Ballmer on Linux, licensing and .Net

NEWS By Mike Ricciuti Microsoft CEO Steve Ballmer knows what it's like to be in the hot seat. The company he leads has been under fire for a controversial new licensing programme that raised prices considerably for some customers. A high-profile initiative to deliver web services is on the rocks. And the threat from the open-source Linux operating system is stronger than ever. But Ballmer can claim some success, too. Windows XP, the company's flagship operating system, has sold well. More than 10 million people have downloaded the latest collection of fixes and updates, called Service Pack 1, according to Microsoft. The company's Visual Studio.Net tools have won rave reviews and wide customer acceptance. And as competitors founder and struggle to make sales, Microsoft sits on top of a $40bn pile of cash. Ballmer sat down with silicon.com's US News.com colleagues to discuss the next steps for .Net, the challenge of Linux, and Microsoft's bold entry into the enterprise business application market. Q: How well is .Net being accepted? A few months ago, chairman Bill Gates said some parts of .Net, such as .Net My Services, didn't take hold as expected.
The .Net My Services concept is fine. The business side is still being worked on. And we are working on the concepts, too. The truth is, we probably made (.Net) a little harder to understand than we (should) have. But that has not mattered - we have a lot of customers doing projects now, enterprise customers, with .Net. They are using Visual Studio.Net, they are using BizTalk Server to build important line-of-business applications to connect applications inside and outside of a firewall. How do you define .Net?
What is .Net? Well, the benefit of .Net is XML (Extensible Markup Language) it's all about connection. We take the XML connection and we extend it across both client and server - while other guys are only server-focused. It's about connecting people to people, people to information, businesses to businesses, businesses to information, and so on. That is the benefit. What is .Net itself? It's a set of code we ship that users, developers and IT people use to help build applications that process XML information. Why do you think has there been confusion in understanding that message?
It turns out we shipped some products that didn't have .Net as we know it, the .Net framework in them, and that confused things. Originally, internally we were saying .Net is kind of like XML, and we were using it wherever we were talking about XML products, instead of being more precise. At the end of the day, the IT people and the developers get it quite well. Where would you like to be with .Net plans in six to 12 months?
It's getting to be conventional wisdom that the future of IT is around XML. But I'd like conventional wisdom to be that XML brings benefits today, and the best way to participate in the XML revolution - in terms of user benefits and productivity - is Visual Studio.Net. I'd like that to be the general perception. And part of that means we are going to have a lot more projects using Windows.Net Server and Visual Studio.Net. A Yankee Group study says 40 per cent of corporations surveyed were looking at operating system alternatives such as Linux, in part because of the Microsoft licensing programme. What do you say to that, and what do you hear from your own customers?
I've heard frustration with the way we managed the transition to our new licensing (program). Some customers are very happy because they are paying less than they used to, some customers are not very happy because they are going to pay more than they used to. Probably, the most customers are not in either one of those categories. They didn't like it at first - we worked with them, we worked on their special needs. But I think they are OK with where they are. The term open source - it's a philosophy. People don't look at open source they look at Linux. That's really all it comes down to. People say 'What about Linux, versus your stuff?' And people are going to look at whether we double our prices or take them down. If we changed our prices, people are still going to look at alternatives. Second thing, our product is a more complete product. We have a built-in application server that's well integrated - there is no such comparable notion in the Linux server. We have a directory server built in - there is no such comparable thing in Linux. The Linux client hardly runs any applications, except a bunch of shareware stuff that's not very good. I think it's not complete, it's a poor value proposition versus Windows. It is a clone of an operating system. There has yet to be any innovation, new features or new capabilities out of the Linux platform. First they cloned Unix, and there are people working on cloning some of our stuff. But it's just a cloning operating system. That doesn't mean we can stand still - we have to push along. But I don't think anyone should expect anything innovative coming out of that world. There's no data to support that. People highlight, 'OK guys - where's the source code?' I think most people don't want their employees using the source code every day. Really, they don't. That's a distraction from real work. But a lot of people do have a real need to see source code from time to time for debugging and for security purposes. We've have initiated a shared source programme. We're learning, if you will, from the Linux world. We're not above getting smarter every day. If you are a large account, for example, you can get access to source code. If you take a look at the Linux world, there has been some interesting things going on in the use of community in support tools. There are many more communities in the Windows world than in the Linux world. I don't think we have mobilised that community as effectively as the Linux community has. We have some in Visual Studio, and you will see more and more of that. In the areas where we think they have a real lead... we're not going to be cheaper to acquire. But we have lower total cost, more complete, more innovative, and we are going to share source as broadly as we can, but not as broadly as they do. And we are going to have as or more a community as Linux does. I think if you put all of that together, that's our competitive proposition. But people are going to look at Linux, whether our stuff costs $5, $50 or $100. People are going to look at it. So we have to work that value proposition every day. For the second part of the interview, see http://www.silicon.com/a55938