Is Microsoft Dying? Here's Some Evidence

Discussion in 'Stocks' started by ByLoSellHi, Oct 13, 2006.

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    Saturday Interview
    Is Windows Near End of Its Run?

    Published: October 14, 2006

    Steven A. Ballmer, the chief executive of Microsoft, has his hands full. The next version of the Windows operating system, Vista, is finally about to arrive — years late and clouded by doubts that it might violate antitrust rules in Europe.

    Mr. Ballmer, 50, has been deeply involved in the discussions with the European competition authorities.

    Windows Vista and Office 2007, according to industry analysts, may be the last time Microsoft can really cash in on these lucrative personal computer products, as software is increasingly distributed, developed and used on the Internet.

    Yesterday, Microsoft announced that Vista would be shipped in late January and expressed confidence that it would pass regulatory scrutiny. [Page C3.]

    In fast-growing consumer markets, Microsoft is playing catch-up. It trails well behind Google in Internet search. Next month, Microsoft will introduce its Zune music player, in an uphill effort to take on the Apple iPod.

    At Microsoft, Mr. Ballmer must adjust to being alone at the top, as his friend and longtime partner, Bill Gates, eases out of his company duties to work full time on philanthropy.

    In a meeting this week with editors and reporters of The New York Times, Mr. Ballmer answered questions about Microsoft, his job and the future of software. Following are excerpts:

    Q. What was the lesson learned in Windows Vista? After all, it wasn’t supposed to ship more than five years after Windows XP.

    A. No. No, it wasn’t. We tried to re-engineer every piece of Windows in one big bang. That was the original post-Windows XP design philosophy. And it wasn’t misshapen. It wasn’t executed, but it wasn’t misshapen. We said, let’s try to give them a new file system and a new presentation system and a new user interface all at the same time. It’s not like we had them and were just trying to integrate them. We were trying to develop and integrate at the same time. And that was beyond the state of the art.

    Q. In the future, will the software model change? Will the Internet, for example, be the way most software is distributed?

    A. That will happen. It’ll happen from us. It’ll happen from everybody.

    Q. Doesn’t that mean that software product cycles are going to be much shorter, months instead of years?

    A. Things will change at different paces. There are aspects of our Office Live service, for example, that change every three months, four months, six months. And there are aspects that are still not going to change but every couple of years. The truth of the matter is that some big innovations — and it’s a little like having a baby — can’t happen in under a certain amount of time. And, you know, Google doesn’t change their core search algorithms every month. It’s just not done.

    Q. Is Vista the last operating system of this era? That is, the last operating system in the traditional sense of being this monolithic software product? Don’t these Internet changes open the door to Windows à la carte? After all, you have different versions of Windows now for personal computers, cellphones and hand-helds.

    A. Windows is a little different because Windows manages the hardware. It’s got to come with the hardware and manage the hardware. For the thing called the PC — the thing we think of as having a big screen and a keyboard — there really is one infrastructure for supporting hardware, for supporting application development. It’s not 100 percent monolithic. But it’s almost 100 percent monolithic.

    Q. Can we talk about Europe?

    A. Beautiful place. I lived in Brussels for three years as a kid. I do love Brussels.

    Q. I was thinking of what seems to be the continuing conflict — the disputes, penalties and fines — over how Microsoft designs Windows and what features you put in the operating system. Is there a way around that problem?

    A. First of all, I wouldn’t call it conflict. We really have — no, I mean this genuinely — have been having a constructive dialogue. Now, no regulator, not in this country nor in Europe, is going to give you a gold star that says, I will attest that everything in Vista is OK. The Department of Justice is not going to do that, and the European Union is not going to do that. At the end of the day, we can get a lot of guidance. And then we have to make the call and we have to take the risk. We really just have to decide whether we think the thing is compliant. It’s not really their issue. It’s kind of our issue in an odd way.

    A. With Bill Gates making the transition out of day-to-day involvement at Microsoft, what is the biggest challenge you have to overcome?

    Q. Well, there are sort of two. First, it’s not like Bill’s written every line of code or designed every product or done anything like that for many, many years. But Bill’s been an incredible contributor. If Office 2007 is a great product, give Bill 3 or 5 or 10 percent of the credit. We have to make sure that — whether it’s 5 or 7 or 10 percent — we get those values someplace else. And second, with Bill people have understood that we’re committed to long-term innovation. Bill’s been emblematic of that. We’ve shared that vision all along the way. But I think I have to pick that up. Because people want to know that the buck-stops-here person is committed to continuing to invest and do things.

    Q. Several of the areas Microsoft is betting on for future growth — Xbox, Zune and ad-supported Web software and services — are consumer markets. How do you think the consumer perceives Microsoft?

    A. All our surveys will tell you consumers think the world of Microsoft. At the same time, you have to go win the consumer in each area. I’ll give you an example. When it came time to name Xbox, there was certainly a class of people who wanted to have Microsoft and/or Windows more prominent. They all lost. And it was a wise choice. Not because Microsoft is bad. But it wouldn’t have meant what it needed to mean to that audience. And Zune could have been Microsoft music system or Microsoft entertainment system or Xpod, I guess. But again, we thought the experience was different and it was worth giving its own identity. So I think we have a good seat with the consumer, but we have to prove ourselves every time as our competitors have to do, too, by the way. Google has a good brand. It didn’t help them a lick in video.

    Q. What do you see as the most significant changes in how people use software?

    A. I think one pervasive change is the increasing importance of community. That will come in different forms, with different age groups of people and it will change as the technology evolves. But the notion of multiple people interacting on things — that will forever continue. That’s different today, and we’re going to see those differences build. You see it in a variety of ways now, in social networking sites, in the way people collaborate at work, and in ad hoc collaboration over the Internet. You see it in things like Xbox Live, the way we let people come together and have community entertainment experiences. And you’ll see that in TV and video. It’s not like the future of entertainment has been determined. But it’s a big deal.
  2. the market does not think so. the stock is hitting yearly highs.