Ballmer: Third-party innovation is draw for XP

Microsoft Corp. Chief Executive Officer Steve Ballmer introduced and extolled the virtues of the company's new operating system, Windows XP, at its launch here. The big draw of the new product will be innovations by Microsoft's partners, he said, addressing some of the concerns users might have about upgrading to its newest product.

"Windows XP is a more significant advance forward than anything we've done since Windows 3.0," he said.

Ballmer said he saw Windows XP as the point of convergence between reliability and compatibility.

"I really wanted Windows 2000 to be the point of convergence for those two lines, but it just wasn't ready."

Ballmer recommended that companies in the process of deploying Windows 2000 should stay with that rollout.

"Those people may push off Windows XP rollout to some time way in the future, but if you haven't already made the decision, to those people we say, 'Windows XP,' " he said.

What will sell the upgrade to Windows XP is not Microsoft but Microsoft's partners, said Ballmer. Thirteen of them were present on stage with him.

"The industry innovation on top of the product is what will eventually overwhelm people," he said.

The partners present included Simon Calver, vice president and general manager for Dell Computer Corp. in the U.K.; Dana Cuffe, chief information officer for Egg, a U.K. online financial services company; Tim Brookes, executive chairman for photographic supplies distributor Jessops Group Ltd. and Aled Miles, vice president and managing director for Northern Europe for Symantec Corp..

"We won't really know all of the great things it does for another two to four years as we add more partners," he said, speaking of the capabilities of the new operating system.

One major company that did not sign a partnering agreement with Microsoft is AOL Time Warner Inc. In June, the two companies abandoned talks on whether to include a link to AOL's Internet service with Windows XP. The talks collapsed when the companies failed to come to terms over a number of issues, including support for competing media players, the placement of an AOL icon on the Windows XP desktop interface and interoperability between Microsoft's and AOL's competing instant messaging applications.

"We were not able to come to an agreement that would let us ship their client, but Microsoft will continue to offer technical support for AOL," Ballmer said.

Ballmer addressed the controversial theme of new licensing agreements for corporate customers, an agreement for which the introduction date has already twice been pushed back due to complaints from corporate users.

"We've had a lot of feedback that we've gotten from customers. A lot. A lot of feedback," he said. "We've especially received feedback from France and the U.K., and we probably should have responded a little sooner to that feedback than we did," he said.

Microsoft did listen to the complaints, Ballmer said, and had pushed back the deadline in response to those complaints.

"I think we have responded to maybe not every issue raised but our response has been complete and in full," he said.

On the subject of pricing for the Home version of Windows XP he said, "We have tried to price Windows XP as we have priced all other upgrades, and Windows XP has as much value as our other standard US$99 upgrades. We have approached the value very carefully, in responding to competition, as some of that competition is offering their products for free."

This version of Windows XP needs to be registered upon launch, something which might serve to educate the home consumer, according to Ballmer.

"We need to start teaching people about honoring intellectual property. In that sense, the home market is the most important to help teach people that pirating is wrong," he said.

The process of registering the software is simply reminding people about the importance of intellectual property.

"We don't want to alienate our customer base, but that customer base also has to be properly educated about the value of intellectual property," he said.

One of the main reasons for moving to Windows XP is because "The world is moving to wireless computing," he said.

Windows XP supports wireless networking via GPRS modems and IEEE 802.11 wireless LANs, said Ballmer.

Of all the reasons to upgrade, Ballmer was particularly enthusiastic about the help and support capabilities integrated into Windows XP, especially for business customers.

"That real-time (help) application is built into XP and that alone is worth the upgrade," he said.

The Microsoft CEO repeatedly stressed the security measures that had been built into the operating system. "More people trust us with their private information than any other company in the world. There are 130 million people every month alone who trust us very much with their e-mail, through Outlook, and most people consider e-mail to be their most private online activity," Ballmer said.

In terms of protecting against hackers or computer viruses, the CEO assured the journalists in the audience that Microsoft was committed to working with the development communities and with all of its users to identify any problem areas and to react quickly to patch up any security holes in its software.

"The code base was designed to be very secure. There have been bugs but we have supplied some patches and we have been getting those patches rapidly deployed. Providing security patches is key."

Ballmer was confident about sales of XP in the near future. According to Ballmer, Microsoft has already received 100,000 preorders on the consumer side. On the business side, 150,000 copies have already been deployed to companies with 1 million order commitments received by Microsoft, he said.

"We think we are poised in terms of preorders to come out twice as fast as Windows 95. In terms of revenue we will report that in the upcoming quarters."

Customers who have already begun integrating Windows XP Professional into their systems include the U.K. building society Halifax PLC, Scottish Power PLC and Citigroup Inc., which alone has 80,000 desktops, according to Ballmer.

When asked if this was the right time to launch the new product, Ballmer conceded, "We are in slow economic times. I want to launch the product when its ready. I want the people who have the wherewithal to upgrade to take advantage of new applications and services that we've added to fire them up and turn them on. It's a great time to launch our new product, and in another few years it will be another great time."

Ballmer said that his two sons, aged six and nine, had been playing their computer games on Windows XP and that he was proud to report that the product had survived the "acid test of the 'Ballmer brothers' " with "no complaints."

After his presentation, Ballmer was immediately driven to Heathrow airport in order to fly to New York to join Microsoft Chairman Bill Gates at a gala dinner later in the evening. The dinner is just one of the events planned in 60 U.S. cities for Thursday and part of the US$200 million the company is spending on the initial promotion of WIndows XP, according to a Microsoft spokeswoman.

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