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July 07, 2004Ballmer memo excerptsMicrosoft CEO Steve Ballmer issued his annual state-of-the-company memo to employees yesterday, outlining the company's progress and challenges. In addition to our story this morning, see coverage by The New York Times, the Washington Post, the Associated Press, and CNet News.com. This year's memo wasn't nearly as long as last year's -- coming in at less than 4,000 words, compared with more than 5,500 last year -- and it didn't contain a rallying cry on the level of last year's "We will rise to the challenge" of Linux statement. But it was full of information about Microsoft's plans, and insights into Ballmer's feelings about the company's direction. Here are some excerpts from the memo: On growth and costs: "We have as much opportunity to grow as any other company in the world. That’s a big statement, but the opportunities we’ve scoped out are very big. Make no mistake -- we must grow our revenues to grow profits. We cannot just cut costs. At the same time, we must ensure a competitive cost structure, or competitors will offer prices, services or innovations that we cannot afford to match. Other companies have been severe in tightening costs the last few years -- layoffs, major benefit reductions, etc. We have not done those things and want to be prudent now so we avoid severe measures later." On the need to innovate: "The key to our growth is innovation. Microsoft was built on innovation, has thrived on innovation, and its future depends on innovation. We are filing for over 2,000 patents a year for new technologies, and we see that number increasing. We lead in innovation in most areas where we compete, and where we do lag – like search and online music distribution – rest assured that the race to innovate has just begun and we will pull ahead." On Microsoft's share price: "Obviously, we all want to increase the value of our stock, and we have the best opportunity to do that since the end of FY98. Our stock was around $25 then, as it is now, and we have more than doubled our operating profits since. Shareholders then were betting we would work hard for all these years to make the company worth that mid-98 stock price. We have done so." On aiming products at various markets: "Our products must also be better segmented for different users with different needs. And we must evolve marketing to focus more squarely on the value proposition throughout the product lifecycle, not just at launch. So many customers have yet to deploy our most recent advances, so we must not only help them understand why to deploy, but also demonstrate the benefits of deploying before we reach the Longhorn generation." On perceptions of Microsoft: "We must also work to change a number of customer perceptions, including the views that older versions of Office and Windows are good enough and that Microsoft is not sufficiently focused on security. We must emphasize key positive perceptions of the strong manageability, and developer and information-worker preference, for our platform." On avoiding the trappings of size: "Nothing solves 'big company' ills quite like a strong focus on accountability for results with customers and shareholders. Innovating, growing share and profits, and serving customers all ensure that we have no time for wasted motion. To do this, we need to prioritize the things that matter the most with our customers and for the company, and then be accountable for executing on those choices." Posted by Todd Bishop at July 7, 2004 09:50 AMComments
"Microsoft was built on innovation, has thrived on innovation..." "We are filing for over 2,000 patents a year for new technologies..." These are about the funniest and most ridiculous statements about Microsoft one can make :-) (Hint: the first one is a lie, the second relies on the idea of patenting trivialities.) Posted by: Jan Bielawski at July 7, 2004 12:01 PMIt's quite obvious that Jan has a bone to pick with MicroSoft. Hey Jan, how about a comment with substance??? Posted by: E Johnson at July 7, 2004 12:57 PMThey got off too lightly with the antitrust case. Posted by: Larry at July 7, 2004 12:58 PMHey E., look at that! Got the meaning of "patenting trivialities" ? Or need a few more examples ? Cheers. Didn't Billy "borrow" the concept of "Windows" from Apple? From what I remember of "Pirates of Silicon Valley" anyway... Posted by: Anonymous at July 7, 2004 01:11 PMInstead of "working to change perceptions", why not work to fix the reasons people think Microsoft software is bloated and insecure ? There's a novel idea... Posted by: James at July 7, 2004 01:13 PMGood one Francois. Posted by: Bill Gates at July 7, 2004 01:17 PMMicrosoft has lost the battle with software complexity. They have mistaken marketing goals with engineering principles. Microsoft's development of software is very nearly ad-hoc. This is not a sustainable development model. A simple comparison of Lines of Code (LOC) for Microsoft vs. Linux hints at the problems facing them in the future. My guess is the ratio would be 100 to 1. I predict they will be unable to produce new products in the future in a reasonable amount of time due to the extremely poor quality of the existing windows code base. Longhorn won't be better - just different! Posted by: Ed at July 7, 2004 01:26 PMWhat a joke. MSFT has earned the reputation that they have for selling bloated, buggy code. Posted by: MSFTJoke at July 7, 2004 01:36 PM"Microsoft was built on innovation, has thrived on innovation..." This is a joke no ? The anti-Microsoft party line consists of gross generalizations and flat stereotypes. It's actually laughable to see the hordes of drones come out of the woodwork to take their shots. It seems to be a combination of jealousy and group think in some of these techno-circles that perpetuates the M$ is eeeeeeevvviiill meme. I'm tired of it. Yes, Microsoft has imitated, yes Microsoft has behaved in