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CRN Interview: Bill Gates, Microsoft

Microsoft Chairman Bill Gates sat down with CRN Industry Editor Barbara Darrow and CRN Senior Writer Paula Rooney last Tuesday after his PDC keynote. Following are excerpts from the interiew:

Microsoft Chairman Bill Gates sat down with CRN Industry Editor Barbara Darrow and Senior Writer Paula Rooney last Tuesday after his PDC keynote. Here is an excerpt of their discussion (to read the full interview, click here).

CRN: You guys have been more partner-centric than IBM and Oracle. However, both of those companies now are trying to paint themselves as the ISV's best friend vs. you guys. I don't know if you have any comments on that, and I would love to get your comment on the Siebel-Oracle thing and how that might change with the competitive situation.

GATES: Historically, the main company that we really competed for partners with was Novell. They had that as a huge asset and because of some missteps in their software strategy we've been a huge beneficiary as they didn't generalize their platform—we picked up a lot of those partners. I think if you go out there numerically in the world, there still may be more Novell partners than there are Oracle partners or IBM or SAP partners.

Anything Microsoft does that's successful gets—whether just purely in rhetoric or in actual execution—gets our competitors thinking, ’Hey, that's a good thing. ...

I don't think they'll find [the partnering model] particularly easy to do because you actually have to be willing to give up a substantial part of that revenue stream and generate more dollars for your partners than you generate yourself. And if you've got a services organization that's quota-driven and a substantial part of your P&L—which in the case of IBM and Oracle those are huge parts of their P&L, even more so for IBM than Oracle, but very large for Oracle—you just get a basic conflict there, where we've taken our consulting services and said, ’No, we'll always keep that constrained to serve a strategic role and not a substantial P&L role.

CRN: But Microsoft Services is a P&L, though, isn't it?

GATES: It's a P&L in the sense that we add up the numbers to try and make sure it breaks even, but we've never said to them, ’Hey, you're going to be a measurable part of our P&L. ... And the metric for them is—it's a very different philosophy. The big customer says, 'Hey, have Microsoft consulting come in.' We measure ourselves by how quickly we can leave—that is, between the skill sets we build up in the customer and the partners that were no longer necessary—whereas [for] IBM and Oracle, just naturally it's economics because they've got a P&L goal, they measure themselves by how long they can stay. And so keeping the partners that are effectively service competitors, in their case, and the customer as uneducated as possible works to their advantage.

You see that in a deep way in terms of product design. IBM doesn't mind a product [where] there's a lot of piece parts [and where] consulting comes in and says, ’OK, don't use that piece, use this piece.' And if you look at WebSphere, there's a lot of pieces. I mean, I dare you to name all the pieces in WebSphere.

CRN: Does Oracle's buy open the door for Microsoft to reconsider purchasing SAP on the enterprise front?

GATES: That hasn't come up.

CRN: I mean, some would say, for example, that Siebel is a big Microsoft ISV partner right now and I'm sure you hope in the future. But on the enterprise CRM front, what is Microsoft going to do to counter?

GATES: Well, we have a CRM product, we're scaling that up to more demanding situations. We'll continue to work with Siebel, we'll continue to enhance our product. SAP is in that space as well; they're a very good partner of ours. We have regular meetings with SAP. I'm sure working together better in CRM will be again just a little bit more extra energy because of that.

You know, these mergers don't, they don't really change all that much overnight. I didn't expect Oracle to buy Siebel, but they did, so ...

CRN: So it was a surprise to you?

GATES: Well, I guess if you look at who they put into the Oracle management team, it's a very sort of deal-acquisition [group]—you know, the three people below Larry never wrote code. That's a different structure than we have.

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