Microsoft Corp may be playing nicer these days, but don’t expect it to shy away from competing “very, very hard” against rivals in new markets, company chief executive Steve Ballmer said yesterday.
Addressing financial analysts, Ballmer outlined a future of aggressive competition against a range of software and internet companies, as Microsoft races to become either first to market, first to be supercool or first to make a heap of money from new opportunities.
A pumped-up Ballmer, speaking at Microsoft’s annual financial analysts’ summit, in Redmond, Washington, said innovation and success would help Microsoft beat the competition.
Mark my words, or as close as I can to make a promise, we will outgrow others in our business in profit – the business of adding value to software. Ballmer said.
Looking to the next four years, Ballmer said he expects 40% of Microsoft’s growth to come from today’s emerging businesses – which include MSN, Microsoft Business Solutions (MBS) and home and entertainment that includes the loss-making Xbox. Ballmer expects 40% growth from the company’s desktop business and 30% from servers.
He predicted negative 10% growth from big new investment areas, which have yet to be identified.
Earlier, during the conference, CFO John Connors said Microsoft is working hard to remove the term emerging as a descriptor from these business units during 2006 and 2007. Microsoft is looking to move MBS out of this category in 2006 while home and entertainment would shift in 2007.
We are working hard to make them get to profitable and have them in a position for many years to come, Connors said.
One new area where Microsoft is faring poorly is the Tablet PC. Ballmer, though, insisted the Table PC is 100% the right bet – it’s just the hardware and software are not yet right.
Ballmer continued that while Microsoft must act responsibly, this would not stop it from competing against Sony, Oracle, Linux, Apple, Google and Sun Microsystems in a range of markets.
We will be open with the competition, support the competition and honor our commitments to them, but we won’t shy away from getting into new areas, shy away from improving products, shy away from improving, providing the best value at the best price, Ballmer said.
Microsoft signed a legal settlement and technology sharing agreement with Sun in April, and Ballmer caught himself following the reference to Sun saying: I should stop there. We are friends now. I talk to Scott [McNealy, Sun’s chief executive] regularly, we are agreeing to compete. Turning to Google – Microsoft is investing in search technology – Ballmer promised: We are going to compete… very, very, very hard.
Microsoft will also defend its current markets, Ballmer said. Microsoft and SAP last year held merger talks, but Ballmer noted if SAP moved into Small and Medium Business (SMB) ERP, that would draw Redmond’s fire. Not in our house, Ballmer warned.
Summing up his attitude to entering new markets, Ballmer said it is important to be first, or a fast follower. Next, if someone is first to market with a cool technology, then it’s important for Microsoft be supercool. Finally if Microsoft has failed these tests, then it comes down to a mater of money, and Microsoft had better be the first company making the most money when the market settled down.
There may be some things we don’t hit, we may not be first. But when we are not you can count on us, Ballmer told analysts.