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Ballmer to Hosting Partners: We'll Beat You

Steve Ballmer has a message for partners who are worried about competition from Microsoft: That's the way it goes.

Well, OK, that's an oversimplification, but Ballmer, in response to a question during Wednesday morning's Worldwide Partner Conference keynote, said that Microsoft has to host its own applications or surrender the market to its competitors.

And he said that Microsoft's hosting model will grow faster than those of partners: "Cloud services will grow faster than the hosting opportunity, but that doesn't mean hosting won't grow," Ballmer told a crowd at Houston's Toyota Center Wednesday. He fielded pre-screened questions from partners asked by Geoff Colvin, editor at large of Fortune magazine. Colvin and Fortune narrowly won the Q&A gig over RCPU. OK, we just made that last sentence up.

Ballmer, however, said that partners won't come up empty-handed in Microsoft's hosting plan. He said that Microsoft will continue to support partner-hosted applications, even if those partners compete with Microsoft's self-hosted offerings. And he said that Microsoft's hosting effort would benefit the entire channel -- not just hosting partners -- over time by diving innovation in Redmond's traditional server products.

"I would say as we start introducing more and more of these cloud service offerings, we're in the process of reengineering our server software," Ballmer said. "All of the innovations we'll make in cloud services, we will also repackage over time back into our server offerings."

Ballmer hit on a few other issues during the keynote Q&A:

• On a potential acquisition of Yahoo, Ballmer offered no specifics but said, "Watch this space for news on search."

• On Microsoft being "uncool" in comparison to Apple and Google, Ballmer contended that Microsoft doesn't get headlines because it has been consistently successful for a long time and isn't new like Google or "reborn" like Apple. He also said that forthcoming Microsoft products might change the trend: "What we need to do is have products that surprise people, that delight people, and particularly on the consumer side. We haven't surprised people quite as much as we need to, to surf the cool wave," he said.

• On the free phone support for Vista that Microsoft began advertising this week, Ballmer said the initiative isn't an effort to undercut partners: "Most small businesses have only two, three or four employees, and statistically you would say most of them buy their computers via mail or in a retail shop. They might work with partners but most of them don't. The message in the ad is targeted at people who wind up being largely self-sufficient," he said. Ballmer also pushed partners to drive Vista sales: "It's time. Vista's ready," he said.

• On open source, Ballmer said that while Microsoft will interoperate with open source software, and while Microsoft will encourage open source development on the Windows platform, Microsoft won't be going open source any time soon: "Are our products likely to be open source? No. Open source implies free. Free is inconsistent with paying for lunches at the partner conference," he said.

• On unified communications and "coopetition" with Cisco, Ballmer said the relationship will be more competitive than cooperative, and that partners should push Office Communications Server: "That's why they call it coopetition, and I'm going to focus on the non-'coop' part. The 'tition.' We're going to get out there and thump and bump and sell to the best of our ability," he said.

Posted by Lee Pender on 07/09/2008 at 1:22 PM


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