Following up on my questions earlier in the day, Steve Ballmer cleared some of the fog around how Microsoft plans to innovate in services and iterate at Web speed (compete with Google and others treading on his company’s turf) during an interview at Gartner’s Symposium ITxpo with analysts Tim Bittman and Dave Cearley [video clip here].
[Listen to the freshly minted The Dan & David Show podcast, where we play clips from the Ballmer Q&A and David and I provide commentary]
"The top priority for us is to innovate. If we don’t, nobody needs to buy from us," Ballmer said. "The important thing we are focused in on across Microsoft is how through a combination of both product and through services that talk to those products—Internet-based services—all of our major businesses can have a short twitch capability--call that every six or nine months--a medium twitch capability and at same time we can’t stop doing the R&D that takes every three or four years to get done. We just can’t make our customers wait three or four years for things that should have been on more interim cycles. We try to orchestrate ourselves, so that we have innovations coming on all three of those cycle paths."
"If you do things that are innovative and bring value, and you respond to the big core trend, which is to move more toward a services approach, whether it’s service-oriented architecture, on demand delivery through virtualization or services running out in the cloud—there is sort of a theme there," Ballmer added.
Each product will have its own cadence, Ballmer said, and needs to have services so that innovation can be fed to the market on nine month cycles. Major twitches are about a two year cycles, and some, like Vista and WinFS, take longer, but Microsoft wants to give visibility to customers on progress and get feedback, Ballmer added.
In today’s world Windows is a long twitch, Office a medium twitch and MSN is the short twitch, but I suspect those territorial boundaries will be altered over time. Ballmer said Microsoft has a "phenomenal opportunity" to create new value for customers at the desktop, server and Internet cloud. "That value is going to come from both new applications and services, not only created by Microsoft but created by third parties. The question of how to allow third parties to create interesting scenarios that live partly on the client, on Windows; on the server, Windows; and out in the cloud is a very important one and certainly one we are focused in on." He mentioned MSN as an example of that direction.
On the subject of Google, Ballmer joking said, "Other than curing cancer, Google will do everything." He went on to talk about the smart people at Microsoft (a competitive arena with Google, which has been poaching Microsoft talent) and the relentless focus on innovation.
Ballmer also talked about how there's plenty of room for improvement in the experience that most users see today and how Microsoft intends to be the company to take the search experience to a new level. He noted that 50 percent of all searches don't lead to a desired outcome, and Microsoft would focus on getting answers right and on improving relevancy and natural language querying, as well as on the targeted advertising front. Ballmer also suggested that the corporate network and the Web shouldn't be thought of as two entities that get searched separately and that the two should be tied together to provide one seamless search experience. Google would agree.
He also claimed that the products to be delivered over the next 12 months is the greatest innovation pipeline the company has ever had, touting Vista, new servers, IE 7, mobile windows and the Motorola Q smartphone (due in Q1), Xbox 360, IPTV, and Office, which he said would be the most exciting release in 13 years.
In regards to Vista, Ballmer said that it's the most important new version of Windows since Windows 95. "I'm going to trust Vista on day one," Ballmer said. "I bet most people in this audience will trust it day one--on their home computer," he joked. He's realistic about enterprise adoption cycles. "I'm trying to be honest among friends," he told the crowd of about 4,000 IT executives and managers. He also address some of the issue with Microsoft's licensing practices. The company just introduced a new license to deal with virtualization and has made the contracts easier to parse. "The simplest thing we have today is our enterprise agreement. Used to take two years of postgrad education (to understand it), now it's a 9th grade education. We know we have a lot more work to do in terms of tools and license forms," he said.