Q&A: Ballmer Talks Vista

Microsoft CEO Steve Ballmer will be in New York on Nov. 30 to introduce major upgrades to three of Microsoft's flagship products: the Windows Vista operating system, Office 2007 application suite, and Exchange Server 2007 e-mail system. In advance of that announcement, Ballmer talked with InformationWeek editor John Foley about the significance of the product launch to Microsoft's business customers. We also asked about Microsoft's plan for continuing to develop innovative products amid fundamental changes in how software is delivered and accessed.

InformationWeek: You describe this product launch as a new era for business computing. What's the big deal?

Ballmer: It's Vista and Office and Exchange, but it's also the launch of a wave of products, some of which ship immediately and some of which come out over the next year or so. Number one, we enhance our traditional value proposition, in terms of end-user, individual productivity. When we say things like, the Ribbon changes everything, I really mean it. The Ribbon [part of Office 2007's user interface] changes everything. There are things in both Windows Vista and in Office that dramatically enhance individual productivity.

Number two, what we're shipping with SharePoint, with Exchange, with enterprise content management, in terms of workflow and document management, we also make this the transition between individual productivity and people being able to tie their individual productivity into the information and workflow of their business processes. Exchange is critical to that. SharePoint is critical to that. Excel Services is an important piece of that for business intelligence. Enterprise search is an important part of it.

The third piece is bringing this all home for IT people by reducing the cost of management, improving the security of these systems, and the level of compliance and the tools for information compliance that are built in. And of course it's all available in a way that developers can tailor.

IW: It all sounds good. Yet we also know some of your business customers are running old software, Windows 98, NT, Windows 2000, and Exchange 5.5. What's going to be the thing that grabs their attention and really drives adoption?

Ballmer: In the business market, people are grabbed at different times in different places for different reasons, and maybe even inside an organization for different users. It requires alignment of the following factors: We've got to fit in the [upgrade] cycle of the customer. Customers' cycles are determined in part by our upgrade cycles and in part by other business requirements. Number two, we've got to galvanize people with the business value these technologies bring so that they're motivated to move up their cycle times or to include these products as they go through their normal refresh cycle. A lot of people will move in the first year, a lot will move in the second year, and yet there will probably be people who still haven't moved in years 3, 4, 5.

As you point out, there is a lot of NT workstation still in a number of businesses and there's still some Exchange 5.5. In a sense, the guys with the older infrastructure are actually most likely to be among the early adopters.

IW: Our research shows that 39% of IT professionals plan to do some Vista upgrades in the first 12 months. How does that jibe with your own numbers?

Ballmer: That would be fairly comparable. It all depends on how much they move--one machine, lots of machines. If you looked at it in aggregate, 35% to 45% would be approximately right.

IW: How does that track with XP?

Ballmer: I think we will get an adoption cycle around Vista that may be a little bit faster than XP because of the importance of security, which was sort of a lesser issue when XP shipped. And the transition issues are no bigger by and large with Vista than they were with XP.

IW: How confident are you that the security of Windows environments is going to take a real step forward here?

Ballmer: Very sure of that, very sure. That's different than saying, Do we have the first system in the history of the planet that has no issues? I'm not saying that. But I am quite sure that this is the most secure version of Windows we have ever built, the most reliable version of Windows that we have ever built, and the version of Windows which is most able to protect itself from attacks.

IW: You describe Vista and the Office System and Exchange Server 2007 as a new era of business computing. Some people describe it as the old era of business computing. By that, I mean big pieces of software that run on a company's own computers and that take years to build and deliver. How do you respond?

Ballmer: These are huge releases in terms of the capabilities that they give a business to derive business value and that's the key thing. Take document management, workflow, enterprise search, real-time communications and presence and the way those things are integrated in the system, take voice mail. These are amazing new capabilities that we are delivering and delivering in a way that they're accessible through the UI, the browser, the Office applications that people know. That's a tremendous step forward. Anybody who speaks to the contrary is in a different place than our customers.

At the same time, we have said that there's going to be a transition over time from software being [installed] with each customer to software being delivered as software plus online service. We started down that path. If anything we're moving as fast or faster than our customers; we're certainly not moving slower. That doesn't mean that there's not going to be big innovation; the world needs big innovation, so whoever says that I think doesn't get what customers really want to do. But that innovation will get delivered in quite a different way going forward. And yet, if we came out and said these things are only available as a service that runs out of the Microsoft data center, we would be out of step too with what customers want. So the key is to focus on all this new business value and we have said that we're moving it to an additional delivery model over time.

IW: And that delivery model is one you describe as combining the best of Web with the richness of the client. In other words, software as a service

Ballmer: "Software and services" is sort of the new way that we like to say that. It's not like every enterprise customer is prepared to take that for most of the stuff we're talking about. It's the future. It's what we're working on. We're driving very, very hard. And yet I think we're exactly in tune with the kind of business value that people are prepared to accept today.

IW: If I'm not mistaken, most of the desktop applications that make up the Office desktop suite are not available as hosted services on Office Live. Am I right about that?

