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Steve Ballmer's letter to Microsoft Employees

From CNN:

http://www.fortune.com/fortune/technology/articles/0,15114,661919,00.html?cnn=yes

Pretty long memo (that I'm sure some members on this list have already seen) but very interesting nonetheless. Even a nod or two towards Linux, though sorry for those MS employees on the list that you all are taking a hit in your benefits.

CF
Friday, July 09, 2004

"With Windows Server 2003, we can compete for every commercial workload running on Linux or UNIX today — even mainframes and high-performance computing"

I don't think so.  While 2k3 is another incremental improvement, until they address security and to a lesser extent reliablity, the workloads will stay put.  Plus a lot of people remember Microsoft saying NT was better than Unix when  in fact NT was crap.  What makes Microsoft believable this time?

The lowend Unix load, the load that could migrate to intel hardware running Windows is now lost as it will go Lintel because Linux is essentially Unix so the investment in admin skills and the shell scripts they have written are no lost.  Microsoft has got to be bitter about this.

will
Saturday, July 10, 2004

I love this memo. It has some real classics in it.

The best I think is this part:

> One aspect of our cost-efficacy efforts that has gotten a lot of focus internally is the recent changes to employee benefits and streamlined facility policies. ... We considered and rejected more substantial changes based on employee input, the value we know benefits have to employees, the importance of maintaining employee productivity, and preserving our great culture. Even with the changes we made, our cost per employee will still rise in FY05 by 6%, and most of that is a significant rise in per employee benefit cost. For example, per-employee healthcare costs — the largest single component of U.S. benefits — skyrocketed 54% from FY01 to FY05, and for FY05, the cost of medical benefits will rise by more than $880 per employee. Conversely, the change in ESPP discount (15% to 10%) will result in a savings of $370 per employee.
>Some employees have asked why we can't use some of our $56 billion in cash to avoid making the benefits changes. Using the cash reduces profits, which reduces the stock price. The cash is shareholders' money, so we need to either invest in new opportunities or return it to them.

To reiterate:

> Some employees have asked why we can't use some of our $56 billion in cash to avoid making the benefits changes.

heh heh! We might run out of that 56 billion at any moment now, so we gotta cut your menefits before its too late you filthy  greedy bastards. Oh and wouldja mind working some more hours for free?

> Managers will reward superior performers with ... Gold Star Awards, which are special one-time awards

Omigawd! Can it be? GOLD STAR AWARDS! F'in A man, I can't wait to get a job at MS!

Oh wait did you say that google is hiring smart people who get things done and they have really good benefits. Hmm...

But wait! One final word from our buddy Balmer, who in case you are wondering, will NOT be reducing his own benefit package in this deal:

> To deliver effective value propositions, we are enhancing the marketing and engineering partnership from the beginning of the product-development cycle, to create a shared vision and accountability for the value propositions we'll take to market.

So, we gotta deliver effective value proposition! That's the whole damn problem. Let's fix this and maybe we can comp you that $330 for your heath care.

Dennis Atkins
Saturday, July 10, 2004

Balmer: Microsoft is losing it.

"Windows with .NET surpassed Java in number of new projects. Xbox is approaching PlayStation's share in many markets, and Office 2003 is being deployed faster since launch than Office XP. "

Examine each of these points and ask yourself "what the heck is that supposed to mean?"

Such a long, long letter.  So little to say.

"However, reading some of your comments in the MS Poll and in mail I have received, there are core issues that are not as clear to you as I would like."

I guess I'm not the only one thinkint WTF?

A whole lot of nuthin'

hoser
Saturday, July 10, 2004

"Such a long, long letter.  So little to say."

Good point. I bet there is an inverse correlation between letter length and whether it's good news from the head office.

The letter you want is:

"Congratulations team! Because we have exceeded all expectations, bonuses for everyone!"

Dennis Atkins
Saturday, July 10, 2004

Microsoft is suffering because they haven't created much that is new and useful in about 8 years, with the possible exception of .NET.

They've been riding the monopoly train, and that monopoly is being threatened.  At the same time, their desperation to hold on to that monopoly has led them to restrict themselves from major revenue-producing opportunities.

For example, they deliberately don't produce Office or Visual Studio for Linux/Unix, because that might hurt the Windows OS monopoly.  They limit the ability of ISVs to produce useful software, by keeping some APIs undocumented to preserve the advantage for their own developers.  Their dependence on the Windows monopoly creates too many internal conflicts of interest, and now that the monopoly is being threatened they don't know how to compete.

T. Norman
Saturday, July 10, 2004

Yeah I agree but not on the Office for Linux thing. Corel released WordPerfect for Linux last year and it sold a grand total of 63 copies. Microsoft is well aware of these numbers and realizes only a fool would chase that market.

