Microsoft Chief Executive Officer Steve Ballmer said Thursday that his company must be able to operate successfully in multiple markets -- a phenomenon he calls being "multi-core" -- for the company to continue to grow well into the future.
Although Microsoft is best known for its desktop OS and software business, the company has managed also to carve out a successful business in server software, making it a two-core company, Ballmer said at Microsoft's annual Financial Analyst Meeting in Redmond, Washington. This is something he argued no other major technology company has ever done, though IBM Corp. comes close with its hardware and services business, he said.
But as Microsoft moves ahead, the company is fighting a war on several fronts, and Ballmer hopes it will develop more core businesses with its entertainment and online services strategies.
"There really is a Sony that lives inside of us," he said. "There's an aspiring Google or Yahoo that lives inside of us."
To create a multi-core company, Microsoft must continue to build out businesses in markets other companies have already created. It used that strategy with success to create the Xbox game console, and it is currently doing that in other markets, such as Web-based services, business intelligence and high-performance computing, Ballmer said.
"You have to confront the question: Is it OK to get into some area of endeavor when you're not first?" he said. "It's always best in our business to be first. We want to be first. But are you prepared to get in and innovate and try to get growth in areas where you're not first in the market. As investors, you have to understand that we think that's important."
Even as it continues to plug away at new markets, Microsoft also is learning from mistakes it has made in its core businesses, Ballmer said.
Referring to how long it has taken the company to release the next version of the Windows client OS, Windows Vista, he said the company will never again take five years to develop an update to a major product. The most up-to-date release of the Windows client OS, Windows XP, was released in late 2001, while Windows Vista is slated for release in January 2007.
"We will never [again] have a five-year gap between the releases of major products," Ballmer said.