Steve Ballmer's new Microsoft

Microsoft CEO Steve Ballmer spoke last week with Computerworld US about the impetus for the memo on core values that he sent earlier this month to the software maker's 50,000 employees.

During a one-hour interview with senior editors on the Microsoft campus, Ballmer also shared his thoughts on a wide range of topics, including the merger of Hewlett-Packard Co. and Compaq Computer Corp. and the challenge of meeting the increasingly high expectations of enterprise users. Excerpts follow:

You reinforce things through the management process. That's all you can do. Every time you sit down with people, you ask them, "How are you doing?" and "What are your plans?" And then six months later, "Did you get accomplished what you said you were going to get accomplished? Is it ambitious enough relative to what customer expectations are? Is it ambitious enough relative to competition?" At the end of the day, it's the same kinds of things that determine success. You know, broad customer connection. . . . We could be better connected with our customers without a doubt.

The sharing of good ideas and the competition amongst groups; it's the best metric, as opposed to "Here's a number." There'll be some numbers that are useful. I mean, we measure customer satisfaction in 66 different ways. . . . But the measurements are probably less interesting than the best practices which we will share.

There's nothing in the memo that, quote, should help us avoid problems with the government. . . . I think the thing that is important is we have reached a settlement with the U.S. Department of Justice which provides a clear framework in which we can operate.

}Externally, which is very important, I'd say the level of customer expectation is much higher in any way you want to say, whether it's reliability and trustworthiness . . . innovation. . . . The level of expectation in almost every sense, I think, is higher today than it was five years ago.

If you look at the ways we're different internally, we've recognized and we are responding to that level of expectation. Whether it's in direct-to-customer-facing things or the innovation which feeds the customer, we've ratcheted those investments up with an eye toward this increased sense of expectation.ve years ago, if you'd asked me, I would have spent a lot of time talking about . . . what businesses [we] aren't going to be in. That was always a question we'd get. And I was always trying to answer it. I don't try to answer it anymore.

Yeah. We're basically a software company. We help people realize their potential through software. But I don't want to be limiting. I don't want to limit the way our people think about how they can add value. I don't want to create any kind of expectation amongst anybody else that we will limit, if we have good ideas and we think we can make a contribution.

Areas in which we think we have innovative ideas that can make a difference. . . . Will security be different tomorrow than it is today? Yes, it will, because now we have to secure an XML infrastructure, if you will, as opposed to an HTML infrastructure. Everything about the way security works needs to change. You start passing XML messages around, it's not enough to just put a firewall out there and say, "I'm done." It's a set of work, and we think we have some unique ideas to add value. . . . Some of those we may pursue, all with our own technology. Some of those we may pursue in partnership.

Take storage. How are we going to support SANs? Where do the interfaces come between the operating system and the storage systems? And what's our relationship to the storage community? And how will it evolve? Well, we're talking to EMC about that, and we're talking to Compaq or HP, I guess I should have to say about that. And we're trying to find the right place for us to add value in the right ways.

We have a great relationship with the merged company. As a matter of fact, Carly [Fiorina] and Michael [Capellas] were here two days ago, something like that. The two companies talk frequently. . . . I think HP will be a very important partner for us. I think those guys have sets of very ambitious goals for themselves. And we want them and need them to succeed. We talked mostly about what we're going to do together.

Sure. But it's inappropriate to go through them. There's plenty of things that we're working on together that are exciting, as we have plenty of interesting things with any of our big partners, whether it's HP, Dell, Accenture.

As the new HP executes well, it'll be a good thing for the new HP and therefore a good thing for the industry. It's a hard execution challenge, and I have a lot of respect for Carly and for Michael to step up to that kind of challenge. I'm not sure I would have had the je ne sais quoi they've got for that kind of tough challenge. But they're sure fired up by it.

Obviously, CIOs are important. Senior IT, the real implementers, are important as well. If you actually ask who will make the decision in the average enterprise IT shop about the way to build the next application, the CIO will ultimately give his or her imprimatur to the decision.

But there's some implementer, a technical architect, a smart person who's well regarded in the organization who's really going to study it. They're going to take a look at .Net. They're going to look at the alternatives, and they're going to make the real decision about what to do. So in a sense, relative to the enterprise, a lot of the key decisions about our servers, tools, management infrastructure, it's going to be at the level you described, as opposed to the CIO level.

Those people felt a lot less important during the dot-com days because marketing and business people were making a lot of the decisions. Do you see that difference now in your customer base? I never bought into that. That doesn't mean we didn't do some selling that way. But in some senses, you could say it shows. We have low market share of what I would call the dot-com funny money. . . . It was basically money that went from investors and venture capital guys into companies and then went back into IT vendors. And part of the reason why IT sales have fallen apart is because the funny money got dried out of the market.

If you look and say, "Who had the highest share of funny money?" It was the four horsemen of the Internet . . . EMC, Cisco, Oracle and Sun. The four horsemen were the guys who had the high market share of funny money. We did not.

First of all, money wasn't an object. And we've always appealed to the value buyer, shall we say? . . . Some of the initial Web implementations happened on Unix systems, which gave sort of an extra boost particularly to Sun and Oracle. And, OK, we didn't have high market share. But it meant we never took our eye off the ball with the core IT people. That's always been kind of our bread-and-butter audience.

The companies over time that that community can view as providing real trustworthy computing will be companies that have a real leg up. I want to be pre-eminent in terms of that community's view. . . . Our heritage is perhaps innovation, new features, etc. . . . But we will be a leader amongst that community . . . being a trustworthy company and providing a trustworthy computing platform for them. We've set that out as an absolute goal.

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