News

Ballmer: Microsoft Not Shopping for Services Firms

• By Scott Bekker
• 03/19/2002

According to The Wall Street Journal, Ballmer told German executives about a conversation he had with Microsoft chairman and chief software architect Bill Gates. The two discussed whether they should acquire a large-scale services provider like IBM's Global Services division.

The Microsoft power duo decided against moving further into the services business. In what sounds like a classic Ballmer reconstruction of the conversation, the Journal quoted Ballmer as saying that Gates swung the debate with this argument: "Steve, you love our [IT-services] partners. I love our partners. Let's support them."

Microsoft already has an internal services unit that is transitioning from a consumer product support focus to a more robust, enterprise consultancy. Microsoft and Accenture also jointly created the services spin-off, Avanade.

Nonetheless, Ballmer is the one who said repeatedly at the Enterprise Server launch day in September 2000 that Microsoft must get more "skin in the game," meaning getting service and support people into the enterprise.

Microsoft has an image problem in the enterprise stemming from inexperience in delivering a full wrapper of services and support around its software products.

A few weeks ago, Gartner published a bulletin putting 60 percent odds on Microsoft buying up to five IT services firms, including a big-name systems integration company, in the next few years.

The potential for conflict of interest between Big Five firms' accounting and consulting arms that was exposed through Arthur Andersen's role in the Enron scandal has prompted several of the firms to consider spinning or selling off their consulting organizations. The prospect makes the topic of buying a systems integration company a hot one for a company with Microsoft's cash reserves.