and we have about 50 times as many users," says Ballmer.

Heh... the competition predates 1985. But anyway, this move by Jobs parallels in a way the early MicroSloth moves, which involved porting MS-BASIC (BASIC being first in a long line of products Gates and company didn't invent or perfect, ahem) to lots of different microprocessors.

Digital Research was first choice by IBM to make the OS (CP/M being king of the OSes back then; many of the small indie computer makers were building with the Z80 chip; even the Apple II had CP/M available via a Z80 emulator card), but the IBM guys were late for the meeting, and the head of DR decided to go sailboarding.

Digital Research's 86-chip version of CP/M went nowhere. DOS, built by MS, and at least until v 5.0 still included (ahem) some CP/M interrupt code, was available to IBM as the official OS, but was also made available as a generic and standardized OS for the numerous indie makers.

The software side won. IBM didn't figure out until it was too late that it wasn't in control of its own destiny. OS/2 was a response, and didn't work out too well. Apple avoided the MS trap like the plague, and survived pretty nicely by controlling its own OS and hardware design. A short-lived move to license the OS to not-very-independent hardware makers (they were required to use the PM 7200 motherboard, if memory serves) was intended to expand market share.

Jobs was brought back, and eliminated that licensing.

Apple has tried to ride the UNIX wave, just as it rode the Internet wave (particularly the broadband). Apple's product lines are going to proliferate again -- this is more a feeling than based on anything -- probably by the end of 2005. And it will be a surprise, whatever it is.

But getting back to this diversification of the chips... Steve Jobs basically blackmailed Adobe years ago, announcing that his dissatisfaction with the secrecy (Adobe's proprietary software, which everyone liked, but was played close to the vest) had led Apple to develop its own scalable font technology, TrueType. Warnock (John?), founder of Adobe, next stood up and condemned what Jobs said as "garbage and mumbo-jumbo", but then announced that Adobe would open up.

I view this as a shrewd move by Jobs, and this is coming from someone who really, really doesn't like the man. Apple will be seen as an OS development company, and the licensing deal which involved hardware won't recur, but the ultimate goal will be revived.

And IBM will have a fire built under it. If it comes up with improvements, Apple will stick with a "classic" product line, probably including the higher-end stuff. The Intel-based family will be built by Apple, and other makers may come over to offer their own lines. I'd expect that it will take the form of platforms that are designed for multiple OS support.

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