Dennis Atkins
Saturday, July 10, 2004

"Corel released WordPerfect for Linux last year and it sold a grand total of 63 copies." - Dennis Atkins

If anybody at MS thinks there's any correlation between how well WP does on Linux and how well Office would do, they should be fired immediately. It's hard enough justifying buying WP on its native platform, let alone on Linux.

Office would sell well for Linux for precisely the same reason that WP sold badly -- because Office is the industry standard.

zahid
Saturday, July 10, 2004

Word Perfect for Linux came out years ago. Scarcely anybody bought it or bought into it though.

Stephen Jones
Saturday, July 10, 2004

"Steve Ballmer's letter"

Now hands up all you guys who think it is actually him who wrote it.

A whole *department* has been working on this for at least a month...

Janonymous
Saturday, July 10, 2004

I got a gold star once when I was in Kindergarten - I feel so special.

FG
Saturday, July 10, 2004

> To deliver effective value propositions, we are enhancing
> the marketing and engineering partnership from the
> beginning of the product-development cycle, to create a
> shared vision and accountability for the value
> propositions we'll take to market.

Anybody care to count the buzzwords in this sentence?

Joe
Saturday, July 10, 2004

"Corel released WordPerfect for Linux last year and it sold a grand total of 63 copies."

And WordPerfect for Windows sells like what, 64 copies?  Big difference.

T. Norman
Saturday, July 10, 2004

Funny you mention that. We got really drunk last night playing "buzzword quarters" with that memo. man, I have a killer headache.

Dennis Atkins
Saturday, July 10, 2004

I hope you are drunk or joking Norman ...

Sales have slowed but in a typical year, Corel sells approximately 250,000 copies of WordPerfect at the retail level. Total installed base is said to be just under ten million and nearly all of these are paying customers.

On the other side of the fence, Microsoft has estimated that its Office suite has 300 million users worldwide, covering purchases across all years. That is more than the population of the US and is extremely unlikely to represent the actual number of paid licenses. In any case, WordPerfect has 4% of the market and Office 94%, with 2% going to free alternatives like Open Office and others. (You can't give this stuff away folks.)

Anyway, 30 times 64 is 1,920, which is how many copies of MS Office would sell on the Linux platform if it would be made available. This is not enough to justify the cost of porting and marketing it - at least 5 million copies will need to be sold to make it worthwhile.

Arguments contesting this will have to account for a 2500 *times* greater number of copies sold than any reasonable economic analysis would indicate.

Dennis Atkins
Saturday, July 10, 2004

I apologize, my numbers were out of date. More recent figures are:

> While WordPerfect's market share in the general population ranges from 15 to 20 per cent, in the government sector it ranges from 40 to 60 per cent, depending on the level of government. In the legal sector, WordPerfect's market share is 59 per cent.

So, let's ignore the sectors where Corel is the leading application and focus on its weakest segment, the home users, who obviously take what they get that's bundled with their computer. In this market, Microsoft could hope at best to sell 64*5 = 320 copies of Office for Linux. This does not make for a compelling busines case for doing the port.

Dennis Atkins
Saturday, July 10, 2004

Extrapolating from WordPerfect to MS Office on Linux is totally off the mark.

More accurate projections for MS Office should be based on Linux's market share, not WordPerfect on Linux's market share.

If creating MS Office for Linux expands the target market for MS Office by even 1% (Linux now has >1% market share), that's 3 million new users of MS Office.

T. Norman
Saturday, July 10, 2004

In any case you can already run MS Office in Linux thanks to CodeWeavers' version of Wine.

Which, by the way, makes me wonder if it is true about those secret Windows APIs, how come MS Office doesn't use them?

Andres
Saturday, July 10, 2004

Norman you've never run a successful business have you?

We'll split our estimates of success and I'll bet you $30,000 that MS doesn't sell even 10,000 full price copies of Office the firt year it's released. This has to be actual copies of Office that are sold.

The fact is the only reason he Linux market wants Office ported is so then can download it off Kazaa, like they did with WordPerfect, which, despite its 64 sales, is installed on the desktops of every Linux user I know.

Dennis Atkins
Saturday, July 10, 2004

"While WordPerfect's market share in the general population ranges from 15 to 20 per cent, in the government sector it ranges from 40 to 60 per cent, depending on the level of government. In the legal sector, WordPerfect's market share is 59 per cent."

Dennis, what's the cite for this? I'm not saying I don't believe you - I just need the cite.

