Excited About Innovation

VARBusiness: Are Windows XP and Office XP enough to return Microsoft to its glory days?
Belluzzo: Windows and Office are the two most popular software products in the world, and as our flagship products we are continuing to invest significantly in their future%85These are break-through products, and we think people will be as excited about the innovations as we are.

VB: What's wrong with the Linux model for software?
Belluzzo: What has made our industry so successful is an ecosystem where software that comes out of the intellectual commons, commercial enterprise or government can exist together and complement each other. Our chief concern with the [General Public License] is that it places a wedge between the elements of the software ecosystem and could have the effect of disrupting the cycle of innovation that has allowed the software industry to flourish. If software companies are unable to derive revenue from their hard work and innovation, and unable to reinvest in R&D, then the business model that has been so successful for the past quarter century won't continue to be viable. Microsoft's "shared-source" approach provides opportunities for researchers, customers and developers to examine Microsoft source code and help us improve it. But maintaining control over our intellectual property is absolutely critical in order to preserve the stability, security and interoperability of our software for customers,and to protect the company's long-term profitability.

VB: What would a significant shift on behalf of customers to move to renting or leasing computing solutions,instead of buying them,mean to Microsoft?
Belluzzo: Clearly, there is a great opportunity for Microsoft and many other companies as the business model for software services evolves. We are putting a lot of wood behind the arrow with .NET and our commitment to XML Web services. This isn't something that's going to happen overnight, and it's going to require a tremendous amount of work by Microsoft and other companies, but we believe the future lies in the kinds of services that technologies like Hailstorm and Passport are seeding now.

VB: How has the economy impacted your business this year?
Belluzzo: There's no question the economy has affected the industry, and Microsoft is not immune to that. But we are very pleased with our performance in light of economic challenges. Microsoft's [fiscal year 2001] revenue growth was quite credible in light of the fact that PC shipments declined throughout the year and we were at the end of the product life cycle for Office 2000. We feel the past six months of the year, in particular, showed a lot of strength. With the introduction of several breakthrough products this year,including Windows XP, Visual Studio .NET and Xbox,we feel good about the opportunities in '02.