Ballmer spins: Our software vs. their services

Microsoft's Steve Ballmer says choose Microsoft's people-enabling software versus IBM's services and consulting. But it's not really that simple.

Microsoft has a lot of enterprise products moving through its pipeline in the next 12 months, and what better way to grease the skids than to launch an expensive marketing campaign to woo the IT managers' bosses' boss.

At Microsoft's Executive Business Forum: Impact/People in New York recently, which was packed with CIOs and CEOs, Microsoft's Steve Ballmer made a point to position Microsoft as a technology company that can put software in the hands of employees, thus enabling them to do their best work. This image is in juxtaposition with archrival IBM, which Ballmer was careful to cast as a services and consulting company.

"IBM says we have a team of consultants and we can help you innovate," Ballmer said. "But at the end of the day, unlocking people potential is better. Having people collaborate to make the right decision is more productive."

By no stretch [is Microsoft] attempting to provide solutions that are different from what IBM is attempting to do.
Rich Ptak
Ptak, Noel & Associates
IBM, of course, has many products that compete with Microsoft, including Lotus Domino, its DB2 database, and Linux-based server products, to cite a few. Microsoft is gearing up to launch new versions of its Exchange messaging platform, a new version of its Office productivity suite, plus its Vista client and Longhorn Server.

What's interesting about Ballmer's message is that the driving force behind Microsoft's success was that it removed the mystique of the computer for the average person, said Rich Ptak, principal at Ptak, Noel & Associates, an Amherst, N.H., consultancy.

"Microsoft made its bones by being transparent to the end user, and that's what they are still about, I think," Ptak said. "Now, they are trying to position themselves as being the people who give you the tools."

"There is no question that there is now better integration of their tools, but by no stretch are they attempting to provide solutions that are different from what IBM is attempting to do," Ptak added.

IBM's philosophy, by contrast, is that users should not have to custom craft an application just to use tools. IBM will provide the tools and expertise, and [its] partners can deliver the custom applications. "IBM is saying, we know what we are doing because we've done it over and over again," he said.

Microsoft said it plans to spend about $500 million to market its new products. At the event, Ballmer demonstrated a handful of applications due out later this year, including unified messaging with Office 2007, depicting it as one way to empower employees.

Consider the costs

Some CIOs didn't buy Microsoft's characterization of Microsoft and IBM as being a choice of a software company versus a play for services and consulting. "It's just a thinly disguised way to sell software, and actually, it's not that thin," said Rich DeBrino, CIO at Compass Health, an Everett, Wash.-based healthcare facility.

For example, DeBrino said, "I believe in unified communications but there is a big cost. There is an acquisition cost, a training cost, a software license cost and time to come up to speed. So when you look at the entire project cost and how long for the ROI, you wonder how long it will take me to recover this."

It has been shown that by outsourcing the right things, it provides a value to the company, he added. Usually, that involves anything that is not your core business.

Companies look at the software versus consultants and services choice with two views in mind, one expert said.

"They would certainly like to be able to expand an existing relationship with Microsoft if they are comfortable [and] satisfied with the current relationship and confident that Microsoft is capable of expanding where they have additional needs," said Jeffrey Kaplan, managing director at Thinkstrategies Inc. in Wellesley, Mass. "Those areas may not be where customers feel they need another alternative or they may not have faith that Microsoft can evolve in that direction.

The truth is that people have viewed Microsoft in a relatively limited way, Kaplan said. Most IT shops view Microsoft technologies as fulfilling enterprise OS and business computing requirements. "The [unified messaging] application is somewhat bleeding edge in its nature and there are other niche players with a foothold," he said.

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