Microsoft chief executive Steve Ballmer showed himself ready to face up to user concerns about security and licensing when he spoke to Computer Weekly in London
Corporate users' concerns are getting through to Microsoft chief executive Steve Ballmer - at least in part. When Computer Weekly asked him to list the three most important issues UK IT directors were raising with Microsoft, he named two - security and value for money.
"The number one concern I hear from IT directors here in the UK - and elsewhere in the world - has to do with security, and it is not a Microsoft-specific issue, except insofar as Microsoft products are the most popular in the world." he said.
The Trustworthy Computing security initiative is approaching its third birthday, but Ballmer admitted, "We will be working on Trustworthy Computing for the rest of my days at Microsoft."
He added that the battle to secure the Windows source code and devise new, secure operating systems had hit Microsoft's product development pipeline.
"We have made [security] our job-one priority, to the extent that we pushed out a very significant Windows XP Service Pack 2 release at the expense of some of our innovations," he said.
The second core issue raised by IT directors is getting more value from their IT investment. "The notion of doing more with less, as we say in our advertising, really sums up the way the corporate IT director is thinking these days," he said.
Three years ago the focus was on spending less, said Ballmer, now it is on doing more with less. Delivering more productivity, more applications and more improvements is high on the agenda. "Yet budgets are being managed in a tight way in IT around the world," he said. "It is not unique to Microsoft, but as the industry leader, industry issues become Microsoft issues."
Talk about value for money leads inevitably to IT users' concerns about Microsoft licensing, the impact of delays in bringing out new products - particularly Longhorn, the next generation of Windows - and Microsoft's increasingly aggressive campaign against Linux.
Microsoft has done a lot to recover from the 2001 Software Assurance debacle, when it tried to make fundamental changes to its enterprise-licensing regime at short notice. The move provoked an unprecedented user backlash, forcing Microsoft to delay implementation by 12 months.
With a major round of Software Assurance renewals now due, Ballmer was keen to emphasise that his company had learned from the angry user reaction it had provoked and was offering better value.
Software Assurance provides two kinds of benefits, he said. "One is a set of non-upgrade-related benefits on support and services which we deliver quite reliably. Not all of our customers take us up and use the benefits," he added.
"The second thing we deliver is upgrades, and we did have a longer cycle in terms of major releases on Windows, for example, than we had anticipated.
"We are hearing the customers. I respect that there are some customers - not a huge number - who would have expected a major release and have not got one."
For the benefit of these disgruntled customers, Ballmer said that Windows XP Service Pack 2 was a significant upgrade.
Just in case its user base is tempted to look for open source alternatives to Windows, Microsoft has embarked on a major advertising campaign targeting Linux. It is a concerted effort to make sure the facts are known, according to Ballmer.
"What customers want to know is, are they buying a product that gives them the best overall value," he said.
Examples such as the controversial total cost of ownership trials at Newham Council prove that they are, Ballmer said. The East London council last year set up a major trial comparing open source and Microsoft-based systems. Microsoft paid consultants Capgemini to demonstrate that its systems offered better value for money, and won the contract.
Microsoft wants all of its customers to understand that they are "getting a fair deal" when compared with other users of their size and market sector. "We are always happy to engage in that kind of dialogue," Ballmer said.
Repeating the line Microsoft has used in antitrust actions in the US and Europe, he said Linux was just one of a long series of competitors that Microsoft has seen off over the years.
When asked about Microsoft's filing with the US corporate regulator the Securities and Exchange Commission last month, which stated that Linux sales could hit Microsoft profits, Ballmer said, "We did not say it will - some companies list hurricanes as risk factors." He said Linux was simply the latest competition his company faced.
He was relaxed about users following advice from analysts to compare Linux with Microsoft on total cost of ownership when considering buying new systems.
"If it is not Linux, it will be something else," said Ballmer. "We have had good competition throughout my whole time at Microsoft - we like competing. It brings out the best innovation. Microsoft's own installed base is a form of competition. It puts the pressure on us to continue to innovate and add value."
Ballmer enthused about the development of new mobile phone technology, welcomed the convergence of computing and the mass media and took swipes at Apple and other digital music providers.
But he said little about the development of Microsoft's enterprise computing portfolio, except that he had initiated moves earlier this year to buy SAP and then decided against it. Microsoft has said it is not interested in competing for PeopleSoft with Oracle.
Acknowledging Microsoft's attention to the consumer market, Ballmer dismissed suggestions that corporate users might lose out as the company focused on consumer products. Microsoft development teams did not accept a fundamental division between consumer and corporate products, he said, claiming that 90% of Microsoft's R&D resulted in benefits to both.
Despite Ballmer's optimism and his efforts to make Microsoft more focused on the needs of corporate users, the love-hate relationship Microsoft enjoys with IT directors is likely to continue.
Users expect the company to make progress on security, to deliver the upgrades it promises when they take out enterprise licensing agreements, and they want to see total cost of ownership come down. Otherwise the search for alternatives will grow ever more intense.
Quarantine' technologies promised
Microsoft is working on isolation technologies that prevent infected PCs or mobile devices damaging the rest of the network. They are already deployed on Microsoft's internal networks and go part of the way to meeting the security architecture called for by the Jericho Forum, a user group of IT security chiefs drawn from major global organisations.
Steve Ballmer, Microsoft's chief executive, said the technology would, at the latest, be rolled out with the 2006 release of Longhorn He said the company had made major security improvements with the release of Windows XP Service Pack 2 and the move to a monthly patching cycle.
"People should be able to patch when they want to patch, not when hackers want them to patch. We want to be able to say there is a patch available, but if you do the following things, you do not need to apply it until you are ready. "If you have the right firewalls in place and if you are running the right versions of the operating system, the OS can isolate itself or make itself resilient to different kinds of attacks, even if deep inside it has a vulnerability."
Challenges for Microsoft
- Settling its anti-trust case with the European Commission
- Improving security through its Trustworthy Computing initiative
- Delivering Longhorn, the next generation of Windows, to hit its 2006 target
- Increased competition from Linux and open source products
- Finding new products that are as profitable as Windows.
This was first published in October 2004