10 Things Steve Ballmer (and Microsoft) is Thinking About

As reported by ChannelWeb, Steve Ballmer touched on many issues at Microsoft’s Strategic Update Meeting in New York last week. Here is my take after reading the quotes:

  1. SEARCH: Microsoft is not making money from Search and may be slowing its rate of investment
  2. Microsoft is threatened by netbooks and is considering how to adjust its Windows 7 strategy to avoid loosing market share to Linux and other OS’s
  3. Google, with Android, and Linux threaten Microsoft’s client operating system dominance
  4. Microsoft denies they are creating a smartphone, but have they really accepted the “market mojo” of the iPhone and Blackberry?
  5. Microsoft knows they need a lower cost server operating system — watch for Foundation Server
  6. Microsoft still sees pirated versions of Windows as the biggest threat to their OS business
  7. Microsoft IE is losing market share: Ballmer admitted that “Browsers are key features of operating systems”, in contrast to their answer to anti-trust concerns that IE is not part of the OS
  8. Microsoft wants to R&D itself through the current economic times
  9. Microsoft has not figured out how to make money with Office Live, yet; Windows Azure (server in the cloud) may be ready by November 2009
  10. OpenOffice is a growing threat, starting with the educational market

In all of his comments, Ballmer seems to be missing the gap between the features Microsoft deliver and the subset of those features most customers actually use. If the threats he acknowledges offer simpler feature sets, but meet most customers’ needs, Microsoft could be in big trouble.