The talks by five Microsoft executives, including Chief Executive Officer Steve Ballmer, came on the heels of the company's positive fourth-quarter earnings. Last week, Microsoft announced revenue of $16 billion for the quarter. Peter Klein, Microsoft's chief financial officer, said at the time that all of Microsoft's business segments showed "double-digit growth," quarter over quarter.
The number-crunching crowd of financial analysts attending Microsoft's annual event may have preferred seeing spreadsheets and graphs. Instead, they got PowerPoint slides illustrating Microsoft's general vision in the enterprise and consumer markets. That vision encompassed Microsoft's Windows Azure cloud computing platform, Windows operating system success and consumer products.
Ballmer Lays Out Consumer Strategy
During Ballmer's talk, the Windows Phone 7 operating system was demonstrated running on an unidentified prototype device by Augusto Valdez, senior product manager for Windows Phone 7. Valdez showed off the mobile integration of the Microsoft Bing search engine, which provides search and mapping services based on the user's location. He said that the device was capable of running multiple Microsoft Exchange accounts on one phone.
Brad Brooks, CVP for Windows consumer marketing, showed how Windows 7-based PCs and Windows Phone 7 smartphones will be able to tap into a "personal cloud." Data can be shared across those devices using Windows Sync technology and the Windows Live SkyDrive cloud-based storage space. This data-sharing capability will be available "starting this fall," Brooks said.
"And by Q3 a vast majority of all PCs that ship to consumers will have this pre-installed so people will have this personal cloud experience as part of their Windows 7 experience right out of the box, and of course that will come with every Windows Phone 7 as well," Brooks said, according to a transcript.
Ballmer focused his talk on the consumer side of Microsoft's business since it is "very much on the minds of [Microsoft's] shareholders." The company's consumer products include Xbox gaming consoles, Bing search, Microsoft Office, the Windows operating system and Windows Phone.
Microsoft's mobile strategy has received much criticism over the years, particularly with regard to meeting the competition in the smartphone and tablet markets. However, Ballmer said that Microsoft has had Windows 7 on tablets and slate devices "for a number of years." He noted Apple's progress in putting out popular products and suggested that Microsoft would rise to the challenge.
"Just like we had to make things happen on netbooks, we've got to make things happen with Windows 7 on slates," Ballmer said. "And we are in the process of doing that as we speak. We're working with our hardware partners; we're tuning Windows 7 to new slate hardware designs that they're bringing them to market." He later referred to devices from Samsung, HTC and LG that are expected to "come to market this fall," but it wasn't clear whether he was talking about tablets or smartphones (or both).
Microsoft expects to get "a boost" in 2011 when Intel rolls out a low-power processor to market code-named "Oak Trail," Ballmer said. Oak Trail is an Intel Atom-based processor for tablets that's expected to use half the power of an Atom chip. It's designed to work with Windows 7, MeeGo and Google operating systems, according to Intel.
In a Q&A session with the financial analysts, Ballmer would not be pinned down on when Windows phones or tablets would hit the market. "We'll be in the market as soon as we can," he said. He did reveal a bit about Microsoft's thinking on executing its product plans, noting that "there is no way we will let hardware be an impediment." Ballmer revealed that Microsoft had actually designed the hardware for Windows phones for its partners.
Turner Extols Microsoft's Enterprise Strengths
Kevin Turner, Microsoft's chief operating officer, described the company's advantages in the enterprise space. He said that 70 percent of Microsoft's cloud platform wins in its fourth quarter represented new business, with Microsoft gaining customers from IBM (Lotus Notes) and Novell (e-mail). He cited "limitations" to Amazon's cloud service in that it requires the customer to maintain virtual machines. He touted Windows Azure, saying that the capabilities of Google's and Salesforce.com's cloud platforms fall short by comparison. Microsoft has an edge over VMware because "they don't run their own datacenters," Turner said.
The introduction of Windows 7 to the market gave Microsoft a 2.7-point advantage over Apple in terms of laptop attachments in the U.S. market, Turner claimed. Microsoft sells "just under eight copies per second [of Windows 7] since we launched this product in October 22," he said. Turner also claimed that Windows Server has been showing its highest gains over Linux in the last three years.
Microsoft hopes to grab database market share when Oracle launches its Fusion product, which is rumored to happen this fall, Turner said. He touted the "self-service" business intelligence capabilities of SQL Server 2008 R2. In 2011, Microsoft expects to launch the Parallel Data Warehouse version of that product, which will enable "100-terabyte" data warehouses.
On the enterprise collaboration front, Microsoft is challenging Cisco Systems with the Microsoft Office Communications Server product. Turner said that Microsoft's Live Meeting service is offered for "a third of the price of [Cisco's] WebEx" videoconferencing solution.
In addition to Turner and Ballmer's talks, the event featured presentations by Bill Koefoed, general manager of investor relations, Craig Mundie, chief research strategy officer, and Peter Klein, chief financial officer.
Recorded video and print transcripts are available at the Microsoft investor relations Web page here.
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