In-Depth

Ballmer Heralds a New Era for Microsoft

Microsoft CEO Steve Ballmer says he will be more active in championing innovation within the company.

• By Ed Scannell and Stuart Johnston
• 07/28/2006

Saying both he personally and his company were entering a new era, Microsoft CEO Steve Ballmer said he will take a much more active role in championing innovation within the company as chairman Bill Gates gradually backs away from his role as chairman over the next two years.

"On June 15 when Bill announced his role change, I felt like I had a new job," Ballmer said speaking at Microsoft's annual financial analyst meeting for the first time. "I have never had to be the primary champion of innovation because I have always had Bill to play that role. But over the next two years but that is what I'll be doing."

Microsoft will take a long-term approach towards delivering meaningful innovation in a number of important areas by staying committed to initiatives through thick and thin.

"When we start something, we don't back off it. We will keep working and working and working and working. We are not afraid to falter with something new. We will learn, come back with new ideas and smarter people each time," Ballmer said.

Noteworthy at this year's confab, chairman and co-founder Bill Gates has demonstrably begun passing his powers and responsibilities to the executives that will take over for him when he leaves two years from now. Gates, in fact, did not even turn up to stand in the wings.

Instead, Ballmer told the audience, Gates is on vacation with his wife and family somewhere in Africa. Indeed, Gates departure may be a bit like breaking up the legendary comedy, dance and musical partnership of Dean Martin and Jerry Lewis. Ballmer has been with the company since 1980, and first met Gates at Harvard before Gates and co-founder Paul Allen started Microsoft in 1975.

During his talk Ballmer said Microsoft will more fully embrace an advertising and subscription-based model as well as emphasizing an Internet-based delivery of its products as a central strategy. He added that Microsoft is akin to a multi-core processor in that it is looking to add new "core s" to its business including entertainment and Internet-based services to go along with its existing cores of desktop and server software.

Also during today's financial analyst meeting Kevin Johnson, co-president of Microsoft's platforms and service division said he saw nothing standing in the way of the company delivering on its promise to deliver its long-awaited Vista operating system. He stopped short however of saying the company actually would deliver it on time.

"We're still on track for delivery [of Vista] in November [to business users] and January [for consumers] but we will only do so if it is ready. We are moving milestone to milestone right now and the next milestones is Release Candidate 1 which should come by the end of this quarter," Johnson said.

Microsoft said on Thursday it expects total PC shipments to be 225 million during the next 12 months, growth of between eight and nine percent.

Other executives, including Ray Ozzie, also presented the company's views to the future during the morning sessions. The company announced its fiscal 2006 and fourth quarter 2006 sales and earnings a week ago.

Key to the positions that Microsoft wants to impress upon analysts and press are its belief that the emerging software as a service marketplace will drive business innovation in the future.

"Innovation will have to be at the backbone of what we call our Live transformation. Software is becoming a service," Ballmer said. His demeanor reflected the increased stress of transitioning the company to a post-Gates Microsoft -- a presentation style that appeared more purposeful and less frenetic than the hyperactive energy he traditionally exuded in earlier years.

As Microsoft moves into its new era, however, Ballmer told the gathered analysts and press that he's as confident and focused as ever: "If we can build the kind of capability and deliver the kind of performance that we've done in our so-called desktop business and our server businesses, those two opportunities [entertainment and devices, and online], we will all sit here 10 years from now and agree we're not only fantastic in terms of the innovation delivered, but also in terms of the returns that came back."