News

Microsoft Gives Financial Analysts Overview of Company Plans

• By Stuart J. Johnston
• 08/01/2005

Microsoft executives used their annual financial analyst meeting last week at the Redmond campus to describe in broad terms, some of the upcoming products and services ideas that have appeared on the Microsoft roadmap since this time last year. On that timeline are plays in new technology areas, such as high-performance computing, as well as expanding the company’s base of existing products.

“These are areas in which we will introduce new products, but perhaps as significantly, we will also introduce higher-value versions of existing products,” said Microsoft CEO Steve Ballmer. Given that the bulk of Microsoft’s income still comes from the company’s core products -- Windows, Office, and its main servers, like SQL Server and Exchange Server – the company will introduce “new SKUs,” Ballmer told the audience. (SKU, or “stock keeping unit,” is a retail term that roughly translates as “packages” or “products”).

For instance, the company plans an enterprise edition of Windows Vista – formerly code-named Longhorn. In the Windows XP generation of client operating systems, Microsoft shipped Home, Professional, Media Center and Tablet editions. It was unclear from Ballmer's brief mention what the Enterprise Edition would include to distinguish it from Professional. Ballmer also promised a higher-end applications package he dubbed Office Premium. Microsoft also plans a product Ballmer described as Office Server which will feature a new premium Client Access License.

Microsoft execs have often in recent years complained that the company’s traditional markets have become so saturated with its own products that its existing installed base has become Microsoft’s own biggest competitor. Presenters last week insisted that the company’s developers are combating the “good enough” mentality among customers by continuing to innovate as they come out with new releases of existing products.

Users and customers will get a chance to kick the tires on some of those forthcoming products soon enough. Windows Vista just entered Beta 1 earlier in the week – although the beta is limited to about 10,000, mostly technical, beta testers. Internet Explorer 7, as well as “Longhorn Server” also entered beta test at the same time.

Meanwhile, Microsoft is preparing to ship a raft of product updates in the coming months -- among them the Office 12 beta, BizTalk 2006, SQL Server 2005, Visual Studio 2005 and Windows Server 2003 Release 2.

Other areas of importance to Microsoft’s managers? “We talk about work flow, real-time communications, document management, collaboration, terminal services, search, portals, unified messaging, media technologies management, anti-spam, business intelligence, storage and security,” Ballmer said.

In addition, while the world waits for Vista, the company is still moving users’ code base forward, motivated largely by its security initiatives. Will Poole, senior vice president of Microsoft’s Windows client business, told the audience that, in less than a year since its release, Windows XP Service Pack 2 has been downloaded by more than 218 million users.

In niche markets where Microsoft does not yet have a significant presence, such as in scientific and other high performance computing arenas, Ballmer said the company is working to improve its products to take on those types of tasks, including handling multiple clusters. To expedite that, the company recently hired a vice president of technical computing.

Microsoft is also looking increasingly to services to help keep its coffers growing. “It's not just about what can be done on the Internet; it's about rich intelligence at the PC client, in the phone, at the corporate server . . . and it's about serving everybody from consumers on up to large businesses,” Ballmer said. Among those services, he added, are hosted customer relationship management, Outlook and other Office services.

Executives said to expect Microsoft to introduce more products and services in systems management as well. “Our management business, led by Microsoft Operations Manager and Systems Management Server . . . passed the $400 million mark,” said Eric Rudder, senior vice president of servers and tools. “We'll also expand into new categories like backup and data protection with System Center Data Protection Manager [which] should actually ship by the end of this week.”

“You'll be seeing our security portfolio expand as a company with OneCare for consumers all the way up to enterprises,” Rudder added.

Ballmer also told analysts what not to expect: for Microsoft to make any “blockbuster” acquisitions in the near future. Instead, the company plans to continue making small and medium-sized, strategic acquisitions along the lines of recent purchases like managed services provider FrontBridge Technologies and security vendor Sybari.