Update: Ballmer named CEO as MS pursues new strategy

In a press conference, the two Microsoft executives portrayed the change in leadership and direction as a seminal shift for the software giant on a par with the introduction of the PC GUI (graphical user interface) and the explosive birth of the Internet.

Microsoft Corp.'s Bill Gates today announced that he is handing over the chief executive officer reins to Steve Ballmer, retaining his role as company chairman and taking on a newly created position of chief software architect.

The new role will free up Gates' time to pursue a new strategy for Microsoft that was also announced today. The strategy calls for Microsoft to deliver applications and tools that support a range of next-generation Internet-based services, as well as new versions of the company's Windows operating systems that support those services.

In a press conference this afternoon, the two Microsoft executives portrayed the change in leadership and direction as a seminal shift for the software giant on a par with the introduction of the PC GUI (graphical user interface) and the explosive birth of the Internet.

"There's more opportunity for software than there has ever been ... in a sense you can say that you haven't seen anything yet," Gates said in today's teleconference. His newly created role at Microsoft as chief software architect will allow him to work closely with the company's product development groups in order to orchestrate delivery of the new software, he said.

"With Bill as chairman and chief software architect of our company ... I think we have an opportunity to repeat in the 21st century the kind of progress we helped make on behalf of our customers in the last century," said Ballmer, now Microsoft's president and CEO.

The cornerstone of the new strategy will be a family of applications and tools dubbed Next Generation Windows Services (NGWS), which Microsoft will deliver over the next two to three years, Gates said.

Without giving away many specifics, he said the new products will incorporate a new user interface and make use of emerging speech technologies. The company is also working on a fresh approach towards developing software applications, together with a new file system, Gates said.

"We need to deliver a breakthrough version of Windows that allows PCs and servers to support these next-generation services and host them out there on the Internet," Ballmer said.

Microsoft will spell out its road map in detail at a strategy briefing in the second quarter of this year, Gates said. The first products specific to NGWS will be rolled out at Microsoft's Professional Developers Day shortly after the strategy briefing, Gates said.

The forthcoming Windows 2000 operating system as well as new versions of the company's SQL Server database and its Exchange groupware software due in the coming year are also integral components of the new strategy, he said.

The changes at Microsoft reflect broader changes in the nature of computing and the expanded role that software and Internet-based services are playing in people's daily lives, Gates said. Microsoft is at an "inflection point" at which "the nature of the platform, the way that it works, the way that people develop applications" require some "breakthrough technology," Gates said.

Ballmer acknowledged that the revamped software effort could probably have been accomplished with the old management structure, but that "now the time is to supercharge every effort, and I think it sends a clear signal, maybe externally but certainly internally, it sends a clear signal to people that this is our chance," he said.

The types of Internet services NGWS will aim to support might include an online travel service that not only allows users to book flights online, but notifies them of changes to their flight schedules via portable, Internet-enabled devices. Friends and relatives will have Internet-based calendars that will reflect the changes in schedule, Ballmer said.

In another example he offered, a user's healthcare records, history and payments could be managed and stored online, once again tying in with an online calendar that notifies the user of upcoming doctor's appointments.

Microsoft will deliver a few of the services itself, Gates said, including services for mobile users, and services for consumers in the home and knowledge management workers. Most of the services will be delivered by other companies, he said.

As the company pursues its strategy to provide the software and tools for building and accessing Internet-based services, Microsoft will compete with the likes of IBM Corp., the America Online Inc./Time Warner Inc. conglomerate, Oracle Corp. and Sun Microsystems Inc., all of whom have taken steps to provide online services and the software that supports them, Gates said.

Sidestepping a question about whether Microsoft would be able to complete its vision if the company is broken into pieces as a result of the U.S. government's antitrust case, Ballmer said, "I think it would be absolutely reckless and irresponsible for anyone to try and break up this company."

Addressing the question more directly, Gates said Microsoft would not have been able to deliver the Windows 95 OS successfully if the company's operating system division hadn't been working hand-in-hand with its applications division to deliver 32-bit versions of programs like Microsoft Office.

The company doesn't see giant mergers on the scale of Time Warner Inc. and AOL as a necessary part of its vision, Ballmer said.

"The truth is our business is focused on software and the value software can deliver through services. I don't see the need for megamergers to get that done," he said.

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