Tuesday, November 08, 2005

Ballmer licking his chops?

Yesterday, Steve Ballmer, Microsoft's chief executive officer, unveiled the long awaited SQL Server 2005, Visual Studio 2005 and BizTalk Server during a press event in San Francisco.

In his message to the crowd, Ballmer communicated the key business differences separating Microsoft from the competition—including the growth of the open-source community. During an interview with CNET News.com, Ballmer said that Microsoft’s ambition was to become the “grand consolidator of everything else” and not just to focus on Fortune 500 customer like Oracle and SAP do. Statistics show that Microsoft accounts for less than 1.5 percent of total IT expenditures in large enterprises, something the company wants to change.

Ballmer was blunt: “Well, the question is, how do we get higher price points? We'll have some people in those 'mission critical' applications choosing our enterprise editions. As people move into more mission-critical applications they will naturally choose some of our higher-priced items. We are the high-volume, low-priced guys in every space in which we play--with some small exceptions around open source, if you will.".

With this release Microsoft will offer Express--a stripped-down version of SQL Server--and Visual Studio at a lower price point (but neither offering is available in the US.

It would appear to me that with current and future products, Microsoft is trying to use flexible pricing to capture more of the market. I think at times this makes it more difficult for the consumer; after all, license fees are not the biggest expense for us—it is the operating cost of the software. Microsoft has not been able to bottle their own operational efficiency and extend it beyond Redmond. This is something they try to address with the new features within Visual Studio, but still have a long way to go.


At 6:47 AM, Blogger Tor Stenstad said...

Joe, your question concerning R&D funding is an interesting one with multiple options. I will do a post with my thoughts on this topic. Thank you for your comment.


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