Rory Cellan-Jones

A meek new Microsoft?

  • Rory Cellan-Jones
  • 2 Oct 08, 09:20 GMT

For years he has lived in the shadow of Bill Gates - in the public's mind at least - but the man who bustled into a room at Microsoft's London offices for our 20 minute interview was certainly no shrinking violet.

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Steve Ballmer is a confident, extrovert character, and a more natural communicator than Microsoft's founder - but the most arresting line from our interview seemed to reflect a new humility at a company seen by some as the playground bully of the software world.

"We may be the "David" on this particular battle with "Goliath," he said, referring to the contest between Microsoft and Google in the field of search. He went on to admit that Microsoft had a "single-digit" share of the search market, that it had started investing in search too late, and talked with envy of Google being the "cute darling" of the technology world, just as Microsoft had been years ago before it ran into what he described as "legal things".

Later, when I asked whether it worried him that consumers didn't seem to love Microsoft he even went as far as talking of people having a "love/hate relationship" with Windows PCs, though he insisted they loved what their computers did, even if they lacked affection for the company behind it.

So does this mean that Microsoft has been transformed into an ever so humble little business, happy enough to tick over, and with no great ambitions to grow further? Not a bit of it. Mr Ballmer went on to explain that he was aiming Microsoft right at Google's search and advertising heartland - and even suggested that search was in desperate need of a bit of innovation.

He pointed out that it worked now much the same as it did five or six years ago, and it was time to move on. "Search is my favourite business," he said, explaining that when you had virtually nothing the only way was up: "Everything is possible, we have nothing to lose."

When I suggested that this plan had gone "pear-shaped" (does that expression work on the West Coast, I wonder?) when he'd failed to buy Yahoo earlier this year, Mr Ballmer said that deal had been "a tactic not a strategy". What the strategy is that will turn Microsoft into a force to be reckoned with in both search - and more importantly for the bottom line - online advertising, remains to be seen. But to underline those ambitions, Microsoft today unveils plans to invest in new R&D in the search field in Europe.

And there was nothing humble about Steve Ballmer's plans in the mobile field. Here there was a sideswipe at Google's Android operating system - a version 1.0 and it looks like it, was the verdict - and a dismissal of the idea that handset manufacturers would prefer an open-source solution to Windows Mobile. And where would Microsoft be compared with Android, Blackberry and Apple's iPhone (I left Nokia out of it) two or three years from now? Number one, according to Mr B.

Later this month at its Professional Developers Conference in Los Angeles, Microsoft will outline ambitious plans to move its business away from what Mr Ballmer described as the "software on a DVD" model towards "cloud computing", where applications and user data are stored on huge server farms. It's another area where Google appears to have moved more nimbly.

Microsoft could just sit and watch the billions flow in from Windows and Office for years to come. But this Goliath of the software world has obviously been wounded by Google's search slingshot - and is promising to hit back.


  • Comment number 1.

    Given the subject matter of this story I thought you might be interested in an academic working paper on Search Engines I put out this summer. Entitled: "Is Google the next Microsoft? Competition, Welfare and Regulation in Internet Search” it provides empirical evidence and theoretical reasons why Ballmer is right to be concerned that Google growing dominance will be very hard to stop.

    The full paper can be found either on SSRN or on my own personal site . The abstract runs as follows:

    Internet search (or perhaps more accurately `web-search') has grown exponentially over the last decade at an even more rapid rate than the Internet itself. Search engine providers such as Google and Yahoo! have become household names, and the use of a search engine, like use of the Web, is now a part of everyday life. The rapid growth of online search and its growing centrality to the ecology of the Internet raise a variety of questions for economists to answer. Why is the search engine market so concentrated and will it evolve towards monopoly? What are the implications of this concentration for different 'participants' (consumers, search engines, advertisers)? Does the fact that search engines act as 'information gatekeepers', determining, in effect, what can be found on the web, mean that search deserves particularly close attention from policy-makers? This paper supplies empirical and theoretical material with which to examine many of these questions. In particular, we (a) show that the already large levels of concentration are likely to continue (b) identify the consequences, negative and positive, of this outcome (c) discuss the possible regulatory interventions that policy-makers could utilize to address these.

  • Comment number 2.

    Interesting although I think they may have left it a little late for the on-line search market. In saying that, Google has become increasingly saturated with rubbish links and tenuous connections.

    As for the mobile OS market, It'll take a lot to dislodge Symbian although I think they've got a good chance of eating into RIM's market. The new WinMo custom skinned devices by HTC and Samsung are largely excellent and WinMo 7 promises to deliver more. Apple will, of course, carve out their own niche too.

  • Comment number 3.

    Not a bit.
    Microsoft are proving to be true to form as the world-conquering company we all know. However, whether they stick to their tried and tested tactic of buying out new software then re-branding it is yet to be seen.
    There is some good to this technique though, through purchasing new and innovative software/designers they are able to encourage interaction between them, which can allow for interesting developments. What does irritate people though is the fact that these innovations tend to be Windows specific...
    I'll still stick to my open source platform for the time being.

