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March 16, 2006 8:32 pm

Microsoft hits at IBM ‘top down’ approach

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Steve Ballmer, Microsoft’s chief executive, used a business forum in New York to launch a new marketing assault on the business software market and contrast Microsoft’s “people-ready” approach with that of rival IBM.

Mr Ballmer contrasted what he characterised as IBM’s “top down” approach to its business customers built around its expanding services and consultancy operations, with Microsoft’s strategy of delivering software tools to employees, enabling them to become more productive.

IBM is our main competitor, but we are very different,” the typically outspoken Mr Ballmer, said adding that the differences between the two companies’ approach to business customers are highlighted in their current advertising campaigns.

“IBM will say ‘we have a phenomenal team of consultants and if you hire us we will tell you what to do,’” Mr Ballmer said, “we seek to empower every employee and that to us is a much bigger deal.”

Both Mr Ballmer and Bill Gates, Microsoft’s chairman, have long described IBM as Microsoft’s biggest competitor, but Mr Ballmer’s comments on Thursday, timed to coincide with the 20th anniversary of Microsoft’s stock market flotation, represented a far more explicit attack on the New York-based IT giant and its marketing strategy under Sam Palmisano, chief executive.

“There are still some people who think that IBM is a technology company rather than a services and consulting company,” Mr Ballmer said pointedly in a press conference after his keynote speech to business leaders attending the Executive Council of New York’s executive business forum which focused on what he described as Microsoft’s ‘people-ready business vision.’

Other Microsoft executives including Jeff Raikes, president of Microsoft’s business division, pressed the distinction noting, “Microsoft is a software company, not an outsourcing company....

“That is not to say people should not use consultants, but innovation has to be home grown. If you are going to rely on someone else to do your innovation then you are really giving the business away.”

Mr Ballmer added, “People, armed with the right software are the key to driving business success. We want to empower business employees,” he said noting that Microsoft will spend $500m over the next year promoting its ‘people-ready’ marketing message.

The Microsoft chief executive also highlighted the ‘unprecedented’ collection of new software tools – many aimed at the business sector – that Microsoft will bring to the market over the next year. Among these software products are the new Windows Vista operating system, the 2007 Microsoft Office productivity suite, Windows Mobile software and the next version of Microsoft Exchange Server. Microsoft already derives two-thirds of it’s revenues from business customers.

“Twenty years ago this week, Microsoft - armed with our belief in the power of software to change the world - was listed as a publicly traded company,” he said. “People-ready is a natural extension of our founding vision of empowering people through software.

“Today we take this to the next level by showing how these tools now work together in new ways to enhance innovation and drive greater value for business.

“Fuelling our vision is a series of software solutions resulting from a $20bn R&D investment over the past three years that is producing new innovation in a range of categories," he said. "From business intelligence to the mobile work force, from collaboration to communications, and from CRM to enterprise search, the opportunity for software to deliver even greater customer value is limitless."

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