Ballmer security pitch leaves skeptics unswayed

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Or not.

Put yourself in charge of business strategy at Microsoft for a moment. Unaccustomed position, I know.

Now, on the home market, you have your brand name and you know that ease of use is by far the most important factor. You can get your $50 given the usual current price point for pc's though the very low end market is a concern.
Your competition is trailing you both in ease of use and in the features that are the main reasons for sales. As long as you can keep developers interested, you're set.

Then you look at businesses, and that's more complicated. You've created a niche for a cheap, not very capable competitor, and that niche is being filled by a type of software that's philosophically abhorrent to you, but has cachet for a number of professionals.

Luckily for you, many buyers are not professionals. Means momentum will carry you a certain distance. That plus the upfront cost of a conversion.
You have to go in two different directions at once. The first is the growing elaboration of what you're doing, including linking in Office ever more closely to other products. You want to be able to provide a turnkey solution that works perfectly. This will appeal to small and mediium businesses, but you'll have to put off taking over the larger ones entirely.
Here's where acquisitions will help, buying companies that already have a connection with large businesses.

That's the fun part, and everything you're doing to increase value will help justify your pricing.

But now you have to consider the lower end, where some companies are reducing functionality to save money. Here the low cost alternatives could be damaging.

First, you have to persuade as many companies as possible that adding capabilities is worthwhile.

Then, you're going to have to come out with cheap, limited versions of your own software to compete in the cheap niche. That one is difficult, because you have to include enough to make the purchase worthwhile, but leave out enough that only people in the limited functionality market will be interested. And you're going to have to add enough functionality that just sticking with older versions of Windows seems a loss.

Writing off the cheap market isn't a good idea, because it lets in competition, and you know thoroughly the strategy of starting from a presence in a company and expanding from there.

It's destroying Linux's cheap niche without innovating (belongs to more expensive software) and without producing a replacement for your more expensive products, while still providing a reason to upgrade that you worry about.

Security is perfect for you. A reason for upgrading with no reference to functionality. But that gift from your opposition won't last forever, particularly since you have to do an effective job to meet criticisms.


So, cometition in the software market? No. Threading a needle with a cheaper version of Windows? Yes.
No wonder Microsoft is putting off making that effort. There are a lot more interesting and profitable things to worry about.

Posted by: Anton Philidor   Posted on: 10/25/04 You are currently: a Guest | Members login | Terms of Use

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