Microsoft shakes up online management

JUST as Microsoft appears ready to up the ante in its US$45 billion (A$49.6 billion) unsolicited takeover bid for internet giant Yahoo, the company has shaken up management of its online division.

And reports in the US say the management changes – announced by Microsoft chief executive Steve Ballmer – prepare the ground for a merge with Yahoo.

The company said former aQuantive chief executive Brian McAndrews – who joined Microsoft when the digital advertising firm was acquired last year – will take expanded roles in the Microsoft Online Services division.

Steve Berkowitz will step down as senior vice-president of the Online Services Group. He will remain with the company, focusing on a smooth transition of the business, until the end of August.

Mr Ballmer also announced the promotion of Satya Nadella to senior vice-president Search Portals & Advertising Group, and Bill Veghte to Senior VP of the Online Services and Windows Business Group.

Analysts in the US say the promotion of Mr McAndrews is significant and that he will most like be the top lieutenant in any Microsoft-Yahoo combination

Microsoft responded saying the raft of changes had nothing to do with the Yahoo bid, and that there had been other senior management changes also announced yesterday that were outside of the Online Services Group.

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Microsoft unveils next-gen Surface computing

IT’S not often that Microsoft is able to spring new product on the market that haven’t already been heavily previewed through leaks, official or otherwise.

But the company managed to do that today with a launch from way outside of the box – a coffee table-shaped computer called Surface that re-invents the user interface.

Developed by Microsoft’s Entertainment and Devices division, Surface dispenses with keyboard and mouse in favour of a desktop system where data is manipulated by hands, voice and pen.

The touch screen tabletop lets users “grab” data or manipulate pull-down menus. Barcoded objects sitting on the tabletop can be integrated into applications so that their movement becomes a part of the user interface.

Surface is a 30-inch display in a table-like form factor that small groups can use at the same time. The OS in the system is based on Vista and can deal with several users at once (which different people at a table manipulating different parts of the system), Microsoft said.

Surface Computing sounds gimmicky. And with the devices (which Microsoft is manufacturing itself) are not cheap at US$5,000 (A$6,100) to US$10,000.

But Microsoft chief executive Steve Ballmer, who launched the new systems at the Wall Street Journal’s D: All Things Digital conference in California, says the company is serious about developing the systems into a mature market.

“With Surface, we are creating more intuitive ways for people to interact with technology,” Mr Ballmer said.

“We see this as a multibillion dollar category, and we envision a time when surface computing technologies will be pervasive, from tabletops and counters to the hallway mirror. Surface is the first step in realising that vision,” he said.

The first business applications for the systems will be in hospitality, entertainment and retail, Microsoft said. Harrah’s Entertainment, the hotel and casino group has said it will use the systems in a variety of dining, entertainment and reservation tasks.

Mobile phone company T-Mobile will use the Surface systems in retail outlets to let people look at products, prices and features of mobile phones (which will sit on the tabletop, and bring up data as customers manipulate the phone).

Microsoft corporate vice-president Tom Gibbons says the technology that drives Surface and its potential applications should not be underestimated. Microsoft’s core goals had always focused on bringing increasingly natural interfaces to computing, and Surface was a big step in that direction, he said.

“Surface computing is a powerful movement. In fact, it’s as significant as the move from DOS [Disk Operating System] to GUI [Graphic User Interface],” Mr Gibbons said.

“Surface computing breaks down those traditional barriers to technology so that people can interact with all kinds of digital content in a more intuitive, engaging and efficient manner,” he said.

“It’s about technology adapting to the user, rather than the user adapting to the technology.”

“We’ve looked at the market extensively, and when you consider that the revenue-generating opportunities include services, hardware and software, we believe there will be a multi-billion-dollar addressable market for surface computing,” Mr Gibbons said.

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Ballmer quietly greases government wheels

WHENEVER a Great White Chief’s corporate jet descends into Australian airspace after the long flight from their US headquarters, you can be sure they’ve got government on their mind.

It’s a well worn path. Once every two or three years, if you head an American IT giant, all roads lead to Canberra.

And so it was with Microsoft’s larger-than-life chief executive Steve Ballmer quietly slipped into Australia last week.

It was as low a profile visit to Australia as is possible for a Microsoft chief to make.

The IT press were unhappy that Ballmer wasn’t being made available for a press conference (nor the fact that they were locked out of an American Chamber of Commerce luncheon, among other events).