less than sterling fashion at times, but overall it's an incredible company, that has turned out some amazing products. Get over it. There's not a major company in the world that isn't guilty of some of these actions, singling out Microsoft is just plain silly. Posted by: Anonymous Coward at July 7, 2004 02:00 PMLOL! If that isn't trolling, I don't know what is... But everyone has their right to their own opinion AC. M$ isn't evil, but the stockholders are. Guess who that is... Probably M$ employees who have stock options and every other one of us who own mutual fund shares that own M$ stock. It's all about the bottom line, your's or mine. Yes, M$ is ALL about innovation, they just like to aquire it and remarket it under M$. Innovation relabeled. What do you think? I scoured this document and found no mention of words like quality As they say with the Cubs every year in Chicago, "Wait till next year!" I would take it a step further and tell you that based on what I have seen, read, experience, etc., that what we are seeing is that Microsoft has become a company with a critical mass of people (Gen-Xers *) who are more fixated on their personal stock options and the present value of Microsoft stock, than on the quality, and security of the software that they produce. The pity is this: they fought so hard for the majority share of the world's computer market, but the based on the quality of their software, they don't really deserve this position of prestige and trust with the public. So the end result is that we have a group of technicians and managers outside Microsoft contantly doing one of two things: patching their substandard, poor quaility software, or making excuses, on WHY in light of hundreds of security and quality issues, with no end in sight, do we keep staying with Microsoft, instead of moving to something like SecureBSD or the secure version of Linux. By the way, at the tender age of 23, I was responsible for all the source and object libraries for a huge command control system that supported a major command post and the National Command Authorities. I was also responsible for all the procedures and system utilities that went into maintaining, and building about 500,000 lines of code that comprised this system. That is one reason I take a dim view of what Microsoft gets away with. It's fine to lust after market share and have a big sizzling marketecture, yet living up to the responsibilities that come with this position is a whole other challenge that Microsoft falls flat on. Consider: if TCP/IP, which most of us can agree is a technological marvel, performed as shakey and poorly as most Microsoft software, the Internet never would have taken off the way it did, and we wouldn't be sitting here in an online classroom. And if all this sounds like a harsh judgement of Microsoft, consider the existence of and the justification for the following versions of software: MS DOS 5.0 (and that's just the tip...)
"Our stock was around $25 then, as it is now, and we have more than doubled our operating profits since. Shareholders then were betting we would work hard for all these years to make the company worth that mid-98 stock price. We have done so." Steve, take the crack pipe out of your mouth. Investors who bought the stock in 1998 didn't do so with the hope that you and the rest of MSFT would work hard for 6 years to justify that price. They did so because they hoped to make money on the stock - which they haven't because your attempts to increase shareholder value over that period have been a complete and total failure. Posted by: Anonymous at July 8, 2004 10:16 AMI just want two features from windows or longhorn or whatever the code name is: 1. Instant boot get it ? Posted by: robertito at July 10, 2004 08:06 PMA quote explaining the innovator's dilemma from Clayton Christensen: Pull The Innovator's Dilemma off your bookshelf (you do have a copy, right?) or pick up The Innovator's Solution, both by Clayton Christensen and you will see the problem Gates and Ballmer have. In the 'Solution, the cycle that Microsoft is entering is explained. Cut costs, go for profit. Then cut prices, go for volume. Cut costs, raise prices, to restore profitability. Cut prices, cut costs, go for profit. Along the way, every potential growth program, which will necessarily start really really small, will be killed off. The most creative people who are not expensive boat anchors will be laid off or quit and then go on to form a disruptive competitor. Throughout the process, Microsoft will be asking customers and stockholders for advice, and one or both of these groups will be cheering each new initiative which will ironically be destroying the company. Posted by: michael pettengill at July 15, 2004 11:13 PMOn the one hand, the FY98 bit is a joke: people were speculating back in those heady dot-com boom days that MS stock prices would continue to spiral. Nae luck them, but Stevey-boy should know better than try to spin a flat 7 years. On the other hand, the people saying that MS never innovated are just as guilty of crass party-line-toeing (just the opposite party): Microsoft were traditionally best at taking an idea and making it wonderfully usable and powerful, I admit (Excel is the best example of that), a result of the massive investment in the usability labs in the mid 90s. But they also sometimes came up with real, blue-sky winners. Visual Basic revolutionised the IDE, and everything from VS.Net right through to JBuilder and Eclipse owes it a debt. Let me alienate anyone not yet loathing me by saying that a great many Americans (and I speak as a true Americophile) these days can't seem to have a balanced opinion, seeing both sides, crediting where due and critical where necessary. This applies to operating systems and it applies to partisan politics, and everything in between. Posted by: Endie at October 11, 2005 05:47 AMPost a comment
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