One of the hilights of a Microsoft VC Summit is always Steve Ballmer’s intervention and the following Q&A. I have already referred to an interesting part of his talk regarding acquisitions, but most interesting learning I got from the session is Ballmer’s clear determination to go after Google and its position of search and online advertising leader. Microsoft has the might, and the resources, to take a long term view and give Google a run for its money (and they evolve as an organization as Scoble just posted). The consumer can only benefit from such a competition.
Here are a few more tidbits he covered:
- VC investment levels up – including in early stage since 2005, with resource shortages in certain places (especially where Google has a development center)
- Consolidation in the industry is happening, with M&A being the primary exit option
- Consumer markets are driving enterprise expectations, as applications and services available in the cloud to consumers lead to enterprise demands
- Open source is leading in the enterprise through pragmatism: it is about value delivered, reliability and cost savings. There is still an issue of IP protection, and what will happen when a company selling open source software is sued for a patent infringement.
- Service oriented software is very difficult to balance between extensibility/customization that you get inside the firewall, and the cost savings that you get through a standard platform in the cloud.
- Venture investment correlates to Microsoft’s business (per the blurry picture on the right that shows that mapping)
- Phones are going from dumb to smart
- Web 2.0 = Intelligence in all devices, and communication between all devices.
- Still a lot of issues with open source companies, or companies relying on open source stacks that they modify without paying a lot of attention to contribution obligations related to the license.
- Innovation investments targeted by Microsoft:
- Windows: The Live Software Ecosystem
- Software Development: Up a Semantic Level – as opposed to using low level declarative programming
- Delegating IT
- In Control: Professionally and Personally
- Rewiring the Economy: moving away from paperwork through enterprise and extrarprise workflows
- Redefining Personal Entertainment & Creativity
Following the presentation, a brief Q&A took place with the audience:
- On the issue of speed of execution and delivery vs. Google (“unnamed company down the road”), Ballmer states that companies can’t deliver fundamental innovation in 6 months chunks and with loose coordination. At the same time, he jokes about Microsoft’s tendencies of having super long sales cycles on products and services.
- On the Microsoft stock: “I would not sell now baby” .
- How does Microsoft set the price on technology acquisitions, since they seem to value business less than technology ?
That valuation is often based on what it is worth Microsoft to have, as opposed to pure financial metrics, etc.
- What can VCs invest in if Google or Microsoft end up building all major pieces of Internet services by themselves ?
Microsoft will be happy to work with VCs to indicate what is strategic, especially as Microsoft builds a competitive monetization platform to AdSense, and they will go at it with “whatever it takes, for however long it takes”.
- Which deal/acquisition do you wish you had done ?
Steve wishes he had gone ahead with the SAP acquisition/merger – but does not go through the reasons why.
- Can you comment on the spin-out of Wallop from Microsoft, and SNs in general.
Social Networks are interesting, and important, but it is not clear which ones will survive in the long run ? Microsoft will deliver SN functionality in their products for the enterprise, but Ballmer does not seem that excited about owning one of these sites.
- What is the solution to avoid the proliferation of malware ?
Windows Vista, which has anti-virus/malware protection at its core. Less than 50% of PCs have a form of anti-malware enabled.