Ballmer: IBM, Linux, AOL Remain On Hit List As Sun Fades As Threat
Microsoft still considers AOL Time Warner a primary competitor despite the media giant's recent travails, Microsoft CEO Steve Ballmer told CRN late Tuesday.
"AOL is still on the list. . . . It's fun to see the other guy hiccuping, but it's still 'the' franchise in the United States. Most people in the this country when asked how they access the Internet, say they do so via AOL," he said.
For that reason, AOL remains in the top tier of major competitors for the software giant, although Ballmer maintained Microsoft has made inroads with its MSN 7 online service.
Meanwhile, IBM is stronger than last year, Ballmer said. "IBM is tough. It's not exactly resurgent, but it's hanging in and has some momentum with WebSphere," he said. "We run into IBM in nine out of 10 enterprise accounts [where IBM Global Services is a good asset. This is an end-to-end promise they can make."
Linux remains a huge factor as well, he said. The open-source code operating system remains a "tough competitive force. . . . It's non-traditional, it's free and it's cheap. We have to educate people why what they pay for [our offerings is more than offset by the value we deliver. We used to be the cheap guys. We were cheaper than Novell, cheaper than Oracle. We can't do that with this one," Ballmer said.
The recent decision by Caldera, SuSE, TurboLinux and Conectiva to collaborate on the UnitedLinux effort to take on Red Hat Linux "only makes it clearer that there's a schism [in Linux. It's deja vu all over again. Like Unix, it's fractured--you can't write an app that's binary. You could say it's less fractured now, but it's clearer now that it is fractured," Ballmer said.
Microsoft has to make it as easy as possible to port Linux to Windows, Ballmer said.
Java is also a big consideration, although Ballmer paints it as a "phenomenon of the masses" whereas Sun, which launched Java, is not as big a concern as it had been. Sun "is just an enterprise implementer of Java and not the best implementer," he said, adding that IBM does a better job with Java.
Sun is "in a lot worse shape than a year ago. Full stop. I'd be more than a little surprised if they recover," he said. Indeed, Sun, like other tech companies has seen its stock rocked in the past year and was also buffeted more recently by the unexpected decision of president Ed Zander to leave the company. Rivals, including Microsoft, contend that Sun's Solaris operating system, is under more fire from lower-cost Linux implementations than Microsoft's Windows franchise.
Database rival Oracle likewise remains a key competitor, despite that company's recent hardships, he said.
In other developments, Ballmer acknowledged that Microsoft has set its sights on "knowledge workers" as a key audience for Microsoft Office. It sees that audience, comprising people ranging from financial and technology analysts to journalists and lawyers, as a big opportunity for the company's bread-and-butter application suite.
"We want Office to be the definitive tool for knowledge workers. [It is no longer just a spreadsheet, word processor or e-mail," Ballmer said.
The evolution of Office is already well under way. Last year Microsoft added Sharepoint Team Services to the year-old Office XP. Those capabilities allow the construction of document management and routing systems.
Ballmer said Microsoft must continue to add value to Office to maintain its edge even though it is seen as the overwhelming market leader in application suites, with more than 90 percent share. "Our job is to do better and better and better. If we don't innovate and do new things, we won't get people to upgrade, and if people don't upgrade, we're out of business," he said.
Ballmer said the company is not displeased with upgrade rates for the current Office, but he acknowledged that it is difficult, if not impossible, for the company to recreate 20 percent growth rates off a user base that is so huge. Last month, the company said it had sold 60 million licenses of Office XP. The only way Microsoft will see comparable upgrade rates again is a major improvement in piracy prevention. "Twenty percent is an amazing number," he said.
While upgrade rates are down from the company's historical high level, Office XP and Windows XP sales are good "compared to almost anything else in IT," Ballmer said.
"Office is our biggest business, so yes [this is a pretty big priority," Ballmer said.