Ballmer: We have what we have online today. That's all I'll say. I'll make no comment; you can go online and check anything out, and if you keep checking every day there may be something new up there tomorrow.

IW: Looking forward a year, two years, three years, how will business software be different as you move toward "software and service."

Ballmer: Many people will expect to use the richness of the client yet have the utility of a rich client infrastructure delivered via an Internet service. Whether that's a year or two, I think in general it will take a little longer for big businesses to digest that, and it will happen a little faster in smaller businesses.

IW: What about the question of big software releases that take years to deliver? Are you going to get faster and nimbler at delivering software?

Ballmer: We will not have the same length of time between releases that we did on this Vista release. I think that's different than saying there's not going to be big innovation. People would be very disappointed if all software was developed in three or four months and then shipped on an annual cycle. I don't think customers actually want releases that frequently, and there are some innovations that we will work on that will take even more than a release cycle. We will have a release cycle that's more frequent, but we're going to work on big innovations, some of which will take a number of years.

IW: When will we see the next major release of Windows, and will it be the same size that Vista is?

Ballmer: When it's ready you will see it, and when we're ready to tell you, we can go through its ship date. Right now, we just released Vista to manufacturing. Of course, the team's hard at work on next release planning.

IW: Office SharePoint Server seems to be playing an increasingly important role in your software environment. Some people have long complained that you get in ankle deep with Microsoft software and next thing you know, you're in waist deep. The case could be made that SharePoint adds both cost and complexity in the sense that you have another key piece of Microsoft infrastructure. How do you respond?

Ballmer: I don't. I would be happy to make a statement, but I wouldn't respond to it. If people want additional capability, if people want enterprise search, document management, workflow, enterprise content management, those are capabilities that customers can get from us, they can get from a combination of smaller companies, they can go find big competitors. If customers want the capabilities and need them for some business application, then we certainly encourage them to take a look at our product.

People won't look unless the business value justifies the cost. I think we have a lower-cost, less-complex solution by a long shot than anybody else out there. You go look at most of these high-end document-management packages; oftentimes they'll offer a little more functionality, a lot of people don't need all that functionality, but they bring a lot more complexity. We are the simple, less-complex, high-volume, low-cost approach to most of the things I just mentioned, and I think that's a real strength for us.

IW: There's an aspect of IT architecture where, if a business is going to add new functionality, it doesn't always make sense that that be delivered over the Web. In other words, maybe it belongs in your data center.

Ballmer: Yeah, I don't understand the question.

IW: I'm trying to understand, moving forward, this difference between on-premises software and software as a service. SharePoint seems to be one of those examples where it's able to do both.

Ballmer: That's right. We have hosted SharePoint as part of the Office Live offering today. There will [also] be a level of customization and self-management and security that people want to do; I think that will be very common where people want to manage their own SharePoint. You can say, "Do most companies want to send all of their important company information outside the firewall for somebody else to host, or to index for searching purposes?" Some people do, but most people do not.

IW: Microsoft is aggressive in what it tries to get into its new products, but not everything makes it in. Would you identify something that didn't make it into this product launch that you wish were in there? That you'll make a priority to get to market quickly?

Ballmer: Nope. We have other things we're happy to talk about. I don't choose to go down that path, sorry.

IW: What about the biggest challenge to Windows going forward? It once again gets to my question about the scope of what it is that this operating system does.

Ballmer: There are a lot of requirements for any operating system. Hardware continues to evolve. We have new connectivity types, new chip architectures, new storage paradigms and storage types, we have the move to embrace software and service and what does that mean for the operating system. We've got new development models, richer graphics interfaces, new ways for users to integrate data across applications down at the client level, new form factors, mobility, Tablets. We've got new application types that people want to run. And whether it's Windows or anything else, there will be a piece of software that manages the hardware and supports applications and end users. We don't live in a static environment, so we're going to have to continue to move Windows along with the times and we're going to have to continue to innovate, particularly in terms of the new application models and new end-user scenarios. You have other guys out there like Apple who are pushing on the end-user scenarios, in the case of Linux, on different application models. There are special-purpose devices which are trying to unseat the PC by just doing one thing and supporting the hardware for that really well.

So we've got a lot of competition and things to focus on, but at the end of the day, most people who make PCs, most people who use PCs, want one piece of software that brings it all together for them - the full value of the experience: Enabling the hardware, third-party applications, services, and putting the user in control. Windows does the best job of that; Vista takes it to a whole new level with its new UI, built in services, hardware support. We just need to continue to run fast.

IW: If you track Windows over its history, it started out under 10 million lines of code, worked its way up to 50 million lines of code, Vista may be somewhere between 50 and 100 million lines of code. Going forward, will the next release of Windows be on par with Vista in terms of the sheer size of the operating system?

Ballmer: It's sort of an unusual question. My sense is that the next version of Vista will be compatible, it will support 99% of the hardware that Vista supports; it will support a high percentage of the applications that Vista supports; it will support all the end-user scenarios and more that Vista supports; it will be more capable than Vista is, have to do more than Vista does. That's a user statement, and if that means we have to add more lines of code, we add lines of code, but we certainly are going to add capability.