Philo

Philo
Saturday, July 10, 2004

Try this link:

http://www.google.com/search?q="While+WordPerfect's+market+share+in+the+general+population+ranges+from+15+to+20+per+cent,+in+the+government+sector"

Dennis Atkins
Saturday, July 10, 2004

That link is hosed. Try this:

http://www.findarticles.com/p/articles/mi_m0CGC/is_6_27/ai_72110319

Dennis Atkins
Saturday, July 10, 2004

Thanks!

Philo

Philo
Saturday, July 10, 2004

"Norman you've never run a successful business have you?"

What does that have to do with anything? Because you have run a successful business it means you have the right to distort statistics in irrelevant ways? C'mon, using the failure of Wordperfect on Linux to predict the sales of MS Office on Linux?

Anyway, that's beside the point.  Even if MS expected to sell a few million copies of Office for Linux, they still wouldn't port it because it would make Linux more attractive and thereby contribute to undermining the Windows monopoly.

They now have so many competing interests, that growth in one part of the company becomes a setback for another part.  Develop more products for Unix, Linux, and Mac? That hurts the Windows OS.  Make Windows more attractive and easier to develop for? That's more competition for their own applications.  Make Windows more attractive as a server by increasing interoperability?  That hurts the Windows monopoly.

T. Norman
Saturday, July 10, 2004

"they still wouldn't port it because it would make Linux more attractive and thereby contribute to undermining the Windows monopoly"

This theory, if true, would fail to explain why they ported Office to OS X. Didn't that make OS X more attractive and thereby contribute to undermining the Windows monopoly? Why yes it did. So, since they did it any way it seems they are not so concerned about that.

Now regarding marketshare, I keep hearing that there are for more Linux users than OS X users. So why then does Microsoft find it cost effective to port to OS X but not to Linux?

Dennis Atkins
Saturday, July 10, 2004

Oh and wvhat the point about running a profitable business has to do with anything is that mefore investing in some new product development, you make a business case for doing so. The analysis I gave regarding WordPerfect is exactly the sort of thing that Microsoft is looking at. Name one market for which Microsoft was the innovator? There is none. Not one. Xbox was the first video console? Word the first text editor? DOS the first operating system? Windows the first windowing OS? IE the firs browser? No, Microsoft consistently waits for other people to do its market research and then clobbers them with a late-coming me-too approach with substandard quality.

Also by the way, Microsoft and WalMart's approaches in these matters shoot to hell all the crackpot marketing theries espoused in garbage books written by kooks like "The 22 Immutable Laws of Marketing" by marketing crankxs Ries and Trout.

Dennis Atkins
Saturday, July 10, 2004

I presume Dennis is attacking the "first mover" myth.

It's worth looking at those places where MS doesn't hold sway. Graphics (Adobe and Corel), AutoCad (Autodesk), DTP (Adobe and Quark), Music creation (Sonic Foundry?), and no doubt a lot of others.

It might be truer to say that first mover will lose out to the "let the others do the market research", only if the first movers foul up.

For Word Processing both WordStar and WordPerfect  dug their own graves (particularly the first). Excel only got somewhere because Lotus 123 didn't do their homework and find out what people used spreadsheets for, and the list could go on. And DOS was the first OS for the PC, and Windows was the first GUI for the Intel platform.

Stephen Jones
Sunday, July 11, 2004

CP/M predates DOS as do a number of others. Os2 was usable and robust far before Windows was on that platform. But limiting it to platforms is a bit of a disingenuous argument anyway, it's like saying that Neil Armstrong wasn't hte first to go to the moon on a space shuttle.

WordPerfect got hosed when WP Corp. wouldn't stop writing it in assembly language and got behind the feature curve, stalled out on a new release.

Corel has a great portfolio but their current problem is that their pricing is wrong. They are competing on price against Microsoft and Adobe. Their graphics suite is better than that of Adobes and WordPerfect kicks Word's ass. Corel should charge at least twenty times more for the products (You can get Corel Office Suite brand new in a box for $14 for cripes sake) and they'd sell more copies and be profitable. But their upper management just doesn't believe in their products, thinks stupidly that office productivity software is some sort of commodity product and has chosen to try to undersell microsoft. That strategy is not working very well.

Dennis Atkins
Sunday, July 11, 2004

Er, whenever the low price goads me into trying some Corel package it turns out to be crap. Poor interface,  crashes often, poor consistency and integration, features strangely dispersed among the all-too-many programs that Corel bought up over the years.

After trying to do some image manipulation with the graphics programs in Corel Graphics Suite 11 I went back to Adobe Photoshop Elements 2 which is far superior. Ditto SmartDraw for drawing. There's a reason why Corel can't charge real money for their stuff... it's not worth it. And their "updates" aren't, they just increment the version number.

