Ballmer: Microsoft's Growth Engine Still Revs Strong

That's what Microsoft CEO Steve Ballmer told analysts and the rest of the world to expect from the company in the coming years. At the company's annual financial analyst meeting Thursday, Ballmer also promised a boost in market share in Microsoft's "anchor" businesses of Office, servers and Windows; a new focus on online subscriptions and advertising and a continued surge in acquisitions.

Ballmer took the opportunity to gently chastise analysts for not adequately recognizing the company's growth potential.

"We think there's opportunity to grow share [in Microsoft's anchor businesses], not maintain share," said Ballmer. "We can grow share in the server [business], by being more innovative in the Web server. There, we will do what it takes to win back the big hosters. Today we barely play in high-performance clusters of the type used in pharmaceuticals and automative companies. We recently hired a new vice president of tactical computing to help us shape our opportunity."

To bolster his contention that Microsoft can grow in its well-established businesses, Ballmer said the company has gained market share against Oracle in the database market and against IBM's Lotus Notes in e-mail servers. "Big Blue may do most of the advertising today, but we do most of the selling. We are becoming the standard for modern, global business," he said. "We will sell more units in our anchor business."

But beyond gaining market share, Ballmer said the company will expand its fundamental portfolio, adding a comprehensive Office Premium edition, a new Premium Client Access Licensing (CAL) for Windows Server, and a variety of new SKUs--such as a Windows Enterprise Edition--many of which will have higher prices. This may be the proposed "SuperCAL" Microsoft had under consideration and which CRN covered last year.

But Ballmer made it clear that the Redmond, Wash.-based software giant intends to compete outside of its so-called anchor businesses. One area of particular interest: the online market, including software as a service.

"We are very, very, very, very serious and committed about driving our presence with that community vs. all competitors in that marketplace," he said. "We have won on the desktop. With Windows server, we have won in the business marketplace. And now we will win on the Web. We will expand to be the No. 1 place to advertise, with the strongest array of online services." Such services, he said, will include search and music. "Today there are only a handful of major players in the market, and this company will be one of them."

Ballmer cited last week's acquisition of FrontBridge Technologies as an example of services Microsoft envisions. FrontBridge, for example, offers a subscription-based service for protecting their e-mail against spam, viruses and spyware. He also mentioned Microsoft's experimentations with Energizer, where Microsoft is managing that company's IT infrastructure "to look at what it means to have managed services for larger companies at their desktops."

Finally, Ballmer promised more investment to fuel innovation in a variety of areas, from intelligent devices to entertainment, collaboration and information access. Such investment will take the form of R&D, funded by a percentage of the company's operation expense--and acquisitions.

"We have dialed up the pace of acquisitions we are making, because we see so much opportunity in this business. We're not close-minded to blockbuster acquisitions, but the pace of [smaller] ones to improve our portfolio is very strong."