  • Comment number 4.

    Glad to see Micro$oft spreading themselves far and wide. Perfect for their competitors to attack them.

    I hope in 10 years Micro$oft are as relevant as the horse and cart.

  • Comment number 5.

    Whatever Steve Ballmer tries to do to project himself as a serious business man remember:


  • Comment number 6.

    If anything, in the smartphone mobile space, the one company that will be squeezed is Microsoft. Android is seeing great interest currently, because of its open source roots! Its no surprise that the major handset makers for Windows Mobile are on board with it.

    In the US, RIM is currently top dog, followed by the iPhone.

    In Europe the top dog is Symbian by over half of the market.

    Google, Apple and Microsoft have a job to do in order to topple RIM and Symbian. But from what I have seen of all of the platforms (and I've used all except Android, but have seen videos) Microsoft's is the furthest behind in terms of ease of use, innovation and useful, working connectivity.

  • Comment number 7.

    I also hope this interview will haunt him forever:

    I also hope that Steve Ballmer stays as CEO of Micro$oft for a long long time, he is the best thing that could have happened to Apple!

  • Comment number 8.

    Point 1: Crocodile tears. Mr. Ballmer knows his market and knows what we dislike about his monolithic behemoth - or perhaps he sees himself as a future king of Israel and the the seed for future wisdom*

    Point 2: Microsoft's problem appears pretty simple to me - they have to businesses that are at odds with each other; OS and services. All they do seems geared to forcing their business hegemony on us.

    - The days of monolithic operating systems are surely numbered. With the Web emerging as a platform in it's own right, the choice of Windows over MacOS over Linux is becoming less important. I can only see one long term winner - and it's open.

    - Companies like Google can pick up whatever technology seems useful, not what your Desktop department has given you.

    - While MS choose to spend resource protecting their monopoly, they'll always be on the back foot.

    - While I'd like to think they'll change - I don't think they can. Perhaps they can persuade a few people they have - divide and conquer their enemies (the non-MS Philistines), but I expect they'll persue their current course until broken regulatorily or by market forces.

  • Comment number 9.

    People who write Micro$oft are extremely short sighted

    There wouldn't be a computer market if it wasn't for a the vision to put a computer into every home, and running our OS.

    Whilst they are not always the innovators (how many incumbents ever are) they have taken ideas (or brought them) wrapped them up, and sold them them to the public in it's hundreds of millions, and they are practically the sole reason there is a huge IT industry, and they are also the reason that it's competitors innovate and strive to improve on everything Microsoft can do

    And whilst Apple lovers enjoy looking down their nose's at PC owners with their over-expensive machines, All of the real innovation happens in the Open Source movement, it just rarely ever easy enough to understand to gain mass market approval (except in the server market)

    I use Ubuntu on my laptop, and I use XP on a desktop, I like them both, they are both good

    They are not a small company, and nor will they be, it is a marketing tactic so that people start to see Google as a huge incumbent company, and they should start to receive some of the bad blogging press that continues to haunt Microsoft's every move.

    Google are Huge, they try to play it small because it appears more friendly, and it suits Google to be seen as the small guy all the time

  • Comment number 10.

    How many chairs has Ballmer gone through lately?

  • Comment number 11.

    I hope in 10 years Micro$oft are as relevant as the horse and cart.


    Maybe. But just look at your example.

    The Horse and Cart for the first time allowed for relatively long-distance movements of people and goods, which in turn created a market for items which were not provided locally and thus needed to be brought in from othr towns and even countries. It is this market force that lead to the development of the trains, cargo ships and ultimately the automobile. Without the humble horse and cart we would not likely have those advancements thus it is assured it's place in history.

    The same is true for Microsoft, without their vision to bring pc's to the masses the Internet would still be an enclosed academic and military peculiarity, the average person in the street would have contact with nothing more complex than a handheld calculator and joe bloggs would not have access to millions of sources of information at their fingertips. And yes I do realise there was no altruism there it was just to sell licences, that makes little difference to my point.

    Without Microsoft there would be almost no home PC market, there would be largley no world wide web to speak of, there would certainly be no Google and there would be very little in the way of open source development because the facility for it would just not be there.

    Yes some other company might have stepped up to do it instead, perhaps even with better software, but I bet anythign that if they had the people who decry MS today would be venting their anger at them instead all the same.

  • Comment number 12.

    Microsoft have had it.

    Vista broke compatibility too much and slowed their computer down. People expect their computer to be responsive now, especially when they know it isn't short of CPU power.

    Zune is a flop, they still haven't launched it in the UK.

    Windows Mobile's interface redesign won't be around until about 2011-2012, 4-5 years after the iPhone.


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