Chris Nahr
Sunday, July 11, 2004

Feh, the Corel stuff works for me. I vastly prefer Painter over Photoshop. WordPerfect seems more stable and is laid out more intuitively so I don't have to go burrowing around for 5 hours trying to figure out how to center text or what have you. Also, no more lost weekends trying to get the darn paragraphs to stop reformatting themselve sand all teh images shifting around. Stuff stays where you put it in WP and the documents never corrupt themselves just by existing. Now you can't script in VBA that is the downfailing for many, true enough.

Dennis Atkins
Sunday, July 11, 2004

Corel Draw is the best overall graphics suite around. The point to remember though is that the flagship product is Draw the vector graphics program. Photoshop is better than Photopaint, but the Corel combination is better.

In general with graphic suites the learning curve is such that people end up confusing what they don't know with poor quality.

Stephen Jones
Sunday, July 11, 2004

Dear Dennis,
                  Are you sure you can't script in VBA? You can in Corel Draw.

Stephen Jones
Sunday, July 11, 2004

"This theory, if true, would fail to explain why they ported Office to OS X."

They figured that the profits gained by selling more copies of Office outweigh the profits lost by selling fewer copies of Windows, because Mac owners aren't very likely to dump their Macs to get a Windows machine, given the different hardware and user culture.  Still, it probably did have at least a small effect of making Windows less attractive.

That's the reason it becomes so difficult for them to grow now.  Growth in one area often stifles growth in another area.  They have to choose between NOT growing something vs. growing it anyway and dealing with the consequences to other products.

T. Norman
Sunday, July 11, 2004

Really? I had no idea. I thought VBA was only for MS stuff.

Dennis Atkins
Sunday, July 11, 2004

MSFT has jumped the shark.

Their whole hiring and development scheme is based on the development staff being the pampered pets of the company.

Work for MSFT get rich in five years, meanwhile every possible need is taken care of.

Now they are going to streamline "facilities". That means that if your computer breaks, you can wait a week to get it fixed, just like if you had married your college sweetheart and taken an AS-400 programming job with the 11th National Bank of Bugtussle.

When a company with 50% gross margins starts economizing, the end is near.

dot for this one
Sunday, July 11, 2004

"When a company with 50% gross margins starts economizing, the end is near."

I'm with ya on that one. But like all behemouths they got a lot of momentum and can keep coasting for decades on their past laurels.

Tony Chang
Sunday, July 11, 2004

Dennis,

couple of things...

1.) Office is present for OSX  because MSFt doesn't percive OSX to be a threat..not now or in the near future. That is not true for Linux. Another reason is that it is hard to make people pay for applications when the underlying OS itself is free, which is not the case with OSX.

2.) I would love to hear what you think are good books in the buisness and computers area.

Cheers,
Prakash

Prakash S
Sunday, July 11, 2004

So here's the thing - we released new versions of just about every product on the shelf last year, and lots of them have some significant new functionality.

I've seen a lot of interest in the stuff we've got, but also a lot of people completely unaware that it exists.

So on the one hand, I'm in this up to my elbows and hyperaware of the solutions possible. On the other hand, many of you haven't looked at, for example, Office as a dev platform since 2000, and think we're adrift.

Somewhere in the middle lies the truth.

Philo

Philo
Sunday, July 11, 2004

"good books in the buisness and computers area"

Hi Prakash. On computers I've said a lot before and don't have much more to say really. Joel's list is pretty good except I don't recommend the PP book.

I think I've hit my limit on posting, went and overdid it this weekend when I should have mowed the lawn and done some trimming.

I do have advice but I'll reduce it down.

Books on business are sometimes ok but there is no book that will tell you how to run a business any more than there is a mook that will tell you how to create a killer product, and no book tells you how to go about winning a nobel prize.

Advise from relatives who are running successful businesses is very useful. It might be a fabric shop or a deli, but if it is a place the customers love, you would do well to talk with them or even observe them. Helping your parents or uncles out over the summer in their gas station or ambulance service I recommend. Observe what they do well and not so well. Businesses you like - what is so good about them? Why do you like them more than others? Figure out the reason and copy it.

Americans do business the best. Yes, there are crappy businesses but many times when travelling overseas I have found the one restaurant or tour guide or whatever that is doing a great job and not trying to cheat their customers or produce crap quality stuff and those are always the businesses run by ex-pat americans or by locals who grew up in the states.

Don't cheat the customers.
Don't skimp on quality.
Work at least 16 hours a day 7 days a week the first 15 years.
Don't be afraid to bet on yourself. That means risk yor own money to get your business going.

