Top Microsoft execs outline 2010 challenges

Microsoft's server and tools business in the coming year will focus on gaining ground in the high-end database and server market, helping users transition to the cloud and extending its dominance over Linux, according to the division president.

In addition, the leader of Microsoft's Business Division, Stephen Elop, said he would focus on software-plus-services, cloud computing and browser-based applications as he looks ahead to 2010.

When asked in an interview Monday with Network World what the top three threats would be in 2010 for Microsoft's server and tools division, Bob Muglia, president of the unit, pulled a semantic sleight-of-hand and said he preferred to refer to them as opportunities.

Faced with the same question, Elop preferred to think in terms of “constructive disruption” as Microsoft's biggest threat and opportunity. Constructive disruption, he said, happens when technologies and business models change so much that Microsoft adjusts its products and how it delivers them.

“This can be disruptive, but that's what the times call for. It's what our customers are telling us needs to be done,” Elop said. Software-plus-services, cloud computing and browser-based applications are three areas of constructive disruption, Elop said, emphasizing that the software maker will use these technologies to help businesses strike a balance between using Web-based applications and client applications.

“For example, Microsoft has 500 million customers of Microsoft Office-related products worldwide and we have a responsibility to bring them along through this period of change,” he said.

That change includes a healthy dose of pressure from Google, which is eyeing a bigger piece of the productivity applications market with its Web-based Google Apps Premier Edition.

Muglia went a bit deeper with his predictions, pointing to high-end databases and applications as an area where Microsoft will do some work.

“The No. 1 opportunity we have is to look at enterprise applications and grow our share of high-end enterprise applications…” Muglia said. “We still have a disproportionally small percentage of servers and revenue associated with servers that are coming from high-end enterprise applications, which remain predominantly IBM and Oracle based.”

Microsoft CEO Steve Ballmer echoed that sentiment in an interview published Monday by TechCrunch. “We've got four billion in revenue and yet we're a small market share player,” Ballmer said.

Muglia said Microsoft has systems that are capable of taking on high-end challenges. “Companies are paying too much for [high-end databases and servers] and it is a great opportunity to go after that,” he said.

Those efforts will likely include Project Madison, a technology to support scale-out across multiple servers and Project Gemini, the R2 version of Analysis Services that will integrate with Office 2010.

Muglia said the second big opportunity is to help companies transition to the cloud.

“We really are the company that should be able to do this for our customers because of the huge install base of Windows server applications that they have,” Muglia said. “We should provide the best services at the best cost for customers to move into a cloud environment.”

Muglia rounded out his top three opportunities for 2010 saying competition with Linux would be a major focus.

“We've gained share, almost two points of share against Linux last year, but we still see a great opportunity for us to serve our customers better than the open source Linux world. And here we're focusing on doing it with workloads where we have relative weakness like Web and high-performance computing, and we see great opportunities to continue to grow in those spaces,” he said. “So, we're making the right investments there.”