Microsoft’s PR tried hard to throw the media a bone, issuing a statement to say the company had signed a meaningless agreement with the Department of Defence.

Talk about slim pickings … the agreement was so meaningless that a parliamentary secretary was wheeled out to sign it. Good grief! Now that’s a sure-fire strategy for keeping the general media’s interest in the boss’s visit at sub-coma level.

Still, these visits are all about the private meetings – not the public ones. Ballmer met the Prime Minister, yawn (the PM has not been a supporter of this industry). And he met Kevin Rudd, presumably to talk about the latest polling data.

Much more interesting was news that the Microsoft chief met with Health Minister Tony Abbott and with a group of state Government chief information officers.

In the next five years, Health is going to deliver a motherload of business to the IT sector. In Europe, the health sector has become the focus of some of the biggest IT projects ever undertaken in the public sector.

In Australia, after many false starts, governments are trying to use IT to reduce the administrative burden in the health sector. They believe the cost savings will be measured in the hundreds of millions of dollars.

Including the health and welfare smartcard, these health IT projects in the next several years in Australia will be some of the biggest and most complex ever undertaken in this country.

There is nothing like the Great White Chief coming to town to get you in front of the right people.

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Gates returns to Harvard

BILL Gates didn’t feel the need to finish undergraduate studies at Harvard University before plunging into the whole change-the-world, computer-on-every-desk thing.

Not that Harvard holds it against him. The university has invited the Microsoft chairman to be principal speaker at its 356th Commencement day in June, returning Gates to the halls where he met his friend and current Microsoft chief executive Steve Ballmer.

Gates had already founded for-profit businesses in software and consulting during his during his junior year, so by the time he had met and befriended Ballmer, his work at Harvard was probably done. (Harvard says Ballmer lived “down the hall at Currier House” when the two were undergrads.)

Well, that and forming a friendship – and a lot of computer code – with the other Microsoft co-founder Paul Allen.

Gates is a member of the Harvard College Class of 1977, which is to celebrate its 30th reunion at the Commencement.

Having arrived as a freshman at Harvard in 1973, Gates was to have graduated in 1977, but famously dropped out in 1975 to focus with Allen on building the Microsoft into the US$44 billion (A$55 billion) revenue business it is today.

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India, China drive licensed growth: Ballmer

Improved attitudes toward using legal, licensed software within economic powerhouses like India and China will provide enormous opportunities for growth in the corporate desktop market, according to Microsoft chief Steve Ballmer.

Speaking at a financial analysts’ briefing in New York last week, Mr Ballmer said there was a “real movement” among large companies in the emerging economies that would provide renewed growth opportunities for business software growth in the next financial year.

“There's certainly an opportunity to grow the business again in the corporate world in emerging markets on the desktop,” Mr Ballmer said.

“More and more if you go to China, you go to India, the biggest companies all do actually want to be legal.

“As people increasingly list their stocks on the exchanges in those countries, in this country, in others, there's a real movement to legalise in the corporate environment in these emerging countries,” he said.

Mr Ballmer told the analysts that while the industry move to software as a service presented enormous challenges and potential threats to the company, the changes were fundamental and presented at least equal opportunities for growth.

“The evolution of the software business to being a business of software and service is fundamental, and we are investing in that as if it is fundamental,” Mr Ballmer said.

“We will evolve our business models from transactions to in some cases subscription, in some cases hosting, in some cases advertising, in some cases we'll continue on the transaction model, but our business models will evolve with the evolution of our business to have much more of a service component.

“I view this as a huge opportunity for us. People can say, isn't it also a huge threat? Sure, all great transformations have both aspects to them.

“This as fundamentally a very, very good thing, but nonetheless it brings with it a world with new competitors and new challenges,” Mr Ballmer said.

Meanwhile, just three weeks after the launch of the next generation Windows Vista operating system, Mr Ballmer has said the company hopes to develop and release the next major Windows upgrade well inside the five years it took to get Vista to market.

While Microsoft last week issued a statement aimed at quelling speculation about when the company expected to release the next version of Windows.

Mr Ballmer said there were people in the industry still held to the idea that innovation could still be developed by “three guys in a garage”.

“We won't go five years again, I promise, between big Windows releases,” Mr Ballmer said.

“But there are products that are so anchored to the way people work, they're not going to be (developed by) three guys overnight. It simply requires too much testing and too much sort of sophisticated engineering to get there.”
“But we continue to push and push hard on the innovation front, and I'm going to talk about that,” he said.

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