Stan Beer
Wednesday, 11 October 2006 19:01
Opinion and Analysis
Page 1 of 2
In an exceptionally frank interview with BusinessWeek, Microsoft CEO Steve Ballmer revealed himself to be on unsteady ground when it came to valuing the new Web 2.0 companies. However, he was crystal clear on where Microsoft can expect to get serious competition.
After humming and hahing as to whether YouTube
was worth US$1.65 billion or Facebook is worth US$1 billion and
ruefully discussing how Microsoft got outbid on MySpace, Ballmer got
down to tin tacks and named Microsoft's main competitors. Obviously a
US$40 billion a year software company is not going to be scared too
easily by another software company.
However, Ballmer sees Microsoft's main competitors as the paradigm
shifters - the companies attacking Microsoft from outside its
traditional market space. Namely Google, Apple and the open source
software movement.
According to Ballmer, open source is a new business model that
Microsoft has learned to cope with by adding extra functionality or -
as he put it - "extending our value". However, Ballmer admitted that
open source will continue to be a thorn in Microsoft's side and that
the giant software company will be forced to compete with it "for the
rest of time".
Ballmer was loathe to name Google as the second major threat to
Microsoft's business, preferring to label the competition as
advertising. However, he admitted that the market equates the online
advertising model with Google.
As Ballmer says, advertising looks cheaper to the consumer that paying
for software, so Microsoft intends to embrace (read copy) the Google
model. How Microsoft intends to do this without butchering Microsoft's
existing business model, Ballmer didn't say.
