Setting the agenda

Microsoft is embarking on the most ambitious release schedule in its history with Windows Vista at the front, as Jonathan Murray, CTO of Microsoft EMEA reveals

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By  Caroline Denslow Published  January 15, 2006

|~|jonMbody1.jpg|~|Microsoft is focused on reducing the barriers of adoption to its products, be it deployment costs or security, claims Murray.|~|The last year has been a challenging time for Microsoft as it faced several issues on different fronts — anti-trust lawsuits, defection of several organisations to open source, delays in new product releases, and security attacks from different malware authors. And 2006 will offer more challenges — the main one being how it will market Windows Vista to its enterprise customers. Microsoft also has to face other important issues, among which are the impact of the firm’s reorganisation, and the barriers to its emerging online services business. Jonathan Murray, chief techn-ology officer of Microsoft Euro pe, Middle East and Africa (EM- EA), details how the company plans to tackle the coming year. Office 12 and Windows Vista are obviously the highlights of 2006 for Microsoft, but as they won’t be released until late 2006, how are you going to sell in the first half of the year? What impact will it have on the firm’s revenue? I think the first thing I would say is that, if you look at our financial performance over the last couple of years, and if you look at our recent quarterly numbers, we find that our financial performance is actually quite healthy. That has been driven without the presence of Office 12 and Vista. Obviously, we are very excited about those products. We are very hopeful that they will add to our revenue stream. Our growth is very solid on the current pipeline of products that we have, and don’t forget that we are a very broad company. Although Office and the client technologies represent a large part of our revenue base, the growth comes from many of the other products that we sell, in particular our server products. And we have just launched our Visual Studio 2005 and our SQL Server 2005 products. Our server products have been a tremendously fast-growing product for us. It’s the number one by unit volume database in the world, far outselling Oracle and DB2. We also generate a lot of revenue from database products. And with the new version of that product just entering the market, we think that that would be very healthy for the business. We’ve launched BizTalk Server 2006, and we’ve been very successful in entering the enterprise applications integration market with the BizTalk product over several years. The new version of Biz/Talk adds significant new value to customers and we expect to see rapid adoption of that product. We have a very healthy product stream, probably the healthiest product stream we’ve had in several years, and Office 12 and Vista are just part of that. How are you preparing customers for the launch of Vista and Office 12? What are you doing to convince a large number of users to make the switch to the new products? The only way in which we do that is by demonstrating to customers that there is enough value in the products — that it is worth them spending money to either buy them the first time — or if they are existing customers, to upgrade from what they have. In our business, we have a very fairly simple approach. We sell licenses for our software products. If we are unable to convince customers to upgrade, if we are unable to sell our products to new customers, then we don’t continue to grow. And so we are very focused as a company in terms of reducing the barriers to adoption for our products. Those barriers today typically surround the deployment costs, the cost of management of the products — particularly for enterprise customers or businesses running our technology — the cost of security and managing a secure environment. All of those issues are things that we are very single-mindedly focused on as a company because, ultimately, those things drive the costs that customers have to consider. We are driving value into the products and delivering new functionalities and new capabilities, which make it easier to use the technology, create more value in the businesses that use technology, and so we think we are in a pretty good pact. This means reducing costs and increasing value. That is a good equation for customers and it is a good equation for Microsoft. Analysts are saying that Windows Vista will be particularly difficult to sell to businesses. Does Microsoft have a clear marketing message for Vista? I think we have a very strong value proposition for all of our clients with Vista, starting with the consumer space, and more importantly the enterprise market. Enterprise customers are interested in things like manageability, security, reliability, predictability, and those are all things in which Vista will excel. And our job, obviously as a software vendor, is to go out, talk to customers and demonstrate the value of those products. If we do that well, customers will adopt the products and if we don’t do that well, they won’t. And that’s our job to do and we think that we have a very strong product line-up to enable us to go have that conversation. I think we’re at the early stages, still some time before we launch the product, and so we are starting to articulate the value in Office 12. Office 12 is being extremely well-received in the press and by the analysts and by the customers who are beta testing it. They have seen probably the most innovative launch of Office for six years. Integration of different products is key to Microsoft’s str- ategy. What are the implications of this cross-dependencies to the performance of your new products? I think enterprises always choose a deployment cycle or a deployment time that is in line with their own business needs, and every business is unique. I think what we focus on is making sure that our products are excellent at integrating into the existing environments the customers have, whether they an a Microsoft environment or a non-Microsoft environment. A good example of that is the adoption of XML as the native file format for Office 12 that provides very rich integration between Office and the back-end business systems that customers are running — far richer than you’ll find in previous versions of Office, far richer than any other Office products that are on the market. So that’s just one example of how we have been really focused on building integration into Office, so that it becomes not