Microsoft CEO pushes security, licensing & Linux hot buttons

Microsoft president and CEO Steve Ballmer said Canadian IT professionals have told him loud and clear they want to see more simplicity the next time the company changes its software licensing programs.

Ballmer visited Canada as part of Can>Win 2004, a business conference co-hosted by Microsoft.

Part of his agenda involved a speech at the Metro Toronto Convention Centre, where Ballmer said a complaint from the audience concerning licensing headaches drew huge cheers from the audience.

“”They were like, ‘Yeah, baby, give it to ’em,'”” Ballmer said, laughing.

Microsoft caused major controversy three years ago when it began to revamp the way enterprise customers license its products. Under a program called Software Assurance, the company introduced a subscription-style service that many customers said would increase its costs of using Windows and other Microsoft applications. There was also considerable confusion over the range of licensing options, which included the Enterprise Agreement, Business Open Licence or Select Licence. The programs differed in a number of criteria, including the length of agreement, minimum number of license purchases and whether users must sign a contract. Some customers also complained about the short deadline to make decisions, which prompted Microsoft to extend it twice.

Ballmer said he lamented the way the licensing changes were handled, given that the company had wanted to offer more choice and simplicity from the beginning.

“”We had this triple-crown of backfires,”” he said. “”Do I think there’s an ongoing opportunity to improve the way our customers license products? Yes. Will we move, slowly, ponderously, deliberately, methodically before we EVER make another change? Oh, so slowly.””

When Canadian users grilled him about licensing, Ballmer said he offered a number of options, including a tool that reports to customers exactly what they have licensed. The biggest reaction, however, came when Ballmer suggested a formula that would charge customers on the number of PCs and servers they own and allow them unlimited use of its software.

“”There was screaming in the aisles,”” he said. “”At least, it gave me some direction.””

Ballmer said Microsoft is usually hesitant to take away one option when it introduces a new one. “”I certainly had feedback, shall we say, today, that was interesting to me on the licensing front.””


While Ballmer is still mulling the future of the firm’s licensing strategy, he was willing to make one prediction most Microsoft customers will have a hard time swallowing — that security will be the company’s strategic advantage over its competition in the next two to three years.

“”It’s not a strategic advantage for us today because the theory is everybody attacks us and nobody attacks the other guy, so the other guy must be OK. It’s not that every other system out there is so unhackable, it’s just they aren’t that popular,”” said Ballmer. “”We need to be as good as we can be and we need to be better than the other guy. Today we’re better than the other guy, but we’re going to be better and we’re going to be good enough.””

While the company has been under fire for the seemingly endless security flaws found in Microsoft software, Ballmer says a new approach to the development and release of products in addressing the problem in several ways Microsoft said this week it would partner with RSA Security to develop a SecureID card that would replace passwords in corporate enterprises.

“”We have new patch technology, smaller patches, the ability to recall a patch application compatibility issue that somehow prevents the patch,”” he said.

“”There are Windows update services, new Internet firewalling for each PC. We’re working on shield and quarantine technology that provides a way to determine whether a machine is clean enough to run on a network because that is a big source of virus transmission — people are bringing a machine to work from home and introduce a virus at work. There is a full set of things we’ve talked about that we’re doing.””

Improved technology, coupled with a new development process built around releasing a more secure product both in terms of the way developers are trained and the milestones put in place when developing a product is starting to pay off, he added. For example, Ballmer said that in the first 10 months of release, Windows Server 2003 had nine important security bulletins versus 40 on Windows Server 2000.

Ballmer said Microsoft is striving to be best in class but the current experience customers have is “” not what’s acceptable.””

“”It’s not what people want in terms of a security experience and I know that and I understand that. We live in a dangerous and more difficult world. We’re going to get attacked. We have to teach our developers about that reality and teach them about what it means to design and write more secure code,”” he said.

While Microsoft works at making security job one, Ballmer says IT managers need to step back from the daily grind and make sure there is a security plan in place that is continually updated. He said there are companies that have done a good job doing that, but there are also plenty of companies that pay lip service and haven’t really taken the steps and put a security plan in place.

“”If you are a mid-market company with four or five IT people what you need to do and what you can do is a whole lot different than a company that might have 1,500 IT people in one of the big financial institutions. We as a company and the rest of the technology industry is trying to build products that scale from how do you simply deliver a secure solution to that five man shop with five servers, all the way on up to the Bell Canada’s and BMOs and Royal Banks. But even if you’re in a small shop security is not a one-time event, there’s a management plan that goes with it,”” he said.

Losing to Linux

While Linux has started to emerge as a more competitive threat to Microsoft’s dominance in the enterprise, Ballmer denied media reports he had taken time out during a vacation to fly to Munich and unsuccessfully persuade the government there to drop its open source plans. From a pure cost perspective, Ballmer said governments who have dropped Microsoft in favour of Linux have not seen the savings they expected.

In Canada, there is a growing movement at the federal level to introduce open source software. The Information Technology Branch of Canada Customs and Revenue Agency, for example, is developing a policy and approval process for open source software that will be published sometime this fall.

“”We are going to lose some in government,”” Ballmer conceded. “”But in some cases it has nothing to do with the cost of owning the product. We are not an expensive product. This is a decision that in some cases gets highly politicized.””

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