Don't get into business if all you want is to have power over others or be rich. That's not enough motivation. You have to want to make a difference and you have to want to work for yourself and take orders from no one other than your customers, which can be rather challenging. You must not put yourself above others. You must be a humble servant to your customers. Never lie to them, never exaggerate, keep them informed, keep open books, and always deliver on time.

Dennis Atkins
Sunday, July 11, 2004

Actually, Dennis, Microsoft discontinued Office for the Mac after 6.0, despite it being one of their most profitable product lines, in a move that was widely considered an attempt to force migrations to Windows.

Office only reappeared on the Mac around the time Microsoft's antitrust woes began in earnest.  Even now it lacks certain key features (VBA development and Access), and Microsoft's answer to why it won't sell those products to Mac users centre around the idea that people should do those tasks on Windows.

If you want to use examples that undermine your point, feel free.  Otherwise it would help to know a bit about the product in question.

Rodger Donaldson
Sunday, July 11, 2004

Rodger,

I've got Office X installed on my Mac. It has VB built in to it as far as I can tell - there's an option to install it and all that stuff. On top of that you can also, if you chose, interface with RealBasic, or so I am told by RB mavens. On top of that, it has first class support for AppleScript, which is what I use to connect to my MySQL database. I don't know if you are aware of this, but MySQL is considered a lot better product than Access.

So you see, in every way, Office for OS X is a much superior product to Office for XP.

But you would know that if you work on both platforms every day wouldn't you.

Dennis Atkins
Monday, July 12, 2004

"but MySQL is considered a lot better product than Access."

?

In all sincerity, this is the first time I have *ever* heard this.

Philo

Philo
Monday, July 12, 2004

"In all sincerity, this is the first time I have *ever* heard this. "

well I second it Philo.  The number of ASP-Access apps that I've heard are migrating to LAMP is amazing, although maybe the LAMP thing is a side effectof a strong linux following where I work.

In the MS Office context, MS Access frontend is pretty neat. Can't think of anything closer to usable.  But JET vs <insert free database of choice here> is not so hot.

i like i
Monday, July 12, 2004

""but MySQL is considered a lot better product than Access."
In all sincerity, this is the first time I have *ever* heard this. "

As a back end for a busy ebforum? Absolutely. As a 'create-a -little-application' tool? Absolutely not.

My general feeling on a lot of MS software is that they are generally OK, but give some end users a little too much confidence in their abilities to create software.

Ask anybody who's working in a corparate IT department about helping out users with completly denormalized datamodels in MS Access and you will hear a lot of horror stories about users creating their own problems.

I'm all for empowering the end user, but MS Access is a very dangerous tool in the wrong hands, seen from a corporate point of view.

Say cheese
Monday, July 12, 2004

"lots of them have some significant new functionality"

Did any of them improve in any way OTHER than featuritis

.net, the equivalent of MS Bob.
Monday, July 12, 2004

Uh, so what you're really saying is that MySQL is better than 1/3 of Access. Say Cheese says it best - "if you leave out over half the feature set, free databases really kick its ass"

That's probably why I never hear people say MySQL is better than Access - because it's not.

Just out of curiosity - are the groups replacing Access apps going out and pulling an app at a time to rewrite it properly? Or are they just pulling Access from the desktops wholesale?

Philo

Philo
Monday, July 12, 2004

> Another reason is that it is hard to make people pay for > applications when the underlying OS itself is free, which
> is not the case with OSX

Not so sure on this...people run IBM WebSphere and BEA WebLogic on Linux servers, and those aren't exactly cheap...  May be true in the home market, though.

As for MySQL vs MS Access...they are simply different products!  I wouldn't dream of giving any non-DBA person MySQL, but there's a lot of people out there who can whip up at least a functional prototype of something in Access.  Then again, the 65,000 record limit would probably stop me from using Access as the backend for any serious e-business app.

I'm glad Rodger pointed out the availability of Office on Mac in terms of anti-trust lawsuits...I was wondering about that myself.  If the only reason MS ported it was to get the lawyers off their backs, then it makes more sense to port it to a platform used by fewer people, doesn't it?

Joe
Monday, July 12, 2004

*Actually* the reason that MS is supporting OS X is because they have signed a legal agreement with Apple as part of a settlement promising to do so. I think that agreement just expired, by the way so we'll see if Office 2004 is the end of the line or not.

Dennis Atkins
Monday, July 12, 2004

----'we released new versions of just about every product on the shelf last year, and lots of them have some significant new functionality. "-------

Meaning that some of the upgrades have no significant new functionality whatsoever?

Stephen Jones
Tuesday, July 13, 2004

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