just a stand alone Office product, but a set of tools that enable information workers to analyse, to interact and then to collaborate on the sharing and the development of information and knowledge inside an organisation. And we think that Office 12 will be, in order of magnitude, better as a product than previous products that we brought to market in that regard. ||**|||~|jonMbody2.jpg|~|Jonathan Murray points to the strengths of Microsoft, the breadth of its offerings and the ability to focus on both engineering and quality. |~|Is there a danger, though, for users that they will have to pay for features that they won’t need? Customers always have the choices to which products they buy and which products they don’t buy. Customers buy Office because we spend US$6.8billion a year on research and development (R&D) to make sure those products work extremely well together and that generates value for customers, and the reason customers buy the Office product is because of the integration, because they work so well together. So customers are actually pressing us to make sure that it’s even better integrated than we have in the past. As I said, the path that we will be taking with Office 12 is to make sure that not only do the Office products work well together — Excel working with Word, working with PowerPoint, etc. Now, these Office products, as a suite, as a system, will work extremely well with the back-end information systems that co-mpanies run inside their enviro-nment, things like SAP, their Oracle database environment, etc. Microsoft has long been criticised for the poor security features in its operating system and other products. What is Microsoft doing to prove its ability to create secure and reliable products? We have been focused on security for nearly four years now as a major initiative, as a primary focus for the development organisation and for the company as a whole. I think the analyst community has been very positive on the progress that Microsoft has made in security. Some analysts are now saying that, in fact, if you want to buy a secure platform for your business or for your home, the most secure platform you can buy is the Windows platform. That’s a testament to the great work of our development teams, and the focus they have on improving the code quality of building security testing into the development lifecycle. That is a core part of our common system criteria that we use for the release of every product, and then work with partners and customers to ensure that we continue to evolve our ability to deal with the threats that are in the industry. Industry-wide threats are not just Microsoft threats. I think we have made very good progress, there’s still work to be done, but at least in the conversations I have with customers today security is no longer the major issue or the critical issue like it was two or three years ago. Customers recognise that we have made a significant amount of progress. Service Pack 2 of Windows XP is an excellent product. No product is ever totally secure, but the most secure platform on the market today is the Windows platform. Microsoft has reorganised itself this year. How has the re- structuring helped you do yo- ur job as the chief technology officer of the EMEA region? It’s always easier for me to do my job when I’m backed up by product organisations, which are organised in a way that reflect the needs of our customers. And that is ultimately what we have done with the recent reorganisation. We put product divisions together that make sense from the market segment, from the customers that they service. We will start to think about end-to-end user scenarios or user experiences, and again that is one of the things that uniquely differentiate Microsoft. We have the breadth of product line and we have the commitment to ongoing R&D that uniquely positions Microsoft in the industry to be able to sort out and solve the issues that customers face in the end-to-end integration of technology, which is what either consumers want to have or businesses want to have. That’s a very unique value proposition that Microsoft brings to the market. How is the restructuring of Microsoft helping to address issues, such as slow product development cycle? We’re always looking at the pace of product development. But at the end of the day, if I am a Google, I am servicing a different market need than Microsoft is servicing. We have our web presence, we have our services business, we just made a significant new commitment to online services, and you will see some major rapid innovation in that market space from Microsoft, believe me. But when you look at the enterprise space, enterprise customers don’t want rapid product development. Enterprise customers want products to be developed in a way that they are secure, they are reliable, they work and they add value. And that engineering takes time, it takes patience, it takes testing and it takes a thorough focus on quality, and quality doesn’t come cheaply in this industry. It takes time, it takes energy and it takes focus. And that’s what we are focused on as a company, delivering quality, reliable, secure products for our customers. Microsoft has made it clear that its next venture will revolve around online services, which Google currently dominates. What does Microsoft think of the competition? We respect Google as a very aggressive competitor, a very talented company with some interesting ideas, but search is only one element of a use of technology that consumers need, either consumers or businesses. I’ll go back to the strengths of Microsoft, which are the breadth of its offerings and the ability to focus on both engineering and quality, which is required. I used to manager Microsoft’s 50 global accounts, which are our 50 largest global customers, and when you are talking to a company like Siemens — which has 350,000 employees in a 120 countries around the world — then their needs and technology are a little different from somebody on a web site doing a search. Their needs are quality, reliability, security, all of the focuses on quality that we spend our R&D on. Search will be an important element of how people interact with information, and we have some very strong search assets. We have our desktop search product, we have our online MSN search product, and you will see in the Vista time frame a very clear set of innovations from Microsoft, how we are integrating search into the user experience, people that manage and access information in an online world. ||**||

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