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Fostering customer confidence the Microsoft way

Steve Ballmer has employed an interesting tactic to improve customer perceptions of Microsoft: He's enlisting the help of the workers whose benefits he's cutting.

In his annual state of the company memo, Microsoft's CEO told his charges that the software maker needs to cut its costs while continuing to innovate. Reports about the e-mail memo, which traditionally is seen by many outside of the organization, said Redmond is looking to trim about $1 billion from its budget. Much of that is expected to come from cuts in employee health care and stock programs.

Ballmer used a chunk of the 4,000-word memo to urge his workers to change the way people think about Microsoft. "We must also work to change a number of customer perceptions, including the views that older versions of Office and Windows are good enough, and that Microsoft is

The week's top headlines

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not sufficiently focused on security," he wrote in the memo, which was excerpted on the Seattle-Post Intelligencer's Web site.

In a recent interview with The Associated Press, Microsoft's group vice president for worldwide sales and marketing admitted that the company recognized two years ago that it had some major problems with customer satisfaction. Since then, Kevin Johnson said, Redmond started doing things like sending its employees to visit customers at their place of business and responding more quickly to security threats.

Solid grades in recent studies

Ballmer seemed to echo those sentiments in this week's memo: "… we need to prioritize the things that matter the most with our customers and for the company, and then be accountable for executing on those choices."

It remains to be seen how motivated Redmond's 57,000-strong work force will be to boost customer attitudes, but the company must be doing something right. In two recent customer-focused studies , Microsoft earned high marks. It ranked No. 8 in a survey that asked 1,200 technology buyers which of the major IT vendors they plan to stick with over the next three years. And Microsoft topped the annual Customer Respect Index for 2004 with a ranking that was well above the average of its Fortune 100 peers.

In a related matter, Ballmer also hinted that Microsoft will soon begin offering hosted IT services for small and medium-sized businesses (SMBs). The services will come from the company's Windows, Office and MSN units, but he didn't elaborate, nor would a Redmond spokesman when asked by Microsoft Watch.

Elsewhere in the news

In a matter of days after Microsoft issued configuration changes for Windows to lessen the impact of a flaw in Internet Explorer, a Dutch computer science student declared that he had found another flaw in the company's ubiquitous Web browser. Microsoft acknowledged Jelmer Kuperus' assertion and said it is still working on fixes for Internet Explorer. Kuperus has posted workaround code to the Full Disclosure security mailing list.

Another security issue that appeared this week comes in the form of a reincarnation of the Lovgate worm, which is attacking computers that have not been patched since its predecessor was launched in February 2003. The worm takes over an infected machine's address book and e-mails itself to other machines. Lovgate renders an infected computer useless because it replaces executable files, leaving the computer unable to run applications.

The United Nations is so concerned about the spam crisis that its International Telecommunciation Union agency convened a meeting of 60 countries in Geneva this week to talk about possible solutions. A communique from the group said that if something isn't done soon to stop spam, many businesses may choose to simply stop using e-mail altogether. The agency said spam now constitutes 75% to 85% of global e-mail traffic.

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