Ballmer urges troops to slap down Apple and Google
Later in the memo, he wrote "In the competition between PCs and Macs, we outsell Apple 30-to-1" but admitted Microsoft's position vis-a-vis Google is not as strong as it is on the desktop: "We continue to compete with Google on two fronts - in the enterprise, where we lead; and in search, where we trail."
It would probably be more accurate to frame that as "PCs preloaded with Windows outsell Macintoshes by 30-to-1" - as far as I know, Microsoft doesn't sell PCs apart from those Surface tabletop jobs.
Both Gartner and IDC give Apple around 8 percent of US PC shipments, which means the ratio is at worst (from Apple's perspective) 11.5-to-1 in the companys' home markets.
It's probably about right globally, though. IDC says Apple has 3.3 percent of the worldwide market, which is roughly 30-to-1 if you assume that every PC shipped with either Windows or Mac OS X. Linux has got to be in there somewhere, especially with the apparently growing interest in UMPCs such as Asus's Eee range.
Ballmer clearly doesn't underestimate Apple - read on to see how he plans to compete with Cupertino.
Acer has about 9 percent of the worldwide market, and the Eee family made up about one eighth of its sales during the first half of 2008. But I don't know the breakdown between Windows and Linux.
(Incidentally, I'd love to know why the 1000 is only available with Windows in Australia - the explanation I received from an Asus spokesperson was that "this is mainly due to high consumer demand for the familiar Microsoft OS, particularly since it is available through retail only" sounded hollow to me. And it was small comfort to be told that "For those who want Linux, it can be easily and freely installed on this Windows version." Licence refunds, anyone?)
But Ballmer doesn't underestimate Apple, and it looks like he is taking a page from Cupertino's book.
Apple is "good at providing an experience that is narrow but complete, while our commitment to choice often comes with some compromises to the end-to-end experience," he wrote.
"Today, we're changing the way we work with hardware vendors to ensure that we can provide complete experiences with absolutely no compromises."
A bold plan, and one that might work with the big name OEMs. HP, Dell, Acer, Lenovo and Toshiba together take 55.2 percent of the world market for desktop PCs, mobile PCs and X86-based servers, according to Gartner.
Can Microsoft deliver on that vision? Please turn to page 3.
It seems to me that Microsoft will have its work cut out making sure Vista continues to run smoothly on all standard configurations (to the extent that such a thing exists) from these five manufacturers throughout all future patches and driver updates, even if much of the work is hived off to the OEMs.
Even Apple's relatively small product line sees the occasional hiccup with OS updates and patches.
Much of Microsoft's success is due to its symbiotic relationship with third-party developers, so it is harder for the company to deliver the kind of integration between applications and online services that Apple can.
Where Apple can go ahead and connect iTunes with the iTunes Store, or the iLife applications with its MobileMe Internet service, Microsoft needs to gently encourage its developer community to build support for Windows Live into their products.
Microsoft's huge market share means it draws attention from regulatory agencies, as we saw with the bundling of Internet Explorer and Windows Media Player, so going it alone can be dangerous.
"We'll do the same with phones—providing choice as we work to create great end-to-end experiences."
Good thinking. There's probably three things to be learned from the success of the iPhone. Whatever you think of its shortcomings (eg, the lack of cut and paste), the iPhone shows that users are keen for a better user interface, and better integration with their computers and the Internet.
What's the third point? Find out on the next page.
The third point is that mobile phone users are sick and tired of letting carriers dictate the removal of particular handset features to suit their individual strategies. To the best of my knowledge, you get the same iPhone wherever you buy it.
For example, we know that the iPhone's Bluetooth is only for headsets. There's none of the old nonsense about getting Bluetooth file transfer if you buy it from carrier A but not when it comes from carrier B.
Given the widespread support for Bluetooth (especially on notebooks), the iPhone's support could usefully be improved, but that's another matter.
If Microsoft can find a way to make Windows-based phones more attractive to customers, then more power to it. Part of that could include a one-stop shop for buying applications, similar to Apple's App Store. But even if Microsoft wants to maintain its pro-choice stance, it would be helpful to provide a single front end (which might run on PCs or handsets, or be some kind of web-based portal) to get rid of the need to maintain multiple accounts with different online stores or mess with widely varying navigation models.
Ballmer made it very clear that Microsoft is in search for the long haul. "In search, our technology has come a long way in a very short time and it's an area where we'll continue to invest to be a market leader."
I wouldn't want to bet that Google's search model is the last word, but Microsoft needs to be wary of innovating for the wrong reasons. Why has Google been so successful? Because it quickly delivers results that are, by and large, highly relevant to the query.
What's the biggest mistake Microsoft could make in search? Please read on for my opinion.
So when Ballmer says "We'll introduce new approaches that move beyond a white page with 10 blue links to provide customers with a customized view of their world", I really hope he doesn't have a bloated Silverlight page in mind. Search is a waypoint, not a destination.
But if Microsoft does get it right, search traffic could move very quickly in its favour. A single pair of data points doesn't make a strong argument, but I just tried entering the same search terms (a number of words relevant to this article) into Google and Live Search, and the latter took twice as long. Both returned the same, highly relevant page as the first result, and the Live results page was about 10 percent 'lighter' than Google's.
Make no mistake, Microsoft has its eyes on the "rivers of gold" that have flowed out of newspaper classified advertising and into search advertising.
Ballmer also promises that Microsoft "will out-innovate Google in key areas - we're already seeing this in our maps and news search." How well is the company doing? Please post a comment to our forum saying whether you use Google's or Microsoft's maps and news services.
What about applications? Ballmer claims Microsoft leads Google in the enterprise. It's hard to argue with that. But it's still very early days in the shift from the PC-centric model epitomised by Microsoft Office to the cloud-based world demonstrated by Google Docs and the like.
While the corporate world hasn't been quick to embrace Google Docs, it does seem to be gaining traction in the smaller end of the market. Much the same can be said for open source applications such as OpenOffice.org. But I suspect that the 'pay for the server and get the client free' proposition presented by IBM and Zimbra could gain increasing attention if the downturn in the share and property markets spreads into a broader economic downturn.
The good news for Microsoft is that it's probably already sold most of the Office 2007 that is was ever going to, so it's got another couple of years to work on the 'software plus services' vision. But who is to say that Google won't be able to come up with a descendant of Google Docs that will meet the corporate world's requirements in the same timeframe?
Like his predecessor Bill Gates, Ballmer isn't one to shrink from a scrap: "This is a long-term battle [with Google] for our company — and it's one we’ll continue to fight with persistence and tenacity", he wrote.
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Stephen Withers is one of Australia¹s most experienced IT journalists, having begun his career in the days of 8-bit 'microcomputers'. He covers the gamut from gadgets to enterprise systems. In previous lives he has been an academic, a systems programmer, an IT support manager, and an online services manager. Stephen holds an honours degree in Management Sciences, a PhD in Industrial and Business Studies, and is a senior member of the Australian Computer Society.