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Tuesday, July 06, 2004In his annual e-mail message to Microsoft's employees yesterday, Steven A. Ballmer, the chief executive, declared that the personal computer industry and his company were still growth businesses, and he predicted that the number of PC's in use worldwide would increase 60 percent, to one billion, by 2010.But Mr. Ballmer left no doubt that Microsoft must behave more like the mature company it has become to reduce the constant scrutiny it faces from antitrust regulators around the world and the pressure it increasingly faces from investors. Microsoft invested when most technology companies shed workers and projects during the industry slump, and as a result its expenses have increased faster than the company's revenues over the last three years "This year, we are targeting nearly $1 billion in efficiency improvement and cost reduction across the company, primarily by rethinking how we do things."Part of the rethinking has included Microsoft's recently announced moves to reduce coverage for employees on branded prescription drugs and to reduce the discount that employees receive on purchases of Microsoft stock to 10 percent from 15 percent."Belt-tightening is what more mature companies do," observed Michael Cusumano, a professor at the Sloan School of Management at Massachusetts Institute of Technology.
In a telephone interview yesterday afternoon, Mr. Ballmer said he was more optimistic about Microsoft's prospects than at any time in the last three years. He noted the strength and upward trend in its mainstay desktop software businesses, server software, and the encouraging improvement in emerging businesses like its MSN Web sites and Xbox video game consoles and games.Mr. Ballmer also added that Microsoft was more confident about competing against the rising challenge of open-source software like the Linux operating system, which is distributed free. Microsoft's competitive response is to emphasize what it contends is the lower total cost of owning, maintaining and supporting its Windows operating system.
Much of Mr. Ballmer's lengthy e-mail message - an annual document about strategy and the state of the company - focuses on the management steps taken to do everything from trimming costs to improving product design to reducing security flaws in software products. And Mr. Ballmer alluded to the tricky balance that must be struck when placing tighter management controls on a company known for its freewheeling, entrepreneurial heritage."This will be a place with some structure, but structure that aids teamwork, not politics and bureaucracy," he wrote. Steve Ballmer is really whipping up things inside Microsoft and Microsoft has a really tough time out in the marketplace. This is both a challenging and exciting time for Microsoft. |
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