Ballmer sees Google, Apple and open source as main competitors

Stan Beer
Wednesday, 11 October 2006 18:01

Opinion and Analysis

The third business model that Ballmer articulated was monetizing software through hardware. Once again,  Microsoft couldn't get away from using a major competitor as an example, directly naming Apple's phenomenally successful iPod. Ballmer said that all the cool things that its upcoming Zune player can do will be enabled by software but the payoff will be built into the margin in the hardware sales.

The interview didn't get into the emerging threat in the business space from software as a service delivery companies such as Sales Force.

So what we can surmise from Ballmer's musings is that Microsoft is going to have to keep producing software so much better than what's available from the open source crowd that people are willing to pay hard cash for what they could otherwise get for free.

While the software company struggles with that, it is somehow going to introduce an advertising driven model without sabotaging its legacy business.

Finally, Microsoft is going to leverage software to make money out of hardware, against a competitor which has 80% market share and well over 20 years of experience making money off leveraging software to make money out of hardware.

Microsoft has exceptionally deep pockets thanks to its legacy monopoly desktop software business. That's good because, based on the three challenges just mentioned, Microsoft is going to need to spend a lot of that money to maintain its position as an IT market leader.