Then that Finn guy does this: Microsoft chief sends wake-up call to staff
By Richard Waters in San Francisco
Published: June 4 2003 20:44 | Last Updated: June 4 2003 20:44
Steve Ballmer (pictured), chief executive officer of Microsoft, issued a powerful wake-up call on Wednesday, warning that disaffection with technology spending in general, questions about the next wave of innovation and weaknesses in customer relations posed "significant challenges" to the software company's future.
In an internal memo to staff, Mr Ballmer also listed Linux, along with the open-source software movement it represents, as the biggest threat to Microsoft's long-term well-being.
Steve Ballmer, in his diagnosis of what ails the technology industry, does not dwell on weak economic growth
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"We must avoid complacency. We need to challenge old habits and seriously rethink business-as-usual," he wrote.
The rallying call comes even though Microsoft has ridden out the slump in technology spending better than most. While its shares have fallen nearly 60 per cent from the peak, its revenues have continued to grow while earnings in the fiscal year that ends this month are set to top the boom year of 2000.
Yet Mr Ballmer warned that, while he remained optimistic about the company's growth potential, it faced "significant challenges in the near and mid term."
Linux and other open-source programs, which many customers see as "good enough" at a time when they question the value of spending on technology, "present a competitive challenge for us and for our entire industry, and they require our concentrated focus and attention," he said.
The sweeping nature of the memo echoes other landmark communications that Bill Gates, the company's chairman, has sent to staff in the past. These include his warning in 1995 of the threat to Microsoft posed by the rise of the internet, and his more recent "trustworthy computing" initiative to make the company's software more reliabe and secure.
In an interview, Mr Ballmer said of the memo: "It is a bit of a wake-up call in places." However, he added that Microsoft was still producing innovative software, and he promised that its next generation of products, codenamed Longhorn, would make a bigger splash than the original release of the Windows operating system.
Chief among the issues singled out by the Microsoft CEO were "concerns about Microsoft's attention to customers." Last year the company angered many corporate customers with new licensing terms that had the effect of raising prices. Calling this backlash "our hard-learned lesson," Mr Ballmer promised greater consistency in the company's business dealings, as well as a renewed effort to improve product quality and communication with customers.
The timing of Mr Ballmer's warning about Microsoft's short-term challenges is likely to raise eyebrows among some investors, given that he sold around $1bn worth of his personal holding in the company two weeks ago. At the time, he said: "I remain excited about the potential for our technology to change people's lives, and I remain as committed to Microsoft as ever." |
