Ballmer Memo Outlines 2005 Goals, Challenges

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It's that time of the year again.

Microsoft CEO Steve Ballmer has sent out of his companywide memos, citing last year's successes and challenges and setting goals for the upcoming year.

Not unexpectedly, he uses the missive, which was examined by CRN, to tout some familiar themes, including the ubiquitous "Integrated Innovation" mantra.

"Integrated Innovation is about a customer experience where using Microsoft products together gives you a 'whole' that is greater than the sum of the parts. It is not about creating technical dependencies across groups for their own sake," Ballmer wrote.

The much-touted and much-delayed Longhorn version of Windows will crank the Integrated Innovation plan up a notch, he noted. "We have a lot of hard work yet to do on Longhorn to deliver the right capability. We decided to release a number of products before Longhorn so we can take the time to get it right, and to prioritize the important security features of XP SP2. But all products after Longhorn will deliver on Integrated Innovation by building on its next-generation capabilities."

Looking forward, Ballmer said the company will work on ways to make PCs more affordable to millions more people and mentioned a "Windows Catalog" that "will make our partners' innovation and services more obvious to our mutual customers."

The other major opportunity lies in the millions of Office users to whom Microsoft hopes to sell new "information work scenarios" around collaboration, authoring and analysis. In his memo, Ballmer cited Live Meeting, SharePoint, OneNote and InfoPath as products to enhance the Office experience.

Ballmer also maintained that Windows Server 2003 is a viable contender to wrest server market share from Unix and even Linux at companies of all sizes.

As for the last fiscal year, ended June 30, 2004, high points included the delivery of Office 2003, SharePoint Server 2003, MBS releases, MSN Messenger and the integration between the Office user interface and SharePoint, Ballmer wrote. He also said the company made significant progress on its promise to delivery high partner and customer satisfaction.

For the 12 months ending with the third quarter of the year, Microsoft grew faster than such rivals as IBM, America Online, Sun Microsystems, Oracle and Sony, he maintained. He also cited .Net momentum against Java in development projects.

These internal memos, as well as widely distributed letters to customers from Ballmer and Microsoft Chairman Bill Gates, are becoming a mainstay of Microsoft's messaging internally and to the outside world.

Solution partners and customers alike say that, despite Microsoft's prodigious market position, huge cash pile and loudly proclaimed devotion to customers and partners, it faces major problems upgrading its massive installed base to the newest software versions and placating customers irritated by heavy-handed licensing changes. (See related story.)

Ballmer also used the memo to assure employees that future opportunities remain bright and that Microsoft is determined to lead the field in technology development. The company is filing more than 2,000 patents per year and "we see that number increasing," he wrote. Those words will no doubt ring ominously for many in the open-source community who worry that Microsoft will wield its intellectual property rights as a competitive weapon.

He also defended the company's decision to pare back some employee benefits. The company cut vacation time for new hires and decreased employee discounts on stock purchases. (See related story.)

Ballmer said the company has to aggressively grow revenue and cut costs when needed. "Even with the changes, we still have--according to independent surveys--the most generous benefits plan in our industry," Ballmer wrote.

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