Both BizWeek & the NYTimes run interviews with Microsoft bigwig Steve Ballmer this week. I’m not sure why there’s a PR push just now. Maybe it’s due to the impending release of the new version of Windows, but that’s still months off. Could be to get the business world’s attention away from the Google guys, I guess.
Anyway, the interviews both have points of interest. The BW piece centers on the high valuations for recent transactions (Google buying YouTube, News Corp. buying MySpace, and FaceBook talking a minimum of $1 billion to sell). Ballmer seems to be saying that these businesses just aren’t worth it, and might be hinting that we’re heading to another dot-com bust. (But he hedges his bets by saying that MS might just pay such high prices, depending on the circumstances.)
The BW interview also addresses questions about Microsoft’s play into consumer electronics, via Xbox and Zune. Several years ago, there was an article in Wired about how Microsoft was rewriting the outsourcing equation by not manufacturing any of the components for the Xbox. The model worked so well, MS was losing about $100 on each Xbox sold. Bang-up job. (With the new Xbox, launch costs led to a $1.26 billion loss in fiscal 2006. Given MS’s cash & equivalents of around $48 billion, this isn’t a huge hit, but it’s still pretty amazing.)
The NYTimes interview focuses a lot more on the new version of Windows, which is the unsexy part of the MS business. The interviewer seems intent on proving that MS won’t be able to sell an operating system after this generation, since we’ll all be downloading bits and pieces via them thar interwebs or something. Ballmer tries to explain gently that this won’t be the case:
Q. Doesn’t that mean that software product cycles are going to be much shorter, months instead of years?
A. Things will change at different paces. There are aspects of our Office Live service, for example, that change every three months, four months, six months. And there are aspects that are still not going to change but every couple of years. The truth of the matter is that some big innovations — and it’s a little like having a baby — can’t happen in under a certain amount of time. And, you know, Google doesn’t change their core search algorithms every month. It’s just not done.
I bring this stuff to your attention for two reasons. First, even though this seems like boring business-stuff, it actually is going to have an impact on how you use a computer on a day-to-day basis in the years ahead. As ‘regular’ readers know, I’m interested in how businesses work, and what their choices indicate about the way they perceive their markets. Ultimately, it helps me understand the way they perceive the end-user, providing me with yet more perspectives on human psyches, and what people think we’ll spend money on.
The second reason for this post is because there’s a Miller’s Crossing moment. It comes in the Times piece, when the interviewer asks how the company’s getting along since Bill Gates announced his departure in 2008.
A. With Bill Gates making the transition out of day-to-day involvement at Microsoft, what is the biggest challenge you have to overcome?
Q. Well, there are sort of two. First, it’s not like Bill’s written every line of code or designed every product or done anything like that for many, many years. But Bill’s been an incredible contributor. If Office 2007 is a great product, give Bill 3 or 5 or 10 percent of the credit. We have to make sure that — whether it’s 5 or 7 or 10 percent — we get those values someplace else. And second, with Bill people have understood that we’re committed to long-term innovation. Bill’s been emblematic of that. We’ve shared that vision all along the way. But I think I have to pick that up. Because people want to know that the buck-stops-here person is committed to continuing to invest and do things.
Maybe it’s because of his shiny dome, but all I could think of was how much Ballmer delivering that answer in the style of Johnny Caspar’s “Leo ain’t runnin’ things!” rant.