Sean: This is *not* a joke. This is a real interview with Steve
      Ballmer. Enjoy.

Monday 14th October 2002  11:10am

Ballmer on Linux, licensing and .Net

"The truth is, we probably made (.Net) a little harder to understand
 than we should have"

By Mike Ricciuti

Microsoft CEO Steve Ballmer knows what it's like to be in the hot
seat. The company he leads has been under fire for a controversial new
licensing programme that raised prices considerably for some
customers. A high-profile initiative to deliver web services is on the
rocks. And the threat from the open-source Linux operating system is
stronger than ever.

But Ballmer can claim some success, too. Windows XP, the company's
flagship operating system, has sold well. More than 10 million people
have downloaded the latest collection of fixes and updates, called
Service Pack 1, according to Microsoft. The company's Visual
Studio.Net tools have won rave reviews and wide customer
acceptance. And as competitors founder and struggle to make sales,
Microsoft sits on top of a $40bn pile of cash.

Ballmer sat down with silicon.com's US News.com colleagues to discuss
the next steps for .Net, the challenge of Linux, and Microsoft's bold
entry into the enterprise business application market.

Q: How well is .Net being accepted? A few months ago, chairman Bill
   Gates said some parts of .Net, such as .Net My Services, didn't
   take hold as expected.

A: The .Net My Services concept is fine. The business side is still
   being worked on. And we are working on the concepts, too. The truth
   is, we probably made (.Net) a little harder to understand than we
   (should) have. But that has not mattered - we have a lot of
   customers doing projects now, enterprise customers, with .Net. They
   are using Visual Studio.Net, they are using BizTalk Server to build
   important line-of-business applications to connect applications
   inside and outside of a firewall.

Q: How do you define .Net?

A: What is .Net? Well, the benefit of .Net is XML (Extensible Markup
   Language) it's all about connection. We take the XML connection and we
   extend it across both client and server - while other guys are only
   server-focused. It's about connecting people to people, people to
   information, businesses to businesses, businesses to information, and
   so on. That is the benefit. What is .Net itself? It's a set of code we
   ship that users, developers and IT people use to help build
   applications that process XML information.

Q: Why do you think has there been confusion in understanding that
   message?

A: It turns out we shipped some products that didn't have .Net as we
   know it, the .Net framework in them, and that confused
   things. Originally, internally we were saying .Net is kind of like
   XML, and we were using it wherever we were talking about XML
   products, instead of being more precise. At the end of the day, the
   IT people and the developers get it quite well.

Q: Where would you like to be with .Net plans in six to 12 months?

A: It's getting to be conventional wisdom that the future of IT is
   around XML. But I'd like conventional wisdom to be that XML brings
   benefits today, and the best way to participate in the XML
   revolution - in terms of user benefits and productivity - is Visual
   Studio.Net. I'd like that to be the general perception. And part of
   that means we are going to have a lot more projects using
   Windows.Net Server and Visual Studio.Net.

Q: A Yankee Group study says 40 per cent of corporations surveyed were
   looking at operating system alternatives such as Linux, in part
   because of the Microsoft licensing programme. What do you say to
   that, and what do you hear from your own customers?

A: I've heard frustration with the way we managed the transition to
   our new licensing (program). Some customers are very happy because
   they are paying less than they used to, some customers are not very
   happy because they are going to pay more than they used
   to. Probably, the most customers are not in either one of those
   categories. They didn't like it at first - we worked with them, we
   worked on their special needs. But I think they are OK with where
   they are.

   The term open source - it's a philosophy. People don't look at open
   source they look at Linux. That's really all it comes down
   to. People say 'What about Linux, versus your stuff?' And people
   are going to look at whether we double our prices or take them
   down. If we changed our prices, people are still going to look at
   alternatives.

   Second thing, our product is a more complete product. We have a
   built-in application server that's well integrated - there is no
   such comparable notion in the Linux server. We have a directory
   server built in - there is no such comparable thing in Linux. The
   Linux client hardly runs any applications, except a bunch of
   shareware stuff that's not very good.

   I think it's not complete, it's a poor value proposition versus
   Windows. It is a clone of an operating system. There has yet to be
   any innovation, new features or new capabilities out of the Linux
   platform. First they cloned Unix, and there are people working on
   cloning some of our stuff. But it's just a cloning operating
   system. That doesn't mean we can stand still - we have to push
   along. But I don't think anyone should expect anything innovative
   coming out of that world. There's no data to support that.

   People highlight, 'OK guys - where's the source code?' I think most
   people don't want their employees using the source code every
   day. Really, they don't. That's a distraction from real work. But a
   lot of people do have a real need to see source code from time to
   time for debugging and for security purposes. We've have initiated
   a shared source programme. We're learning, if you will, from the
   Linux world. We're not above getting smarter every day. If you are
   a large account, for example, you can get access to source code.

   If you take a look at the Linux world, there has been some
   interesting things going on in the use of community in support
   tools. There are many more communities in the Windows world than in
   the Linux world. I don't think we have mobilised that community as
   effectively as the Linux community has. We have some in Visual
   Studio, and you will see more and more of that.

   In the areas where we think they have a real lead... we're not
   going to be cheaper to acquire. But we have lower total cost, more
   complete, more innovative, and we are going to share source as
   broadly as we can, but not as broadly as they do. And we are going
   to have as or more a community as Linux does. I think if you put
   all of that together, that's our competitive proposition.

   But people are going to look at Linux, whether our stuff costs $5,
   $50 or $100. People are going to look at it. So we have to work
   that value proposition every day.


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