Ballmer Gives His Take on Software-Plus-Services Plan

Microsoft's top executive on Tuesday for the first time outlined the company's plan to transition from a traditional software company to offering software plus services, giving some road map details for how the strategy will play out in the next year.

In a keynote at the Worldwide Partner Conference in Denver, Microsoft CEO Steve Ballmer shed more details—although not many more—on the plan other executives such as Chief Software Architect Ray Ozzie have been teasing out over the past year. He gave a time frame for the early part of the transition, but mostly echoed what other executives have said about Microsoft's slow transition to adding hosted business services to its traditional software portfolio.

"For software plus services, the time is now," said Ballmer, finishing off the first of a raft of keynotes on the first day of Microsoft's annual partner conference. He said that over the next year Microsoft will continue to sell mostly on-premises software, but there will be more evidence of the transition to its hybrid model as the year goes on.

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Since Microsoft began talking about its plan to gradually transition to offering more hosted services last year in a speech by Ozzie at its TechEd Conference in Boston, many said the company had no choice. With such an entrenched business in enterprise and consumer desktop software, it would be impossible for Microsoft to be as nimble in offering hosted services as rivals such as Google and, which started their businesses as Web-based services providers. And a warmer reception for hosted services is clearly the direction the enterprise market is heading, as businesses become more comfortable accessing Web-based services beyond the traditional consumer staples of e-mail and search that have been popular for years.

The transition to providing more services will touch every part of Microsoft's business, but some changes will be more obvious than others, Ballmer said. The user interface will be an important place for innovation in this area, and Microsoft's Silverlight technology is the cornerstone of that, he said. Microsoft in April introduced Silverlight, a browser plug-in that allows for rich video and interactive media experience to be delivered within websites.

A solid services platform on which partners can build services and which they can resell with Microsoft managing and hosting them also will be a clear sign of the transition, Ballmer said. Microsoft already is offering a combination of consumer-oriented services such as Windows Live Hotmail and Windows Live Local Search, but will begin bulking up its portfolio of enterprise services as well, he said.

Microsoft already has unveiled business services such as Exchange Hosted Services for enterprise messaging and Office Live hosted service for small businesses. There will be new and expanded services like these as Microsoft progresses further with its software plus services strategy, Ballmer said.

Copyright © 2007 IDG Communications, Inc.

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