Ballmer Sees Google, Open Source as Strongest Competitors

By Peter Galli  |  Posted 2006-05-11 Print this article Print

Microsoft's CEO says the company faces many competitors across different parts of its business, citing open-source and advertising business models as two big phenomena.

SANTA CLARA—Alternative business models, like that of Linux and open source and Google's advertising model, pose the greatest competitive challenge to Microsoft, CEO Steve Ballmer said May 11.

Addressing an audience of several hundred members at an event jointly hosted here by the Churchill Club and the Commonwealth Club, Ballmer said the Redmond, Wash.-based software giant faces many competitors across the many different parts of its business.

But there are two big phenomena going on: the new open-source and advertising business models.

Open source is more about whether that is a business model that delivers superior innovation than a commercial company can deliver.

"So, there is competition with this new business model; there was also competition with the new advertising business model [embraced by Yahoo and Google]," he said.

While Microsoft can't embrace the open-source business model, it has embraced the new advertising one and wants to grow to the No. 1 market position in that space from its current No. 3 spot.

Click here to read more about why Microsoft CEO Steve Ballmer has set his sights on search.

"The greatest competitive threat we face is our own ability to either embrace or compete with alternative business models," Ballmer said.

When asked by moderator Roger McNamee, the co-founder of Elevation Partners, to choose between IBM or open source as the threat he most worries about, Ballmer quipped that IBM is then no longer in the game.

Open source is a good-old fashioned engineering competitive threat, he said, and has managed to dominate in several markets.

Microsoft needs a better high-performance clustering product than Linux, and is working hard in this regard, with "a better product and a total cost of ownership being the key," he said.

Read more here about Linux allies' response to Microsoft's "Get the Facts" campaign.

"While it is hard to beat open source on the initial procurement side, it is easy to compete on the total cost of ownership front," he said.

Read the full story on eWEEK.com: Ballmer Sees Google, Open Source as Strongest Competitors

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at www.eweek.com.


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