Just received this article on Steve Ballmer’s visit to Silicon Valley where he spoke at the Churchill Club, saying that global markets should help shield companies through the financial crisis… this from Joseph Tartakoff of the San Francisco Chronicle…
Although the technology industry is not immune to the troubles facing the U.S. economy, it is positioned to weather a downturn, Microsoft Corp. CEO Steve Ballmer said in a talk Thursday evening in Santa Clara, Calif.
"As I travel and talk to people in the industry, I would say given the current circumstances, people still see a certain buoyancy in the market," he said.
Ballmer added that the industry is global, shielding it in part from the crisis in the U.S. In addition, he said so far the consumer side of the market has been less hard hit than the business side.
Steve spoke at the Microsoft Venture Capitalist Summit 2008 and spoke on several topics,noting this on connecting the cloud with devices…
“But we're moving to a world in which computation is distributed between the cloud, the servers, the client devices, be they phones or PCs, and you really get a world that can be more efficient, get more done, enable new scenarios; just amazing amounts of innovation.
“So, people say, are you a desktop company, are you an enterprise company. No, we're a software company. We think we're good at doing software, and we'll follow that broadly.
“This talk is not just about PCs or servers; this talk is about a world of devices: TVs, phones, PCs, servers are all very interesting. And it puts the Internet, of course, as a central part.”
… and this on market opportunities…
“It turns out our biggest growth opportunity is the sale of more PCs. This is a dollar statement, not a percent statement. The more PCs that sell with a legitimate copy of Windows, it turns out if you take a big number and you multiply by a modest percent, you still get a big number. And we've got a lot of absolute growth opportunity, because the PC market continues to grow in a stunning way. I mean, it's a market that's at 300 million and is still growing double digit -- still growing double digit. And despite things or including things like the EEE PC and these other kind of low-cost $300, $400 notebooks, the market continues to explode.
“China will become the largest not manufacturing company but consumption market for PCs within the next two years. It's number two today, about 45 to 50 million PCs a year. The U.S. is 65 million, but within a couple of years China will be kind of the number two market, and yet I think most companies need to have kind of a very different strategy to really think through what goes on in China.”
Steve talked a lot about personal devices, specifically the work on phones…
“Mobile is fascinating -- fascinating. One of the big questions right now to me is what's the long term shape of the Smart Phone market. The world today is largely what we would call feature phones or very low-cost phones. About 1.2 billion phones sold, but only 150 million that we would refer to as Smart Phones. At least in countries like the U.S. and Western Europe within the next three or four years pretty much 100 percent of the phones will be smart. It might take five years.”
Being a VC forum, he also discussed growing the company through investments and acquisitions…
“Just to give you a little bit of perspective, we continue to ramp a little bit certainly in value, but number of deals we do continues to be in kind of the 20 deal a year range. Right out of the bubble we weren't doing much, because we had screwed up a little bit on some of our investment and deal making, so we kind of slowed down a little bit coming out of the bubble, but we've picked back up 17 deals in our fiscal year '07 ended June, 24 deals last year.
“I don't think you should think of 9.1 billion as projectable. The Danger acquisition, which was more expensive than many of ours; I don't know if TellMe made fiscal year '08 -- or fiscal year '07; I suspect it's in '08. So, some big acquisitions for us.
“But we'll continue I think. Probably my guess is we'll buy another 20, 25 companies. The sweet spot for us is under a billion more than over a billion. That's not actually a financial statement. But companies under a billion are basically usually technology and people. Once you get to a billion, you're buying customer-based and sales force and brand and all of the rest. We tend to like and do better with the former than the latter. But we've done some bigger deals that have had more of the other characteristic, and here you get a list of some of the deals from the last year.”
But my favourite part of his address was on tenacity, and his (personal vafourite) use of ‘fu’ and ‘bar’…
“And then, of course, long term tenacity. Tenacity is a thing I almost shy away now from talking about with investors, but I'll talk to you about it. I think at the end of the day more companies get screwed up by not staying on point and just continuing to try and try and try. People screw up more by giving up than by doubling down.
“Almost everything we've ever stopped doing I wish we hadn't. I mean, I can go through a list of things that we used to do, and I say, gosh, if we had kept doing it, we might have gotten to FU earlier or BAR.
“We had this business we called Sidewalk. It was local entertainment guides. We sold it to City Search. It was all wrong. There was nothing right about the idea, not a thing. Today I wish we hadn't sold it, because I think we would have gotten to local search and doing local search well sooner.
“So, in a sense I'd tell you, you ought to continue to expect a lot of tenacity, patience and persistence out of us.”
Steve also had a few thoughts on other topics (as noted here) including…
On the virtualization market: Steve said that “it is still in a very early stage, with less than 5 percent of the servers virtualized. "I see real opportunity to bring virtualization to a much higher percentage," Mr. Ballmer said, adding that the company’s Hyper-V virtualization technology and also its systems management platform have been received with great enthusiasm.”
And on Apple: "Apple's a good company, [...] but they have a certain kind of strategy. They believe in putting the hardware and software together, they don't believe in letting other people make it."
Additional links of interest:
- Ballmer: Tech industry can weather downturn (Seattle PI)
- Stanford Graduate School of Business speech
- The Churchill Club speech