Microsoft CEO Steve Ballmer placates partners with loyalty pledge

Microsoft CEO Steve Ballmer's appearances in front of staff, developers and at partner conferences, are legendary. His 'monkey dance' at a Microsoft staff get-together has shown millions of web viewers how energetic and enthusiastic he can be on such occasions. On Wednesday, at Microsoft's Worldwide Partner Conference 2008 in Houston, Ballmer dispensed with the theatricals and instead took a softer tone in trying to reassure a concerned Microsoft partner community.

Microsoft does 95 per cent of its many billions of dollars of business via partner companies. There are 640,000 such companies globally. Representatives of 7,500 of them made the trip to Texas to hear from Ballmer how the company planned to move forward, following Bill Gate's withdrawal, and for which changes they needed to prepare.

Reports of sluggish sales and the poor reputation of Microsoft's new Windows Vista operating system have been causing some disquiet in advance of the conference. Shortly before the conference opened, for example, it was revealed that long-term Microsoft ally Intel had chosen to forgo introducing Vista on its own in-house PCs. The world's largest chip manufacturer is expected to wait for the forthcoming Windows 7. Microsoft now plans to allay some of these concerns with a $300 million marketing campaign. The software giant is also promising all Vista "Ultimate" and "Business" customers worldwide free support.

What was also not clear to partners was what role would remain for them if Microsoft were to offer major office applications directly as online services in the future, rather than locally installed and maintained on customer machines.

The response from the beefy Microsoft CEO in Houston was surprisingly subtle, quoting French author Jean-Baptiste Alphonse Karr, "Plus ça change, plus c'est la même chose" – "the more things change, the more they stay the same". Applied to the software industry, Microsoft's CEO told the 12,000-odd conference guests, this means that its partners remain crucial to Microsoft, even if technology and business models change.

In practice, Microsoft will implement this pledge of loyalty with, for example, its new "Online Services", with which the software group will offer business applications such as Exchange and SharePoint as networked services. Although Microsoft is delivering the services using its own computer centres and takes care of the full billing process itself, partners brokering new business will be entitled to 18 per cent of ongoing sales in the first year and 6 per cent thereafter. "I am certain that incredible opportunities for providing value to customers are opening for our partners in the software-plus-services era," stressed Ballmer.

At the conference in Munich, Lynn-Kristin Thorenz, analyst at Pierre Audoin Consultants (PAC), described Microsoft's entry into the online business software market as "overdue". "Microsoft will now try to prove that it's not just specialists such as Salesforce.com who can do this." However, Thorenz anticipates online software services initially playing a bigger role in the US than in the European market. "European SME's are much more conservative and have problems with the idea that data is located in the network cloud."

(Christoph Dernbach, dpa)

(trk)