Amid downturn, Microsoft should be thinking bigger

Microsoft CEO Steve Ballmer on Tuesday held his annual powwow with investors and talked strategy, the company's outlook and the areas where it is placing its bets. Frankly, the bets look a bit timid.

First the financial matters, Microsoft kept its outlook that it outlined last quarter, which wasn't so hot at the time. CFO Chris Liddell sees poor economic trends continuing. Ballmer says Microsoft will use the downturn to gain share. The second half will be ugly.

However, few companies enjoy Microsoft's positioning. It has a ton of cash. A cash cow in Windows and Office. The rub: Ballmer's strategic areas of focus resemble previous years. The big omission seems to be cloud computing. Microsoft has talked up Azure--its cloud platform--but Ballmer left it out of the big strategic investment areas. Shouldn't Wall Street hear more about Red Dog, its cloud OS that could transform the company?

Also see: Microsoft’s Azure cloud platform: A guide for the perplexed

Ballmer: Office 14 not this year

Is Microsoft thinking big enough?

Ballmer said that the economy will stink for a while and his investment priorities reflect that, but perhaps Microsoft should make a few bigger bets. This list of priorities--via Mary Jo Foley--looks like standard operating procedure.

Ballmer's seven investing areas list includes:

• Windows
• Mobile
• Desktop productivity
• Server and tools
• Enterprise software
• Search and advertising
• Entertainment and TV

Microsoft focuses on those areas every year. Where's the game changer?

Mary Jo writes:

It’s clear — and not surprising — that the economic downturn is definitely putting a damper on Microsoft’s blue-sky spending plans.

Fair enough, but it's all a bit disappointing.