By Cecilia Kang
Washington Post Staff Writer
Tuesday, July 13, 2010; A10
Microsoft got nothing but grief when it killed its Kin smartphone this month, a decision that looked like a misstep for the software giant as it struggles to stay on the cutting edge.
The move could not have come at a more delicate time, with Microsoft's longtime business of selling software in a box rapidly being replaced by the sale of applications over the Web. The company is facing competition from rivals, such as Google, offering word processing and spreadsheets online free of charge, and it recently lost its place as the most valuable tech stock to Apple.
Microsoft is now working to transform itself into a one-stop shop for Web-based software and, as part of that strategy, is betting big on the growing popularity of cloud computing, which takes software off the desktop PC and moves it to networks of data centers accessed via the Web.
That's the vision that Microsoft chief executive Steve Ballmer outlined to partners gathered at its annual partners conference in Washington on Monday. "If you don't want to move to the cloud, we're not your folks," Ballmer told an audience of 9,500 partners packed into Verizon Center.
In an interview with The Washington Post after the speech, Ballmer talked in further detail about the company's efforts to establish a firmer foothold in cloud computing and its hopes for smartphones and tablet computers. Here is an edited excerpt:
Seems like a tough time to get people to buy more technology. How does the economy pose a challenge to your cloud strategy?
The economy has a lot to do with a lot of things, but not this. The inevitability of the cloud is absolutely clear. When and how is not 100 percent clear. The preponderance of our partners are moving with us. Some partners may move slowly, and maybe a few won't even move with us. But the new guys jumping into the fray are saying, "Hey this is new opportunity."
What's your pitch to use Microsoft's cloud over Google or Amazon?
There are different parts of the cloud market. We can act like they are one thing, but they are not. There is the app infrastructure in the cloud, hardware infrastructure and applications. At the applications layer is primarily Google, and we are just beating these guys almost every time.
With what, office in the cloud? It seems like consumers love free Google apps.
With the bigger customers, we are doing well. Very very well. Their offer is incomplete, and they haven't factored in a lot of things that are important to customers, like security and compliance. We are just way ahead, which doesn't mean we can get lazy in any sense. 2010 is really important. We have a wave of stuff for cloud that follows. We have a consistent offer on the desk and from the cloud -- that is important. A lot of things working in our favor.
What are your biggest priorities in Washington?
Number one is clear: We would like to see better global enforcement of intellectual property laws. If we are going to do our fair share and the industry is going to do its fair share for the president's desire to double exports, that will involve the federal government. That is particularly true in China.
You said several slates and smartphones are coming out in the next few months. How did you fall behind, and how will you catch up?
We have a form factor, where we need to push with our hardware partners and silicon partners: the slate platform. Windows runs Windows apps. The key is that we actually have software technology now to drive the integration of software, hardware and silicon.
In the case of phones . . . we missed. We just didn't execute well. Now we are jamming hard. We'll sell millions of units this year, but we're not where we want to be. But with Windows Phone 7, we are back in it. And those devices will ship within the next months.
How do you make Microsoft, now 35 years old, more entrepreneurial?
You want a company that's driven, doing good work. You want a company that is perfect -- but hardly any company will be. You want a company that is not only trying to be perfect but is resilient when it makes mistakes. That is important. Hopefully you are right every time, but if you aren't, do you have a toughness and ability to stick to things?