4 Ways Microsoft Plans To Grow

Microsoft's departing CEO acknowledged his biggest regret was failing to lead Microsoft into the smartphone and tablet worlds before Apple and Google, which he blamed on Microsoft's botched development of Windows Vista a decade ago.

"I regret that there was a period in the early 2000s when we were so focused on what we had to do around Windows, that we weren't able to redeploy talent to the new device form factor called the phone," Ballmer said at Microsoft's annual financial analyst meeting yesterday. "The time we missed was about the time we were working away on what became Vista, and I wish we'd probably had our resources slightly differently deployed, let me say, during the early 2000s.  It would have been better for Windows and probably better for our success in other form factors."

It will be up to Microsoft's next CEO to take the company forward but Ballmer made clear it will be along the strategy he rolled out in July.

"My greatest desire will be to see the company be so much more successful four or five years from now than it is today," Ballmer said. "That will be grounded in three things:  Number one, we've picked a great new CEO.  Number two, we made fundamental bets before that new CEO came out.  The strategies that we put in place, the approach that I've put in place that the board has endorsed -- those things are important.  The new CEO is important.  And the leadership team and the talent pool that is here is very important."

Ballmer also emphasized Microsoft's financial strength. "The ability to invest, to get into new areas, to think about the next big thing, none of you should take that casually as an investor, "he said. Much of what Microsoft outlined at the financial analysts meeting we've heard before but here are four points Ballmer and the executive team emphasized at the meeting:

One Microsoft Will Empower Devices and Services
Microsoft believes the employee is critical to creating demand for its enterprise IT infrastructure and cloud services. "We do believe that consumers drive a lot of what's coming into the enterprise," Ballmer said. "When I was in Office, Excel was brought into the enterprise because consumers liked Excel and brought it in over Lotus [1-2-3].  We've seen the same thing with the iPad.  Consumers have the iPad and bring it into the business. So we think these end points of these desirable, high-quality devices, combined with the power of our high-value scenarios and services is what's going to propel us forward into reaching customers the way we'd like to."

By bringing together the operating systems groups two months ago, the company is moving forward with tying them together. "We really should have one silicon interface for all of our devices," said Terry Myerson, executive VP for Microsoft's recently formed operating systems group, tasked with unifying Windows.  "We should have one set of developer APIs on all of our devices.  And all of the apps we bring to end users should be available on all of our devices." Myerson said the focus on devices will be to ensure they are even more integrated with cloud services. Whether we're branding them Windows or Xbox, we really need one core service which is enabling all of our devices," Myerson said. "We have a very clear vision of what we want to get done, and we're moving very fast."

More Apps Coming
Despite the fact that the Microsoft Store lags that of the Apple iTunes App Store and Google Play in terms of the number of apps available, Myerson believes the company will catch up. "We really are working our angles on this locally, globally," he said. "We're looking at all of it.  We're looking at domains for ISVs.  We're looking at consumer apps.  We're looking at enterprise apps.  We're looking at how the virtuous cycle works on other platforms, how it should work on our platform.  And it really is a top priority for me and my team, and we're working it."

Satya Nadella, executive VP for Microsoft's cloud and enterprise group added: "We're really building out our tooling across all of our assets and enabling these developers to exploit our broadest platform, and I think that's another source of innovation around our platforms that I think will translate into sort of unique app experiences for our platforms."

Stop Google
Microsoft is not throwing in the towel on search and it will relentlessly pursue taking on Google from all angles including seeking relief from the antitrust authorities that were once the bane of its own existence. "I do believe that Google's practices are worthy of discussion with competition authority, and we have certainly discussed them with competition authorities," Ballmer said.  "I don't think their practices are getting less meritorious of discussion.  We've highlighted some of their bad practices in our advertising, in our discussions with regulators, the bundling that they're doing with YouTube and Google Maps and some other things.  Anyway, suffice it to say that I think they need pressure from competition authority.  I think they need pressure in the marketplace."

That pressure isn't just going to rely on the feds bringing Google down but further investments in Bing, Ballmer added. For instance he cited working with Apple to integrate Bing search into its Siri-like voice assistant.

Eat its Own
Cannibalization is very much in play, COO Kevin Turner said. "As we move people from on-premise to cloud, yes, we're willing to cannibalize ourselves to do it," Turner said. "And we've embraced that.  And when I said that transition is underway, it's underway." Saying Office 365 is already a case in point, "I think the cannibalization stuff is imminent."

Posted by Jeffrey Schwartz on 09/20/2013 at 2:24 PM