Microsoft flexing its muscles

Microsoft flexing its muscles

Summary: Microsoft CEO Steve Ballmer today addresssed how his company plans to spend money to compete with Web giants Google, Yahoo and AOL in the coming fiscal year (starting July 1).  MSN: $1.

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TOPICS: Google
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ballmerseptbig.jpgMicrosoft CEO Steve Ballmer today addresssed how his company plans to spend money to compete with Web giants Google, Yahoo and AOL in the coming fiscal year (starting July 1). 

MSN: $1.1 billion in R&D (up from $500 million two years ago), and $500 million on capital expenses, up from $100 million two years ago.

Ballmer: "I believe only two or three companies can really deliver the infrastructure that's required to keep pace."

Ballmer: "Ad-supported software services are an integral part of Microsoft's plans to give consumers access to a broader variety of digital media, whenever they want and on whatever device they prefer," said Ballmer. "Our close partnership with the ad community is extremely important to us as we evolve Microsoft from a software company into the world's largest, most attractive provider of online media through MSN, Windows Live(TM) and adCenter."' 

Gates: "I think this is a rare case where we are being underestimated. That doesn't happen very often."

The upshot: At least Microsoft and Google becoming massive media companies, controlling tens of billions in ad placements, and Web compute utilities serving billions of consumers and thousands of businesses with every kind of application. Software is media.

See also: Nick Carr's post on Google in the enterprise, Richard MacManus on Microsoft the media company, David Berlind on Google-prise...

File photo of Ballmer 

Topic: Google

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4 comments
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  • Where is the tipping point for Microsoft?

    The loss of market share by MSN is dismal. If the rest of MSFT Corp followed that pattern, a tipping point would be reached by next year, the stock would plummet, and the Search market leader would take everything. Until recently I thought this was unlikely. But the unthinkable is happening and by next year market sentiment could swing away from Microsoft in a much bigger way than today. Unless something dramatic happens such as Ballmer leaving. The signs are clear that R&D alone is not the answer. I've been to several relevant R&D events in recent weeks, run by Microsoft and its competitors. While Microsoft still has some stellar researchers, it's losing key folk to other US companies. Crucially, where Microsoft is becoming noticeably weak is in the time it takes to productize its R&D. It was never fast at this, but now seems to be glacial, because management is distracted by legal cases.
    TCO .
    • good point

      Microsoft has a lot of obstacle, and how as an "underdog" will have to flex its muscle, winning users on a more level playing filed. Now we can see how much fire in the belly exists in the 2006 forward version of MS
      dbfarber
  • Money does not equal success

    The Public Education System should prove that simply throwing more money at a problem does not automatically solve that problem.

    Then again, maybe MS execs are the products of Public Education.

    Microsoft has been nothing more than a paper tiger for years. If they can't leverage their monopoly in Windows or Office, they don't succeed. The landscape is littered with failed Microsoft initiatives.
    baggins_z
  • That there are only two or three companies...

    ... able to provide the infrastructure needed in this market is important.

    It's possible to be second or even third in a big market and still make satisfactory profits.

    And look at the competitors.

    Google has no other sources of revenue. Yahoo is more a content company. Microsoft has been lucky in the past in mistakes from its opposition.

    If developments in ad supported search and portals require new software and large infusions of cash without immediate return, Microsoft is likely to be the best positioned.

    As in XBox vs Playstation, Microsoft is able to seize opportunities immediately.
    I'd say this market is even more amenable to Microsoft's normal approach than is the market in which XBox competes.

    This is far from a hopeless situation.
    Anton Philidor